|Travel websites cracking down on bogus customer reviews|
Categories: Breaking News, Travel Agent News, Hotel News, Tour Operator News, Travel Technology News
Managed Biz Shifting To Dynamic Pricing
2/14/2007 2:11:39 PM
By Glenn Haussman For many in the hospitality business, effectively managing group business is a linchpin strategy. And companies looking to give their employees a fairly priced room on the road, structure deals with hotel companies for a single discounted rate applicable in all markets (with few exceptions) in return for a guaranteed number of nights. This system worked great for years. But then technology and internet came along and upended the entire process. Now, the hospitality industry (both hotels and airlines) is changing the way rates are negotiated. It’s not yet known if margins will be positively affected in the long term, but it’s irrelevant anyway since this change is inexorable.The change is a shift from static to dynamic pricing. Where static pricing generally sets a single rate across all markets, dynamic pricing is a more flexible model where pricing fluctuates based on individual market demand at a particular time as well as each market’s typical rates.
According to Dorothy Dowling, SVP Marketing with Best Western, group business –while not as large as its leisure business – is a large revenue stream for the company’s member properties. Last year alone, Best Western saw 30 percent growth for managed corporate growth.
Dowling said her company has been benefiting as corporations continue to reign in expenses and shift room nights from upper tiers to the mid market.
“Corporate business is a very important segment for us on Monday through Thursday nights, accounting for 40 percent of system revenue stream,” said Dowling. She added that these agreements also help boost leisure business as guests coming through this portal will use corporate rate for vacation stays as well.
Bill Connors, Executive Director and COO, National Business Travel Association – an organization that promotes the value of business travel management – said business travel represents the second or third most controllable expense in a corporation. And now that business has soared to pre 9/11 levels, Connors said, companies are planning to spend more on business travel. He said 68 percent of his organizations members, which includes 65 percent of Fortune 500 companies, expect to take more business trips in 2007 and spend more on hotels, flights and car rentals.
Because the lodging industry is currently experiencing strong demand, Connors said corporations are looking to minimize what they spend per day on business travel.
“Companies are increasing online bookings so travelers can see corporate rates right on their desktops. They are also reducing the number of preferred suppliers to leverage volume for better rates,” he said.
The shift to a dynamic pricing model is gaining popularity because the Internet has made pricing largely transparent. An employee can surf the web to see if their corporate rate is higher or lower than the best available rate, or BAR. Dynamic pricing allows a company to then negotiate a discount off BAR rather than pay a set dollar amount for each room.
“Certain parties maybe felt they weren’t getting BAR, so there is more rate integrity. There is nothing worse from a partner perspective than if their end user arrives at a better price then what they contacted for,” said Dowling. She believes that within the next 12 to 24 month this will be model of choice when negotiating managed business.
As technology enables Best Western to more effectively track the company’s managed business, Dowling said they are now trying to target small companies that purchase just 10 to 12 nights a year. She believes this is a relatively untapped and significantly deep market.
Though it does not offer discounts for volume business, low-fare air carrier Southwest Airlines has hit on a business model the company feels gives it an advantage over the legacy airlines.
Dubbed SWABIZ, the program serves as an in-house travel agency for corporations to assist their travel managers with a one stop shop to manage air travel. The program allows financial tracking, transferring of funds between customers from the same company, change and cancel flights at no additional fee as well as other features. Reports can also be printed from the interface too.
“This is a wonderful program because it was created by the business traveler,” said Loretta Hohmann, Marketing Manager with Southwest Airlines. She noted the program has seen a 44 percent increase in enrollment since 2005
Trustworthy sources of information are sometimes difficult to find on the Internet, and user reviews have become a way for many sites to offer apparently unbiased opinions – at a low cost to the Web companies. But the authenticity of the opinions has not always been reliable.
Travel Web sites, such as Priceline.com Inc. and Expedia Inc., are clamping down on fake online consumer reviews of hotels, which could undermine a growth area.
Trustworthy sources of information are sometimes difficult to find on the Internet, and user reviews have become a way for many sites to offer apparently unbiased opinions – at a low cost to the Web companies.
But the authenticity of the opinions has not always been reliable.
“We have certainly seen instances with other properties where insiders have put reviews up for a particular hotel or a particular thing and it’s not a legitimate review,” said Jeff Boyd, Priceline.com’s Chief Executive.
