Is TripAdvisor site Tingo a wake-up call for bad revenue management in hotels?

NB: This is a guest article by Loren Gray, chairperson of the Hospitality Sales and Marketing Association International’s (HSMAI) digital marketing committee.

We see it all the time: Travelers are planning trips months in advance thinking they will be rewarded with low rates for a hotel stay only to see standard rack rates.

And, their experience confirms once again online travel agencies’  brilliant marketing message — the last-minute booking will bring the best price.

For our industry, as revenue management goes, the strategy is relatively simple. Develop what should be base business with group, wholesale, consortia, in and around 90+ days out. Then follow it with incentive offers, early pre-pays, loyalty marketing and opaque package offers 30+ days out.

Only after, when you enter into your prime booking window (less than 30 days) do you begin to yield higher rates on your remaining inventory based on your “compressed” market demand. Sounds pretty “101,” right?

Then why is Tingo such a worry?

Tingo, which is part of TripAdvisor’s Smarter Travel Media, offers prepaid guests refunds when room rates, accessed from the Expedia Affiliate Network, fall before their arrival dates.

Tingo,  in comparison to other opportunistic platforms, feeds directly off of our industries worst revenue management habits.

Hotels attempt to achieve multi-layered revenue expectations based on properties’ budgets. We load early all of the top rates and hold onto them past the early demand curve.

So, when demand does not produce needed occupancy, what do we do? We lower our rates in the prime booking window, exactly at a time that we should have been raising them.

All of this occurs while fighting an-ever growing OTA advertising campaign that feeds on the premise that better rates happen later rather than sooner — and they have the inventory.

Why? Because we gave it to them.

Enter the Tingo model. Although it may appear similar to Orbitz’s Hotel Price Assurance, (which provides money back when another guest books the same itinerary at a lower rate) Tingo compares a guest’s booked prepaid rate  to any available rate offered for your type of reservation through the Expedia Affiliate Network.

So should the property ever reduce a rate prior to arrival, then that rate is now the new rate of the participating reservation by a rebooking process handled by Tingo.

So what about rate parity, cancelation polices, conditional offers and blended rates? Also what does Tingo say to its users about the opaque packages and loyalty incentives they potentially are missing?

How does the property get on the winning side of affiliate offers when they are the ones “virtually refunding” any downward pricing?

The simple answers are that the property can’t, and Tingo won’t. As hassle free as Tingo claims the user experience will be, in fact, it obscures the industry’s existing incentives and value offers.

Will I personally use the service? Probably not.

But, that’s not because I am a purist. In fact, I usually eagerly adopt new concepts to better understand their potential.

But in this case, my hesitation will be for the same reason other travelers will be concerned — the fine print.

The what-happens-when-it-goes-wrong process. I think we have all experienced at some point, or in some fashion the blame game between third parties and properties when a “miscommunication” occurs.

From a property-level perspective, it’s usually the property that bears the brunt of the blame and lost business from the guest standing there at the front desk. The “don’t worry, we handle everything” refrain from OTAs has been anything but, and that is very much in harmony with Tingo’s sales pitch.

Plus, Tingo has my money long in advance. What process do I have to go through if I want to change my mind about the booking?

What if I saw a package offer from the same property and wanted it instead? What hassle would that create, I wonder? Do I even want to bother with all that?

Is there a silver lining to this? To stretch the definition a little, I feel Tingo shines a bit of light on marginalized revenue management practices of bottom-dwelling’ properties and their rate practices.

You know the ones; just about every market has them. They mirror your rates, just below your market segment rates, and at the first sign of diminishing peak demand,they dive into the rate basement, effectively dragging the market segment along with them.

Now, you have Tingo to hurt everyone even more by “giving back” revenue from business you had already yielded off of.

Add that to the properties dumping inventory into OTAs and last-minute opaque sites, mixed with rate parity issues, and you have quite a negative RevPar party going on.

What was that movie with George Clooney and a fishing boat?

Hint: The Perfect Storm.

NB: This is a guest article by Loren Gray, chairperson of the Hospitality Sales and Marketing Association International’s (HSMAI) digital marketing committee.

