IN-DEPTH: Even as some of the new players stress upon transparency in the room selection process, a section of the industry believes the more specific the requirements are, the more difficult it will be for suppliers to guarantee availability

Published: 28 Mar 2011

IN-DEPTH: Even as some of the new players stress upon transparency in the room selection process, a section of the industry believes the more specific the requirements are, the more difficult it will be for suppliers to guarantee availability

By Ritesh Gupta

“The uncertainty of a hotel room is one of the biggest imbalances in travel today, and we aim to change that by giving people the information they need to be able to request the room that is best for them.”

This statement came from a new online travel venture, Room 77, which is being described as the world’s first hotel room database and search engine. The company, in an interview with EyeforTravel last week, pointed out that travellers are in control of almost every element of their travel planning, from where they go down to their airline seat assignment, but they are at the mercy of the front desk when it comes to the room they stay in at the hotel. Travellers have many different needs when it comes to a room, and the company has created its latest offering to give travellers an insight into the best room at any hotel for them.

Room77 says it matches room within a given hotel based on traveller’s preferences for view, floor, distance from elevator and connecting rooms. So how do hotels assess the significance of transparency in booking at this stage? How do hotels think the industry is focusing on getting consumers closest to knowing what they are booking before they actually complete the transaction?

From a hotel’s perspective, Kuala Lumpur, Malaysia-based Ricky Ang, VP Sales & Marketing, Hotel Equatorial Group, says the biggest challenge that suppliers face from a perspective of having such booking features is the inability to fulfill all the specified requirements of every consumer due to inherent product limitations.

“The more specific the requirements are, the more difficult it will be for suppliers to guarantee availability,” Ang told EyeforTravel’s Ritesh Gupta in an interview. “For example, in the past it may simply have been a bedding and smoking preference. Sophisticated preference models could encompass a mix of bedding, smoking preference, floor levels, views etc. which a supplier may not typically want to guarantee in the past due to inherent limitations of inventory availability for such rooms.”

Ang added, “My opinion is that it is a double-edged sword at best. Hotels need to seriously access the merits of this before embracing it.”

Significance

In addition to Room 77, which is not a booking engine, the industry has also seen the emergence of new travel intermediaries in the form of last-minute booking sites, exclusive members-only travel club, or existing players like Kayak adding direct booking options.

“I think there will be various new online business models introduced over the course of time - some of which will achieve longevity and many will not - similar to offline business models,” said Ang. “Suppliers should adopt a philosophy of working with as many as practically possible as opposed to being too selective and inadvertently limiting themselves from being part of a successful model.”

For their part, new intermediaries believe there is still a huge gap in the marketplace.

“Many travellers today are overwhelmed by the research and decision process. At the same time, with so many choices for purchase and research channels, today’s customer has high expectations for quality, value and other factors. Meanwhile, suppliers want to get their brand in front of the right customer and have them buy a great experience that could be repeatable and referable. SniqueAway aims to address these opportunities by offering its members 4 & 5 star hotels in top destinations at great discounts,” said David Krauter, general manager, SniqueAway, in an interview with EyeforTravel last week.

In case of hotels, customers are purchasing more than just a convenience. Customer decision making is influenced by a mix of tangible and intangible benefits represented by the brand or the physical asset. For their part, OTAs say that they offer tools that help consumers discover value as a function of the benefit that matters to them.

On OTAs’ role in today’s environment, Ang said, “I think OTAs claims that they offer tools to help consumers match consumer's requirement is limited at best. Let's face it, from practical experience, we all know that OTAs don't necessarily provide the most accurate description of a hotel's strength (or weakness).”

Ang added, “In many cases, OTAs tend to want to limit their liability by pretty much sitting on the fence about how good/bad a hotel is. This is something very different from the traditional brick and mortar travel companies. For example, a brick and mortar travel company will never allow hotels to have a “self-rated” star system in their catalogue.”

Overall hotels acknowledge the significance of online travel agencies.

Online travel agencies create trial for hotel brands by reaching brand agnostic consumers who are shopping for a vacation and may not be familiar with a chain or a property. They accomplish this in any environment. For instance, during the downturn, top chains like Starwood acknowledged that in such economic climate it is critical to be represented on these channels because consumers are shopping more sites before making purchasing decisions and the group intended to reach the largest travel shopping audience possible.

OTAs do a great job of packaging travel components and giving the customer the benefit of one-stop shopping on their sites. They are adept at selling the entire experience including airline tickets, destination services and hotel rooms which is a great value to the consumer. Competent hotels do work very closely with online travel agencies at all levels to ensure they understand their distribution objectives and therefore help to contribute positively to their overall distribution strategy.

The nature of the lodging business is that there are always peaks and troughs of demand related to the supply available in any given market. This can be seasonal, development-related, or economic.

“I think the role of OTAs or rather, the OTAs’ business model occupy a niche that by majority (with some possible exceptions) transcends demand patterns of the lodging business,” Ang said. “OTAs provide a channel whereby consumers can easily and readily select an option that transcends the brand of a singular lodging business entity. No hotel chain can conceivably do that.”

This alone ensures the longevity of the OTA business model, Ang concluded.