“It’s somebody who’s in effect been paid to make the property look good.” Boyd said, speaking at the Reuters
By MICHELLE HIGGINS Published: February 18, 2007 WITH more hotels guaranteeing equal or better prices to travelers who book with them directly, online travel agency Web sites like Expedia, Orbitz and Travelocity aren’t always the bargain bins they once were for hotel rates. In response, the agency sites are forced to concentrate on other ways to keep and attract customers. Skip to next paragraph Readers’ Opinions What has been your most successful strategy for getting the best deal on a hotel room? Leave a Comment | Read Comments “It used to be that you would book through an online agency because of the savings,” which for one night “could have been upward of $30,” said Lorraine Sileo, an analyst at PhoCusWright, an online travel consulting and research company. The cheaper rates often came with stricter cancellation policies and requirements for full payment when booking. Travelers accepted those conditions because the savings were significant. “That was yesteryear,” Ms. Sileo said. During the travel slump after the Sept. 11 attacks, hotels were eager to work with discount and travel agency sites to fill rooms. But now that the economy is stronger, the hotel companies have been working to cut out the middleman. If a customer who reserves with Hilton finds a lower rate for the same stay at another Web site in the next 24 hours, for example, Hilton will match the rate and throw in either a $50 American Express gift check or a $50 discount. Marriott and Starwood Hotels also offer rate guarantees. As another incentive for direct booking, major hotel chains have largely stopped offering loyalty program rewards to guests who reserve rooms at negotiated discounts from the online travel agencies. The efforts have been working. In 2004, half the $14.5 billion in online hotel bookings with hotel companies based in the United States were made through online travel agencies, and half were made directly with hotel sites, according to PhoCusWright. Last year, 55 percent of the estimated $23.5 billion in online hotel bookings were made directly, with hotels cutting the online agencies’ share to 45 percent. “Many people are searching online travel agency sites,” Ms. Sileo said, and then moving on to the hotel sites to make their reservations “because they are either getting the same rate or a more flexible cancellation or change policy.” Rick Leonard, a fund-raising executive from Los Angeles, is one of many travelers who book directly with hotels. But to make sure he’s getting the best price, he still searches online travel sites before contacting a hotel. This way, if he is quoted a higher rate, he can say he saw a lower one on the Web. He calls this “keeping them honest.” He favors dealing with the hotels directly, he said, because requests for particular types of rooms are more likely to be honored and, if there is a problem of any kind, being in direct communication with the hotel “just makes the chain of responsibility that much clearer.” Online travel agencies are finding various ways to fight back. Travelocity introduced its own price guarantee last year. A customer who finds a lower rate on an identical reservation within 24 hours of booking can get a refund of the difference and $50 off a future travel purchase. The company also started a loyalty program in October that lets customers with five or more bookings in a 12-month period redeem points for discounts. Expedia offers a similar price guarantee and loyalty program. The online travel agencies have also begun to focus on discount packages combining flights, hotels and rental cars in various ways. And they are trying to set themselves apart with new customer services. Orbitz, for example, introduced a hotel notification service in December for travelers who book flight and hotel packages through its Web site. If flights are delayed, Orbitz will call customers and, with their permission, alert their hotels that they will be arriving late. If a flight is canceled, Orbitz will also rebook customers at new hotels. So what’s the best place for a traveler to book online? It depends on what matters to you most. If you want points or preferential treatment, book directly with the hotel. Most major chains deny loyalty rewards to guests who book negotiated rates from online travel agency or discount sites. And even if your hotel doesn’t have a points program, it’s best to book directly if you want to establish yourself as a repeat customer, worthy of favors and extra perks. “We always recognize customers that are coming back with a small amenity in the room — maybe a bottle of wine or bottle of Champagne — or sometimes an upgrade,” said Jyrki Auvinen, front office manager at the Hotel of South Beach in Miami, which keeps detailed records of guests’ preferences. But because “the information transmitted from a third-party vendor is less than we received from a guest,” he said, customers who book through Web sites other than the hotel’s are typically viewed as first-time guests. Marriott, which keeps files on requests that guests have made for everything from extra towels to foam pillows, said those preferences might not be automatically honored if a traveler booked through a site other than its own. “When they book on another site,” John Wolf, a Marriott spokesman, said in an e-mail message, “only the details absolutely necessary to facilitate the transaction” are shared. If price is your main concern, it pays to shop around. Travel agency sites offer quick comparisons across hotel chains. And they tend to offer good bargains on independent hotels, which may not have the resources to offer real-time online booking themselves, said Henry H. Harteveldt, a travel analyst at Forrester Research. If your trip requires more than just a hotel stay, travel agency Web sites can often offer savings through packages that include flights or car rentals. But the online agencies are not ideal for customers who are tied to particular hotel brands. “If you’ll only stay at St. Regis hotels, for instance,” said Michelle Peluso, chief executive of Travelocity, “you’re probably better off going to their site.” She said people go to Travelocity because of its breadth of offerings like package deals, a variety of hotels and customer reviews of hotels. But you can still use a travel agency site to get a better rate from the hotel directly. If a call comes in from a guest who found a better rate on another site, said Mr. Auvinen of the Hotel of South Beach, any hotel is likely to match it. “It’s just common sense,” he said. “I have yet to meet a hotel general manager that would say, ‘Don’t match the rate.’ ”
MyTravel and Thomas Cook have agreed a merger in a move which will put intense pressure on Thomson and First Choice and spark further European tour operator consolidation.