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About the Writer :: Viewpoints

A founding principle of tnooz was a diversity of viewpoints from across the spectrum. Viewpoints are articles by guest contributors from around the travel and hospitality industries. The views expressed are the views and opinions of the author and do not reflect or represent the views of his employer, tnooz, its writers, or partners.

 

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  1. SCB

    DON’T TRUST TINGO! I booked one room for 6 nights @ Hotel Atwater because the room rate was @ $135.84 per night. Then I changed the check out date to be 2 days earlier. THE CHANGE WAS MADE WITHIN THE CHANGE/CANCELLATION DEADLINE. HOWEVER, THE CANCELLATION POLICY IS VERY MISLEADING. It states:
    “Cancellation Policy
    We understand that sometimes your travel plans change. We do not charge a change or cancel fee. However, this property (Hotel Atwater) imposes the following penalty to its customers that we are required to pass on: Cancellations or changes made after 6:00 PM ((GMT-08:00) Pacific Time (US & Canada); Tijuana) on Jul 7, 2016, or no-shows, are subject to a 1 Night Room & Tax penalty.”

    AS A RESULT, TINGO ONLY GAVE ME A PARTIAL REFUND BECAUSE THE ROOM RATES WENT UP AT THE TIME I CHANGED THE CHECK OUT DATE, EVEN THOUGH I WAS KEEPING THE OTHER NIGHTS THE SAME AND I MADE THE CHANGE WITHIN THE “CHANGE/CANCELLATION” DATE. WHAT A RIP OFF! When I tried to contact customer service at TINGO, it took 2 days of phone calls and being put on hold for them to figure out why I didn’t get all of my money back for the 2 nights. I was stuck with paying the higher rate for the room. WHAT A DISAPPOINTMENT!

     
  2. Ben

    Tingo is a terrible company. They show you price in CAD on TripAdvisor and then charge the SAME NUMBER in USD!!
    I spoke to them today, astonished by this terrible mistake and they just apologized, saying that they are new and the system had a glitch (!!).
    Well, lucky that we’ve noticed that on our confirmation email. HOWEVER, the credit card has already been charged and the refund they are giving does not take into consideration exchange rates between CAD and USD. on a $1000 order, this can amount to $35! that we’ve just lost…. They did not offer any compensation for that even though they have acknowledged that the error was theirs!

    I will not trust them ever again.

     
  3. Ya

    What does it mean on the Tingo Sabor , Cozumel Reservation?

    The following fees and deposits are charged by the property at time of service, check-in, or check-out.
    •Deposit: MXN 1250 per stay
    The above list may not be comprehensive. Fees and deposits may not include tax and are subject to change.

     
  4. John Tischner

    I recently used Tingo for the first time by booking a trip out of state. I always book way in advance and try to get the best price. I found Tingo’s rates and their minimal charges to be fair. I had no problems with the trip. As a matter of fact, the price of my hotel rooms droped twice and I did get a refund, so to me it was a plus because the initial room rate was fair.

    I find the extra charge to be nothing more than trip insurance. Anyone who takes a vacation without buying trip insurance is foolish, especially if it’s an expensive trip and out of the country.

    I say this from a senior citizen’s standpoint. As we age, we are more likely to confront sudden illnesses. I have used trip insurance twice in the past few years, and as recently as March of this year because I had to have emergency open heart surgery. Without the insurance I would have lost quite a bit of money. That’s what I like about Tingo’s guaranteed cancellation policies.

     
  5. Judith Leist Blog | Judith Leist Blog Judith Leist Blog | Everything Judith Leist & a Little More

    […] For a great take on revenue management and Tingo’s impact on it, read Loren Gray’s recent article on Tnooz (Is TripAdvisor site Tingo a wake-up call for bad revenue management in hotels?). […]

     
  6. Max Starkov - HeBS Digital

    Adam, “harmless” would have been the case if you did not have the outrageous merchant fees the OTAs charge hotels, ranging from 18% – 25%. I would not call this harmless. As per STR, this merchant commission cost the industry $2.5 billion in 2011 alone.

