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Expedia, Marriott and MICE on the run
As Expedia continues on its mission to automate the so-called hidden segment of ‘meetings, incentives, conferences and events’, Marriott signs a deal with a competitor. Pamela Whitby reports
Think mice, and one may well scream. Think 'meetings, incentives, conferences & events', in the travel trade known as MICE, and scream you may, but perhaps not with same degree of anticipation and excitement as the prospect of leisure travel to a remote desert island.
Still, Felix Undeutsch, Head of MICE & Groups, Expedia, seems genuinely excited. “It’s huge. It’s massive. This is about one third of global travel industry,” says the man who has been tasked with leading Expedia's foray into this multi-billion dollar industry.
Depending on the study, we're talking of an industry that is the stage to around 60-plus million events each year, and worth anything between $200 and $500bn to the global travel industry. Expedia, which has pinned a value of $400bn on the segment, first identified the opportunity back in 2014. At the time, the company had faced the challenge of arranging meeting space and accommodation for a group of internal executives who were flying in from different parts of the world.
Says Undeutsch: “It was a real pain to organise. The process was lengthy, nobody had an instant view of what was available, we had to wait days for a quotation; everything was a manual process. It was totally not what the leisure world, or flights or the car industry looked like.”
So began Expedia’s research to assess if it was actually possible to automate the process of booking MICE inventory. As a first step the team identified exactly what the issues were. There were three:
Inefficient processes. Hotels do a lot of manual work, but only a fraction of their efforts converts to sales.
No dynamic pricing. In the meetings world, RM is ignored. Unlike the leisure travel or flight industry, where prices vary daily depending on adjusted demand, with MICE, hotels tend to offer two to four packages. This is where it begins and ends; they don’t scale up or down based on demand, occupancy or pricing. Pricing remains static.
Missing customer expectations. In an age of on-demand expectations, driven by apps like Uber, Airbnb and HotelTonight, the providers of MICE are just not reflecting customer needs.
So an opportunity with some pressing problems identified! Against this backdrop, the first step was to assess whether, as a tech company that is essentially a provider of hotels, the process could actually be automated, and for large-scale events the answer was a clear no. After all, organisers hosting a thousand attendees, for example, are unlikely to want to block book accommodation online, and will likely need to visit the venue to see what bells and whistles are possible.
Luckily for Expedia, however, 70% of the 1.5million events that take place in the UK, the second market Expedia is entering after its first foray with Best Western in Germany in 2016, are for less than 50 people. “That's astonishing,” says Undeutsch, who explains that for this reason the niche of smaller, “unsexy” business events is what Expedia decided to focus on.
Another factor was that many of these events take place in hotels. Expedia is, after all, basically a hotel company, so if these meetings or business events take place in conference and training centres then the problem probably couldn’t be fixed. Yet studies showed that six out ten take place in hotels, and given the scale of the events, the are instantly bookable! In addition, event organisers with smaller numbers were more likely to look for accommodation deals.
Ramp up for RM
For hotels, the interesting piece is not necessarily the low-margin MICE business, but rather the ability to upsell block booked room nights. And by automating smaller events, hotel staff are also freed staff up to focus on bigger, higher margin conferences, says Undeutsch.
Kerching! With Expedia’s shift to its ‘power technology’ programme in 2016, in the bid to become more of a 'partner' than a distribution platform, the timing seemed right. Indeed, the idea to build an engine that automates a system for pricing, availability, inventory that works for MICE was justified.
The possibilities for RM are ‘amazing’
What is really “amazing”, says Undeutsch, are the possibilities for RM. “Previously hotels were never able to treat the meetings business in the same way as they treat leisure business by, says, week day by occupancy by whatever. This will change job profiles of revenue managers because suddenly they have tools at hand to manage meeting rooms, for example, by square metre, occupancy, season or whatever.”
The making of a market
Expedia’s MICE product was first integrated into the Expedia website in a number of cities, next came the bid to deploy the technology via its affiliate network of third parties, and finally came the development of a white label product for hotels.
In early 2016, as already mentioned, Best Western Germany became the first chain to sign for Expedia’s white white label Meeting Market product. According to Undeutsch, Germany was a logical starting point because at € 30bn Euros, it’s the second biggest meetings' market in the world, geographically every city is within easy reach, and the customer is prone to perfection. Germany was a good place to get the product in the best shape, event to point of being considered "overengineered" by some in the UK! Spain’s NH Hotels was the next major chain, and the first rolloouts of the produce in UK, are expected in Q3.
As a tech player with a big budget ($1.2bn invested in technology for the 12 months to Q1 of 2017), Undeutsch believes that Expedia has the edge specifically because of its ability to integrate into the property management system (PMS), which is seen as a major challenge. This ability to integrate into hotel systems is important because running multiple customer and inventory databases risks double bookings.
But as with all travel markets, competition for a share in MICE will be fierce, and new solutions are popping up all the time. Only this week software-as-a-service provider BookingTek, which worked with Oracle Hospitality, announced the launch of ‘Meetings Maker’. This, the press release continues, “is the first real-time meeting booking and payment solution to integrate with Oracle MICROS Opera, a well-known hotel PMS.
Could the Marriott-BookingTek partnership be a blow for Expedia?
In what might be viewed as a blow for Expedia, which already has a white-label partnership to promote Marriott's 'vacation packages', the US chain instead chose BookingTek’s Meetings Maker as the back-end for its MICE business.
Meetings Maker recently rolled out to 50 Marriott International hotels and more are expected to follow. According to BookingTek, the technology also integrates with a hotel's existing PMS, and enables hotels to take PCI-compliant credit and debit card customer payments for meetings online. Bookers can search, view, book, and pay for meetings in an average of three and a half minutes.
Going forward, it seems likely that early adopters will be hotels in markets which have already adopted digitalisation. Arguably, Expedia with its billion-dollar budget for technology, 300,000-plus accommodation properties, as well as wholesale links through the affiliate network has the edge. But with Marriott choosing another partner it’s going to be a tough race. MICE is out of hiding, it's a segment on the run!
EyeforTravel events, pictured in the image, certainly play host to more than 50 executives. Why not join us to hear more about how the travel industry is making the most of MICE