The parent company of the planned enlarged group will be named Thomas Cook Group, headquartered in the UK and listed in London.
The merged company would combine Thomas Cook AG’s 33 tour operating brands, 2,400 travel agencies, 66 aircraft and almost 20,000 staff with MyTravel’s 17 brands, 31 aircraft and 13,000 staff worldwide.
MyTravel handled 5.5 million holidaymakers in 2005-06 and made a pre-tax profit of £44 million, while Thomas Cook AG is the second largest European travel group after TUI. Thomas Cook UK & Ireland made a profit of more than £87 million in the last financial year.
MyTravel and Thomas Cook believe that the annualised pre-tax cost benefits arising from a combination of the businesses will be at least £75 million a year once the full benefits of the merger are realised.
The deal is subject to clearance by relevant competition authorities and is conditional on the sale of Lufthansa’s 50% holding in Thomas Cook to German department store group KarstadtQuelle. The board of MyTravel is to unanimously recommend the merger
The delicate balance between direct and indirect – The cost of distribution through intermediaries, unworkable commission structures and improved technology have led to a continuous rise in direct-to-consumer sales by travel suppliers. Is this trend likely to continue in the future, further dis-intermediating the market? And as the market matures and growth slows down, how can you make sure your distribution and marketing efforts stand out from the crowd and successfully retain the consumer?
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initiatives that provide unique value to the customer.
A robust de-commoditization strategy involves the following:
- Focus on the value side of the Price vs. Value Equation
- Differentiation of the hotel product offering from offerings by the comp set
- Differentiation of the hotel offering from the indirect channels (i.e. third-party online intermediaries)
- Differentiated approach to the hotel’s different key customer segments (i.e. family travel, business travel, meeting planers, wedding planners, etc.)
Travel consumers look for product uniqueness, special opportunities and value. Working hard against further commoditization of the hotel product and services should become an important objective in 2007.
Hoteliers have to identify unique aspects of the hotel product and destination and develop a unique value proposition to the hotel customer, utilizing a differentiated approach to key customer segments. A good start is creating unique specials and packages, event-related getaways, seasonal promotions and other marketing initiatives that provide unique value to the customer.
|Thomas Cook y MyTravel anuncian una fusión que podría recortar vuelos a la isla|
|Según datos de las propias compañías éstas sumarían más de 1,6 millones de viajeros anuales a Balears|
|AGENCIAS/ REDACCIÓN. PALMA.|
La fusión anunciada ayer de los operadores turísticos MyTravel y Thomas Cook aumentará la presión sobre el sector hotelero español y balear al colocarlo ante una situación de casi monopolio y podría suponer una reducción de los vuelos a Mallorca. Así lo afirmó Ignacio Vasallo, director de la Oficina Española de Turismo en Londres, quien añadió que los hoteleros tendrán que buscar alternativas, como la mejora de las ventas a través de internet.
El grupo británico de viajes organizados MyTravel anunció ayer su fusión con su competidor Thomas Cook, filial del distribuidor alemán KarstadtQuelle. Thomas Cook controlará la nueva compañía con una participación del 52%, mientras que MyTravel se quedará con el restante 48%. Las sinergias de este proyecto de fusión les permitirá ahorrar al año 112 millones de euros y alcanzar una facturación, según sus previsiones, de 12.000 millones de euros. La nueva compañía se llamará Thomas Cook Group y cotizará en la bolsa de Londres, aunque la fusión está pendiente de aprobación por las autoridades de Competencia.
Ante este hecho, Vasallo manifestó que existe la posibilidad que se registre una reducción de los vuelos a destinos como Mallorca, pero añadió que, si ocurriese, los ´slots´ libres serían rápidamente acaparados por otras compañías, puesto que Son Sant Joan es un aeropuerto con gran demanda. Entre las candidatas a ocupar esos puestos se hallan las aerolíneas de bajo coste. No disminuirá el número de viajes, pero habrá más turistas individuales, remarcó Vasallo.
El experto señaló que la fusión entre dos gigantes del sector era un “evento esperado”. “Sabíamos que algo iba a pasar dada la rapidísima transformación del turismo como consecuencia de las nuevas tecnologías de la información como internet y la banda ancha para efectuar reservas”, agregó. Si hace seis o siete años, explicó Vasallo, el turismo británico hacia España era canalizado en un 67% por operadores turísticos, el año pasado ese porcentaje había bajado a un 36%, siendo el 64% restante turismo individual.
Fuentes de Thomas Cook señalaron que este grupo trae alrededor de un millón de viajeros al año sólo a Mallorca, mientras que responsables de MyTravel remarcaron que esta compañía trae unos 600.000 viajeros a las islas, 350.000 de los cuales recalan en Mallorca. En total podrían sumar más de 1,6 millones de turistas hacia Balears.
El alemán TUI, por su parte, trae alrededor de tres millones.