     
  7. Adam

    Once you consider pricing is set at the property level and distributed through a very finite series of channels, OTA’s are really nothing more than glorified search engines with a booking ability… assuming you’re a savvy operator with a good product, OTA’s are harmless.

    From an operational perspective, Tingo certainly seems like a nightmare to manage….

     
  8. Andrew

    One more thing an OTA told me 14 years ago that if i did not sign up with them i would be out of business because i needed them to survive ” with out us you don,t have a business ” .

    Wrong without us they are just another website,and they Create no value for anyone but them selfs.

     
  9. Andrew

    The OTA’s only have the power if we give it to them so lets not give it to them and with more and more OTA’s appearing all the time, will it get to a point where they have to compete to get our stock listed on their sites in order to have something to sell?

    On the subject of cancelation fees we have a 48hr cancellation policy (you cancel we charge) and we are also looking at the air line system where each booking is non transferable thats why you get a deal.

     
    • Robert Gilmour

      Andrew, couldn’t agree more, but the painful truth however is that hotels have a ‘follow like sheep’ mentality, they can’t see their competitors doing/getting something they’re not doing/getting themselves – its a terrible affliction the industry has suffered from for years and effectively helped create the might of the OTA’s

      or

      as in the case of IHG/Expedia and hotels.com dispute back in the early part of this century, rather than the industry supporting IHG on what was a once in a lifetime opportunity to harmess the power of the OTA’s they waited on the sidelines like vultures waiting to descend on all the business that was up for grabs as a result.

      One thing you’re sure right about, OTA’s add no value whatsoever to the customer or hotel experience, in fact they’re a nightmare to deal with when it comes to cancellations and no-shows

       
  10. Robert Gilmour

    The reality is that once again the hotel is being asked to completely compromise its revenue/rates strategy to please/accommodate both the customer and the OTA and now the Tingos and Flash sales sites of this world. here are irreconcilable conflicts of interest all over the place on any reasonable common sense view. It used to be a distribution channel had to really earn its corn and add value, now it gets it almost without even trying. for example, a flash sale site will not tolerate a lower rate on the hotel website, why shouldn’t it, the flash sales customer is a separate channel from the web direct booking channel, so by clearing the way for them, you are adding insult to injury.

    There are far too many fish in the hotel industry ‘sea’ – the industry is in a total mess, a shambles – regrettably much of its own making, but also by being at the mercy of cheapskates, quick buck merchants and parasites – and clearly its getting worse. Max is absolutely right re Trip Advisor, also the billboard effect is a great example a fraud designed to make us believe we should look at the OTA’s in some kind of virtuous light – then BA is totally by accident rather than design, much to the annoyance of the OTA’s and on line merchants if they were being honest with us.

    Hoteliers. you just need to get on with making a living best way you can, i left the industry as a sizeable owner operator because of all the smart alecs that were always trying to run it from the sidelines, and yes which made my blood boil.. Do what you think is best for your business, ultimately its the only way you’re going to survive and prosper. if you need to cut corners, do it, everyone else is, its a big bad world out there.

     
  11. Max Starkov - HeBS Digital

    Loren, great topic and analysis.

    In my view, the launch of Tingo.com is a direct affirmation of TripAdvisor’s continued anti-industry and pro-OTA business model. By failing to position itself as an industry friend, TripAdvisor is denying itself access to the bulk of advertising dollars in the hospitality industry, controlled at the property level.

    The press release announcing the launch of Tingo.com had the provocative title: “Travelers Overpaid Millions for Hotel Rooms in 2011: Tingo Comes to the Rescue.” It further proclaimed that “In 2011 alone, Americans could have saved nearly $314 million if they had had access to a site like Tingo.com.” How anti-industry is a statement like this one? It makes the industry look like a bunch of corporate thieves who are cheating and overcharging the traveling public to the tune of hundreds of millions of dollars. Tingo.com to the rescue, indeed!

    As for the viability of Tingo.com: To begin with, Tingo.com has no unique content, pricing or inventory of its own. Its only value proposition – refunds when and if a lower hotel rate becomes available – is based on factors that are at the mercy of the other OTAs and the travel marketplace as a whole. Expedia could replicate Tingo’s offering within five minutes or less. Orbitz already offers and widely publicizes similar automatic refunds.

