Giving the customer more choice when it comes to booking seems hardly a revolutionary move, but Expedia believes its recent move to give travellers more choice at the booking stage is going to shake up the industry. Pamela Whitby reports
What with Priceline acquiring Kayak and new entrants offering affordable services constantly entering the fray, Expedia decided it was time to get back to basics – and give the customer more choice of how to pay in the booking stages. Of course this isn’t new. Australia’s national carrier Qantas allows you to book now and pay later for a holding fee of £15 per passenger. American Airlines has its Fly Now Payment Plan. Many hotels do it in some form or other and there are those who would argue that some OTAs can achieve it with generous cancellation and refund policies.
But Expedia’s Seamus MacCormaic, Senior Director Market Management at Expedia LPS, says nobody is doing it with the same breadth or scale as them. “What others are doing is not as dynamic as Expedia’s ‘Expedia Traveller Programme (ETP) because in the back end of our systems we are replicating every rate plan so that it can is pay now or pay later. Everything is being matched to the criteria so it is not as if some will and some won’t be.”
MacCormaic says the move is significant for both Expedia and the industry. “We’re really excited because it puts us back to a position we may have been in up to 10 years ago in terms of innovating in the market place for travellers,” he says. With Priceline’s recent acquisition of Kayak, Expedia certainly needs something to be excited by and MacCormaic is confident that with all the changes going on within the company and more broadly, these is still plenty to play for. Expedia, for one, has consolidated its sites globally which “has freed up development time and resource”. The result is that innovations like ETP and others like its ‘Welcome Reward’ in Hotels.com, which allows you to buy ten hotel rooms and get one free, “are re-invigorating Expedia and its external companies”.
A commercial decision
So what exactly does the ETP offer the traveller? In essence it give the customer a simple choice: buy and pay now, or buy and pay later. Easy to see the benefit of that, but while serving the customer in this is industry is a must Expedia is also doing it for commercial reasons.
According to MacCormaic, the company is seeing an uptick in conversions – so more commission - from those hotel sites that are piloting the programme. “We are seeing movement at both the point of origination and at the point of sale,” he says.
It seems people are drawn to flexibility and by being given these options to pay, are more likely to convert. “The way our algorithm works is that if a hotels sells well then generally its sells more because it impacts your positioning within the sort order ranking,” says MacCormaic. A whole range of factors are included in this including price point relative to a geographical point and who the competitive set is, but it is also about how well a hotel converts. By getting more people coming to the site, and purchasing, ensures that you maintain or even increase sort order ranking.
Hotels opt in to the programme and so far it has been offered to Expedia’s priority partners, but the aim is to roll out it out to everybody. Well to everybody who wants it. Not everybody has agreed to trial it and given the multiple – and some complex arrangements - of hotel stakeholders it can take three months to get hotels onboard. Even so MacCormaic believes Expedia can add value and when others see what the programme is achieving for competitors they will reconsider. This brings us to what Expedia offers as part of the programme.
While Expedia is predominantly viewed as a transaction site (hotels only pay if they sell a room) it is also marketing platform, says MacCormaic. For small-to-medium sized chains of independent hotels, which don’t have the deep pockets for own their sales or marketing people, this can be an advantage.
Quite often hotels are wrapped up in the day-to-day running of the business so don’t have time to see the bigger picture of what may be possible, he says. This is a gap Expedia, and of course many others too, aims to fill by providing customisable marketing solutions.
Things that hotels should be thinking about:
1. What are your occupancies – if under 90% you should definitely start to think about last-minute offers via mobile.
2.When are your busiest times – are you getting the most from these?
3.Who is the average customer customer generally – corporate, midweek or leisure and can you grow any of those particular segments?
4.What do you want to achieve – for example growing international business?
Among the things Expedia offers is using its global data to help hotels develop appropriate promotions while also providing competitive set analysis – what deals its competitors are running successfully and so on. Although it never reveals proprietary information, with access to this data Expedia can help to decide on relevant promotions in relation to geographic position. So, for example, a small-to-medium hotel in Scotland may want to secure more international business. Expedia may suggest running a promotion for Canada as its data shows that this is currently a popular destination for Canadian travellers. Or if a hotel is struggling to fill rooms at the last-minute, a mobile only deal via Expedia’s opaque last-minute platform, Hotwire, may be relevant.
But it is not just small-to-medium enterprises that Expedia can advise. Very often, says MacCormaic, the big chains are sending a very clear message to the market that they don’t want to dilute their rate at all. So they won’t participate in Expedia’s long booking windows with dynamic packaging for air, for example. At the last-minute, however, if rooms haven’t sold they will discount heavily through Hotwire. Both of these are opaque channels but MacCormaic argues it is not necessarily the best approach. If they got those rooms in earlier it could help them yield on their other rooms better the closer they got to the stay date, he says.
Expedia is certainly not the only one offering such services but MacCormaic is quick to stress it does have a breadth of platforms and tools on offer. Others may not agree. But its true that the likes of Expedia through its various partners can help stimulate demand by, for example, creating competition between likely cities – think Amsterdam, Brussels or Dublin - for a short-haul break. There will always be limitations. After all, there is not a lot you can do if there is no airlift into the Greek Islands in winter.
There are two useful strategies that can boost sales and build the brand namely promotions and specifically targeted sales’ growth. These approaches should be familiar to all self-respecting parts of a hotel business and if successful can become an annual affair in the marketing calendar.
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