Transcript Best Western Central Europe Conference 2011

Best Western Central Europe Conference 2011
Revenue Management
Workshop
Your trainer for today:
Four hours of hard work await you:
Welcome
13h00 – 13h30
 The Best Western Quizzer
13h30 – 14h00
 Online Distribution Trends 2011 from a RM
perspective
14h00 – 15h00
 Rate Management
• Which factors influence our room rates?
• How do we differentiate rates and products?
• Do you know your cost of distribution?
Coffee & communication break
15h20 –17h00
 KPIs in Revenue Management
 Revenue tools to capture KPIs
The end
3
Warm-up: The Best Western Quizzer
Revenue Management Workshop
Online Distribution
Trends 2011
from an
RM perspective
Online Distribution Trend No. 1
New search options
The ( good ) old Google Display
SEM = Advertisements at a
cost
Google Commerce Search
•Enterprises Search/ Google
Places
•Criteria such as location and
hotel reviews are important
Organic Search
•Internet sites are being
offered
•Criteria such as page rank,
Content are relevant,
inbound links, domain name
and CONTENT is important
The new Google (beta version)
The traditional AdWords
are still around
New AdWords options are
available:
•Linkages to Google Places
•¾ of the page consists of
commercially influenced
results
•Linkage straight to booking
sites
Organic Search
•SEO is of low importance
•Few results at the end of the
page (lower ¼)
Google Maps: from bad to worse..
Direct rate comparison
as part of the search
results, no need for the
clients to leave the page
and pull up Trivago, Kayak
etc. for rate checks.
Another fine opportunity to divert customers
Click on hotel name = client will
be directed to hotel site???
No, he will be directed to
Google Places!
Places Profile is
crammed with user
generated content &
1.000 links to
external pages!
An interesting new feature: Google Instant
Preview
Google knows my
whereabouts
What does that mean for our online
marketing activities and budgets?
 Our annual budget is the major German OTAs &
TOs weekly budget
 It is getting increasingly difficult to buy good
placements with our limited budgets
 Our branches most popular search criteria „hotel“
will get unaffordable
 Google Advertising as the only online-marketing
activity will not be enough
What are the consequences?
Online Distribution Trend No. 2
Niche Marketing:
Affiliate &
Recommendation
Marketing
Niche Marketing PART 1
 Affiliate Marketing – what are we talking bout

Affiliate marketing is a marketing practice in which a business rewards one or
more affiliates for each visitor or customer brought about by the affiliate's own
marketing efforts. Affiliate marketing—using one website to drive traffic to
another—is a form of online marketing, which is frequently overlooked by
advertisers.[1] While search engines, e-mail, and website syndication capture
much of the attention of online retailers, affiliate marketing carries a much lower
profile. Still, affiliates continue to play a significant role in e-retailers' marketing
strategies
 In concrete terms:
 We produce advertising material (e.g. banner)
 A partner manages the distribution on adequate
partner sites
 A commission is paid whenever a client visits and
books via the affiliate site
Examples of Affiliate Marketing
• Traditional ( banner ) ads
• No costs for advertising place
• Performance related payments
Niche Marketing PART 2: Recommendation
Marketing
Best Western clients act as our ambassadors
More intense and focused than Affiliate
Marketing
„I already bought the product“ is THE
recommendation seal of approval
Examples for the integration into a website
Confirmation page once
the client has completed
the booking
Integration into the
hotel‘s home page
3 steps to gain a new ambassador
Example:
Customer touch point: hotel website
1. Teaser
with reward
2. Recommendation
3. Send
A click opens the widget
Online Distribution Trend No. 3
User generated content
in motion
Consolidated semantic search for hotel
reviews
Revenue Management Workshop Central Europe Conference 2011
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Consolidated Hotel Reviews
 Example: TrustYou
 Consolidation of six
portals: HRS, Booking,
hotel.de, Trivago,
HolidayCheck,
Expedia
 No linking to external
sites away from our
own booking functions
User generated content in motion
 Law suit A&O Hostels
Revenue Management Workshop Central Europe Conference 2011
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User generated content in motion
Sponsored mystery checks by amateurs.. Who is the sponsor?
Revenue Management Workshop Central Europe Conference 2011
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Online Distribution Trend No. 4
The end of rate parity?
Rate parity practise under review
The UK’s Office of Fair Trading, a government regulatory body which
examines business practice and its effect on consumers and industry, is
currently investigating complaints triggered in part by hotel booking firm
Skoosh in September 2010 over hotel room pricing on travel websites.
British newspaper The Daily Telegraph named three major hotel groups
last weekend as being involved (though not confirmed) in the OFT’s
investigation – a probe which is looking to establish whether a breach of
both UK and European competition law has taken place when hoteliers
have asked hotel distributors to charge the same price across websites.
“Rate parity” is frowned upon by many as it restricts the ability to
differentiate a product based on price. Others simply call it “price fixing”.
Rate parity law suit UK
Online Distribution Trend No. 5
Tour Operator Business
goes online
Rate parity – increasingly hard to maintain
.. and here is the reason why maintaining
rate parity is an issue
www.expedia.co.uk
www.thomascook.nl
www.thomascook.fr
www.tui.com/de
www.przeloty.pl
www.opodo.at
TT Showroom
Thomas Cook IBE