    Sooner or later, to counteract decreased merchant commissions and the growth of travel demand as the economy improves, OTAs will be forced to re-institute booking fees that were dropped back in 2009. How would the Tingo.com business model work when there are non-refundable booking fees involved?
    I am not even discussing how the paltry 7%-8% affiliate commission would allow Tingo.com to be a sustainable business venture. The cost of establishing a new travel consumer brand is staggering! In my view, Tingo.com will most probably not “explode” as a new travel site, but linger out there.

     
    • Loren

      Thanks Max,

      As always you have a great perspective on the state of the industry. I agree with your view as to the time and place Tingo will occupy in our market, and the fact there are not really providing a new product, just ways to leverage monies from those who do with no real improvement of the guest side experience. As for Tripadvisor I think you pointed out the obvious short comings of its marketing campaigns, and its true allegiance.

      I personally have always had a ‘soapbox’ view of ‘booking fee’s’ and ‘resort fee’s’ and ‘fuel surcharges’ as the bane of our industry. Don’t get me wrong, I understand their revenue and ‘price gating’ value, I just never prescribed to the notion that the advertised price is not really the price paid.

      In a way I feel its a lot like taking stock in a new friend, if you (the guest) are willing to commit, (by taking a lower advanced purchased rate that is not refundable) then I will promise to make that rate lower than anything other rate I would offer. We all know it is by no means possible to have that ‘simple’ of a rate strategy, but guests can fell intent. So why not think about making a ‘lowest price guarantee’ for prepaid advanced purchase that is seriously advance purchase, allow for any after purchase ‘package offers’ that you may come up with that it could be ‘credited for’ just in case, and just cut out everybody else?…. just a thought .

       
    • Dave

      We are still looking at how this will shake out as well. However the money back offers only apply to “best available rates” and not any promotional pre-paid or advance purchase rates. Also when looking at the site the rates being offered are being supplied by Expedia.

      RE Cancel fees: we charge varying seasonal cancellatuion penalties at our resorts. We also charge early departure fees.

       
  12. Robert Gilmour

    I have never come across any other industry other than the hotel industry, which clearly has lost complete control of its pricing and product. Its a disaster.

     
  13. Leonardo

    That’s a good article! This concept of Tingo is the inverse way of the getaway deals of deal sites like Groupon, don’t you think? Now the hotels can guarantee reserves a long time or just few days before. I think this can work for a category of hotels like the ones that use deal sites to sell reserves…

     
  14. martin kelly

    I hold a similar view to the author. Apart from flawed pricing strategies, I would also ask why in many cases the hotel industry does not charge a cancellation fee, even a modest one like $25, until 24 hours out from booking. It makes no sense. There would be no consumer resistance, as airlines and other businesses have found.

     
    • Loren

      Martin,

      Thank you for your comment and your perspective. I think to some degree I referred to your booking fee point in my ‘War & Peace’ novel reply to Max on April 9th. In principle your point is well taken, by adding the booking fee you are in effect severely hurting the ‘Tingo Model’. But I feel that we as an industry would be ultimately doing a bit of a ‘scorched earth’ policy in inflicting these fee’s, who ultimately hurt our would-be guests.

       
      • martin kelly

        Hi Loren, I don’t agree that introducing cancellation fees would hurt guests. Because the only people they’d impact are those who cancel – ie not guests. I think there’s also an expectation among consumers educated by airlines etc that there will be a cancellation fee. In my own conference business we charge cancellation fees and have never had a problem. People understand they are backing away from a commitment and therefore there should be penalty.

         
  15. Martin Soler

    It’s an interesting concept. I guess time will tell how efficient it will be. But as many have commented, what is it going to help in the end? Very little. I paid my room at a rate I felt was ok. If the hotel delivers the service i expected i’ll leave happy. On the other hand if the hotel had 25% inventory left that day and cut the rates to keep rooms full, well i’m ok with that. If i want to scrape a little more i’ll cancel my booking and rebook last minute. In the end it all boils down to a tweet i read today, there are no good ideas there are only good results (paraphrased).

