Interview: Giving your customers the right room at the right price and time while managing multiple distribution channels, among other things, is a time-consuming job.

Among the many requirements for the job are attending strategy meetings, performing data and competitive analysis and manually updating prices in real-time across all online travel agents (OTAs) while also incentivising guests to book direct.

It can come as little surprise then that most revenue managers cannot effectively manage more than four to six channels. That is the view of says Jean Francois Mourier, chief executive of specialist firm RevPar Guru, who shares his views with EyeforTravel’s Ritesh Gupta about …

EFT: Hoteliers claim many OTAs include ‘extras’ which create a difference in value even though the rate may be the same across all channels. How does this affect direct supplier channel?

JFM: There is very tough competition in the hotel industry. OTAs fight for their share of consumer bookings and hotels fight to capture as many bookings as they can. I believe the playing field will become even more competitive.

Just as OTAs are creating incentives for consumers to book with, hotels must make sure that their website is more compelling than any other to capture all visitors. There are creative ways to incentivise guests to book direct while keeping parity. Hotels just need to find and implement them.

EFT: Given the competition in the marketplace today, what is meant by ‘value’ for a hotel’s offering?

JFM: Travellers are looking for the highest perceived value for the price they are willing to pay for a hotel room. When a customer shops online, he or she can filter by price and star rating to find the properties that will best suit his needs and budget, and will choose the hotel with the highest perceived value. Online the perceived value is more important than the real value since most of the clients are not familiar with the hotel or the destination yet. 

From our perspective, value does not mean the lowest price; instead value is the perfect rate or a competitive price for that very moment - high enough to increase revenues and low enough to increase bookings. We analyse the market (price, star rating, history, competitor rates and so on) to find the rate with the best value - both for the traveller and for the hotel revenue manager - and then applies it across all online channels 24/7.

EFT: When it comes to discounting what are your recommendations for RM executives?

JFM: The best way to offer discounts is through the many opaque OTA channels; however, with the right yield management strategy in place, discounting may not be necessary. It is much more effective to get an adaptive revenue management system that reacts to all market conditions and consumer behaviour – essentially, a progressive system designed to increase RevPAR.

EFT: What do you make of new sites where hoteliers can segment customers and devise bidding strategies that offer value, rather than simply discounting?

JFM: I think these sites have come up with a great concept but they are still complicated to use so hotels may find that they aren’t able to drastically increase their bookings using these channels. That said, my opinion is that it is very important to be present on as many OTAs as possible to increase visibility and online sales. So it doesn’t hurt to try, as they can drive bookings during low occupancy periods.

EFT: What do you make of the utility of value-added packages from RM’s perspective?

JFM: A run-of-house strategy can help you steal market share from other hotels by using your base rooms as a ‘hook’ to capture the business of the consumer and later up-sell them on other sources of revenue. 

Bear in mind that while potential guests are shopping for their hotel room they have hundreds of other properties to choose from and price or location are most often the factors that will convert a looker into a booker. Offering a lower room rate initially helps you win the business. Once you have captured the booking, it becomes much easier for you to get additional incremental revenue from their booking. A good example - offer them the chance to upgrade to a better room category for a small surcharge at check-in. Many times, the guests will prepay for their accommodation when booking and by the time they arrive at the hotel, paying a little extra for an upgrade is not as steep (as paying for everything together upon check-in). Also, remember that revenue generated from up-sells (after booking) is net so you don’t have to pay high OTA commissions on the revenues.

EFT: As you know today travellers can check whether a hotel is priced below what it should be charging as pricing analytics ranks hotel offers by value rather than price alone. How is this going to impact RM?

JFM: It is an interesting tool because it will enable customers to be better informed. For hotels, this service requires that each property’s pricing strategy must be in line with the market at all times. Increasingly this makes keeping up with technology a business imperative.

This is only the beginning of this type of innovation in the hotel industry; we went from having no data ten years ago, to being able to see all rates of all hotels in real-time, giving consumers the ability to control the hotel booking transaction.

Every day I am surprised to see hotels that do not use revenue management systems to manage their rates and inventory automatically. As hotel pricing continues to become more and more transparent, the use of software algorithms in revenue management will become a necessity.