Rate & product comparison of various tour
operators

Hotel details with photos and descriptions

Hotel reviews of guests who stayed at the hotel
Why do tour operator products appear on
rate comparison site like Trivago?
Why do tour operator products appear on
rate comparison site like Trivago?
Frontend
Reisebüros
Internet
TOMA
*
Reiseangebote
Lastminute/Pauschal
IBE Kernel
Reiseangebote
dynamisch
paketiert
Lastminute
Pauschal
Hoteldaten und
Berechnungsregeln
Hoteldaten und
Berechnungsregeln
Flugdaten
Hotel
Ferienwohnung
Charterflug
VeranstalterSysteme Hotel
VeranstalterSysteme Flug
Statische Reiseangebote
* TT-DataMix – Dynamic Packaging-Modul für Reiseveranstalter, online und offline Vertrieb
Kernel
Schnittstelle
TOMA
How can you avoid rate parity issues with
wholesaler products
Frontend
Travel agencies
Internet
TOMA
Travel offers
IBE Kernel
Lastminute
Package
Hotel
Holiday apartment
Charter flight
Static travel offers
Situation today:
TO send contracted hotel products to TT.
These hotel products will be displayed in
B2C and B2B distribution channels.
Challenge:
In some cases the rate given to a
wholesaler are better than the rates shown
on the hotel’s own website or other portals.
Option:
TO can mark the hotel offers that should
only display on B2B channels when the
send the contracted hotel products. This
requires additional programming on both
side but the feature is implemented and
available.
… or alternatively:
§
No more static
„Rooms only“ rates
for online distribution!
§
BW Germany: as of 2012: central negotiations of
the basic contract conditions as a frame for the
individual hotel negotiations
+
New products of online distribution
What are our options?
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Pro‘s & Con‘s of various distribution
channels
Self Distribution
Limited reach/ contatcs
A reasonable marketing budget is a must
We alone decides on products & distribution
No competitive environment
Online-Travel Agencies/Portals
Distribution costs hard to control
Few portals for leisure products
Excellent reach
Excellent presence in search engines
Traditional Tour Operators
Relatively high margin / Only limited number
of hotels, limited product flexibility
Very high leisure travel competence
Still No. 1 booking option for leisure travellers
Direct Marketers
Extremely low profit margin
Distribution partner selects hotels
Very high leisure travel competence
Can generate demand in need periods
GDSs
No leisure bookings
Not very user friendly handling & content
Clear distribution structure, 10% Commission
Easy to maintain.
What leisure products are best sold in which
distribution channel?
Self Distribution
• Basically whatever we are able to display and sell on our own site
• Focus on marketing of exclusive products (Rate but no product parity!)
Online-Travel Agencies/Portales
•Straight, simple products, clear rate structure
• Long booking periods, no seasonal products, Maintain rate parity
Traditional TOs
• Leisure products , with multiple components, fixed rates, allotments, etc.
• No room only rates
Direct Marketers
• Products with low profit margin but high volume. No risk of segment mix.
• Contracts may contain exclusivity clause. No self distribution of product possible.
GDS
• All standard rates (RATES not products), self explanatory, commissionable
• No high revenue expectation
One product for all distribution channels?
TOs
Self Distribution
Online-Travel
Agency/Portale
Direct Marketer
GDS/Travel
Agency
One product for all distribution channels?
TOs
Self Distribution
Online-Travel
Agency/Portale
Direct Marketer
GDS/Travel
Agency
We are in the process of creating
new products
Exclusively for online-,
Rewards- and Partner
Marketing activities
Minimum 5% under
„Regular Rate“
Regular Rate = BAR, Weekend,
Early Web, etc.
NOT commissionable
NOT available in external
distribution channels
5% Discount + x bestwestern.de
= 2-15 percent plus in profit
Exclusively for Rewardsund Partner Marketing
activities
Instead of a price deal, min
double points, miles, etc.
Bonus points will be posted
centrally
Hotel pays a „Mini Commission“
to re-finance the bonus points
Max. 5% Mini Commission + x%
bestwestern.de = 2-15 percent
additional in profit!
Best Western Conference Central Europe
Rate Management as
the key component of
Revenue Management
What factors influence our pricing?
 The ingredients of pricing
 The price differentiation
 The market segmentation
 The distribution channels