     
  16. Oz Har Adir

    Autoslash.com have been offering similar service for car rentals, and Yapta does that for flights. I guess that their experience could be a good representation of what one can expect to happen.

     
  17. miguel

    Great article. I do believe that Tingo is an interesting “service” to customers.
    I also believe that there is no business case for this new style of hotel booking. It’s like buying clothes at a price you want to pay and at the cashier they say “oh you only pay half of the price you had in mind”. Business does not work that way. As a modern hotel owner you are very busy every day yielding, to make profit. But this kind of bookings just ruin your calculation. It is another parameter in the game that makes pricing in the the travel industry more complex. Been on the hotel side, been on the tour operator side, been on the customer side 🙂 Yes, every customer wants the best deal, but a hotel running on free rides will not be in business for long…

    Miguel

     
  18. Dennis Schaal

    Dennis Schaal

    Loren and others: Do you see any positives in Tingo for hotels? For example, if consumers are booking hotels 45 days out because they feel comfortable with the Tingo proposition, doesn’t that at least provide some security for hotels?

    I’m sure that is one of the arguments Tingo is making to hotels. Does it hold any water?

     
    • Loren

      Hi Dennis,

      I think in a way as I mentioned it does. We have tended to ‘follow the bouncing ball’ when it comes to marketing and revenue strategy. we know for the most part no one is paying attention to outside of 120 except long range group, consortia and wholesalers. and consumers least of all. So we market and manage in kind, namely most promotions are in short booking windows and most revenue attention is spend there as well. Should Tingo grow into a revenue issue for suppliers it might change that strategy into one of incentives for extreme early bookers or even moderate incentives for 45+ day’ers. Hey, if we can be ‘trained’ to be last minute bookers we can be ‘trained’ the other way too right?

      Thank You Dennis for the dialog,

      Loren

       
  19. @theslynch

    Loren, you make some outstanding points for hoteliers and destinations that rely on hotel sales/taxes. I’ve been waiting to hear how Tingo would shake out. Personally, I was more interested in how Trip Advisor would leverage the reviews on the site and how they would ultimately function in connection with purchasing. At this point I’ve been disappointed–nothing creative. Notably, not all of the rates on Tingo are guaranteed “lowest.” I used the site to book a hotel recently–just to see how the system worked (I guess I’m one of those early adopters you talk about!). We’ll see what happens when I hit the front desk.

     
    • Loren

      @theslynch,

      Thank you for the comment. I agree with you, I would have expected TripAdvisor to ‘jazz up’ the reviews sectionuse. I’d love to here the end result of your trip that you book with. — loren

       
  20. Mike Putman

    Does Loren also write for Fox News?

     
  21. Anuj

    Great article.
    I do wonder though, what stops hotels from charging upfront like airlines & (ironically opaque sites that sell the same inventory): if they did that, wouldnt it be byebye tingo?

     
    • Loren

      Anuj,

      Thank you for the complement and comment. I’d add to your insight by saying asking where would we go if this builds momentum? Would we go back to “booking fee’s”? –Loren

       
  22. Robert Gilmour

    Well it is and it isn’t, anyway time will tell. Best available rate at the time of booking should still be in the full control and flexibility of the hotel. That’s the only way the industry can function properly. What about rate parity. If a hotelier can’t flex his/her rate according to demand patterns, then we might as well fire the revenue management department.

    Once again the hotel industry sits back and will take it on the chin. Where are the movers and shakers on the supply side – are there any? Plenty is written, nothing is actually done.

     
    • Loren

      Robert,

      Thank you for your feedback and insight. I think it boils down to the first supplier taking the first step, and standing apart from everyone. We all remember IHG and Expedia, everyone was outwardly supportive while inwardly looking to capture the abandoned market share. After all, its all fair in love war and business right? I think when the damage to real revenue, (not perceived) is sufficient, it would be a race for a supplier to resist losing control over there product.

       
      • Robert Gilmour

        Well put. I remember the IHG/Expedia thing very well, i was involved in the lowest internet rate guarantee discussions with IHG and their franchisees. They were absolutely right to give Expedia/Hotels.com a good shake, and it was a game changer

         
 
 

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