 Revenue - Costs = Profit
The ingredients of pricing
The tpe of hotel
The location
The competition
The market place
The demand
The costs
The break-even point
Price differentiation
The day of week (mid-week/ weekend)
The season
The booking pattern (short term vs. long term)
The potential of a segment (volume discount)
The length of stay
The size of the business (individual or group)
The main purpose of the stay (Golf, Wellness, etc.)
The basis of Revenue Management: Rate
Integrity
Price segments
 non confidential rates:
 BAR, SR, Early Web Special
 confidential rates:
 Opaque, Tour Operator, Wholesaler
 contracted rates:
 BBS, BBSL, LCR, Consortia, MICE,
 conditioned rates:
 Packages, Promotions, Gov/Military
Price conditions
Cor
Cons
LCR
Tour
Wholesale
confidential
x
x
x
x
x
contracted
x
x
x
x
x
x
x
Online
Parity!
Online Parity!
non confidential
BAR
SR
EB
x
x
x
conditioned
x
x
yieldable
x
x
x
commissionable
x
x
x
x
some
x
some
mark-up
all room
categories
x
x
all distribution
channels
x
x
Straigth line
availability
Rate
condition
other
Selected
channels
Straigth line
availability
= BAR
Check
channel
Tour Operator Rates
 Calculation:
Net rate + Margin = Rate to consumer
Gross rate - Commission = Net Rate
 Margin approx. 25% off BAR
 Bookable via catalogue and various electronic
distribution channels
 Relevant for electronic distribution:
 Online catalogue rates can cause parity
issues with retail & merchant channels
Wholesale Rates
 Calculation:
Net Rate + Margin + Margin = Rate to Consumer
 Margin min. 30 %, due to higher costs for e.g.
the production of B2B confidential catalogues,
payment processes with the intermediaries/resellers, production of travel documents, etc.
 Bookable via catalogue and various electronic
distribution channels , e.g. Octopus Travel
 Relevant for the electronic distribution channels
of the wholesaler’s B2C portals: rate parity
Wholesaler
 Careful evaluation of the cooperation with wholesalers
like Gulliver‘s, hotelbeds.com, transhotel etc.
 Protect rates by conditioning the publication on
electronic consumer portals, e.g. by adding a minimummark-up in the contract
Today‘s Online Distribution Landscape
TO Portals
Merchant Portals
Self
Distribution
Retail Portals
GDSs
Four elements on your way to a strategic
rate and distribution strategy
Four elements on your way to a strategic
rate and distribution strategy
First the
Analysis:
Then the
structure:
Then the
strategy:
Then the
monitoring:
• The market and the developments in the market
• The price products
• The price conditions and fences
• The distribution channels
• The allotment per price product
• The price level of each product on demand basis
•
•
•
•
The revenue control
The evaluation of the volume and volume variations
The cost control
The price condition control
Four elements on your way to a strategic
rate and distribution strategy
First the
Analysis:
Then the
structure:
Then the
strategy:
Then the
monitoring:
• The market and the developments in the market
• The price products
• The price conditions and fences
• The distribution channels
• The allotment per price product
• The price level of each product on demand basis
•
•
•
•
The revenue control
The evaluation of the volume and volume variations
The cost control
The price condition control
Knowledge is the key
Best Western Central Europe Conference 2011
The
“Costs of
Doing Business”
Exercise
The costs of doing business
How to re-gain price control
• Establish and
improve price
knowledge
• Establish,
communicate
& train price
strategy
• Respect
framework
contract
conditions
• Enforce rate
conditions on
all distribution
channels
• Regularly
evaluate
distribution
channels
• Thoroughly
examine
partner
contracts
• Where ever
possible:
strengthen self
distribution
Best Western Conference Central Europe
Revenue Management
KPIs
Revenue Management KPIs
The Forecast
Calculation
Case Study Forecasting
Best Western Tool for Forecasting
Revenue Management KPIs
The Group
Displacement
Calculation
Case Study: The Group Displacement Analysis
 Definition: transient business is being rejected
because group business has been accepted
 Necessary KPIs:
 Length of Stay
 Room Revenue
 Meeting Rooms
 Availability/Occupancy/Estimated pick-up
 F&B revenue
Case Study The Group Displacement Analysis
Best Western Tool for Group Displacement Analysis
Best Western Central Europe Conference 2011
Revenue Management
Workshop:
THE END
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