IN-DEPTH: Travel companies can be proactive by having systems in place to consistently watch out for competitiveness and make use of advanced business intelligence tools that are capable of feeding rates into RMS or provide the ability to fire reports on demand, says Vishal Jain, Head, Product Management, RateGain.

Published: 31 Aug 2011

IN-DEPTH: Travel companies can be proactive by having systems in place to consistently watch out for competitiveness and make use of advanced business intelligence tools that are capable of feeding rates into RMS or provide the ability to fire reports on demand, says Vishal Jain, Head, Product Management, RateGain.

By Ritesh Gupta

Retail travel businesses are increasingly looking at incorporating data mined from the web in order to optimise pricing decisions.

The web-based price intelligence tools facilitate real-time monitoring of product rates for businesses like online travel agents, tour operators, wholesalers, airlines, cruise lines and car rentals across various competitor websites.

With the ever decreasing brand loyalty in the online world and where rates are constantly changing, travel companies need to be consistently updated about their competition’s future pricing strategies.

“Travel companies (whether suppliers or intermediaries) by and large fall under oligopolistic competition category or monopolistic competitiveness and under both it is important to know what the rest of the market is up to. The pricing is hardly relevant if you choose a cost based or ROI based pricing model. Pricing has to be referenced and benchmarked against the competition and that is where a BI tool providing most updated transient rates/fares can help you fine tune your pricing and rate structure,” says Vishal Jain, Head, Product Management, RateGain told EyeforTravel’s Ritesh Gupta in an interview.

Jain, who is scheduled to speak at the forthcoming Product Development Strategies For The Travel Industry Conference in London (November 3-4) this year, spoke about competitive price intelligence, the maturity level of data-as-a-service in the travel sector and lot more. Excerpts:

The number of options available for travel planning and booking, and also the number of screens/ gadgets to access content continue to rise. The online travel sector, especially both OTAs and travel meta-search engines, continues to witness newer challenges. In this context, how do you see the need to remain competitive for businesses in the online travel sector? How are various stakeholders trying to be proactive?

Vishal Jain:

Back to basics, there are two things to be addressed here, staying competitive in terms of price, value as well as contractual obligations. Travel companies (whether suppliers or intermediaries) by and large fall under oligopolistic competition category or monopolistic competitiveness and under both it is important to know what the rest of the market is up to. The pricing is hardly relevant if you choose a cost based or ROI based pricing model. Pricing has to be referenced and benchmarked against the competition and that is where a BI tool providing most updated transient rates/fares can help you fine tune your pricing and rate structure.

To create differentiation audit of your own BRG and staying competitive in eyes of your consumers or online partners like OTAs, it is imperative to check if your rates are being distributed in the desired manner. For the OTA, it is important to stay credit worthy in terms of offering the most competitive rates combined with easy UX and excellent customer support team.

You can be proactive by having systems in place to consistently watch out for competitiveness and make use of advanced BI tools that are capable of feeding rates into RMS or provide the ability to fire reports on demand.

Some of the companies have integrated the whole workflow into a seamless way of ensuring the right data extraction from multiple sources, correct mapping rules for apple to apple comparison of the data, applying business rules to finally driving actionables as job/ticket assignments to various stakeholders (like Market Managers) within the company. This form of end to end automation and logical workflow helps them drive the right ROI from their BI initiatives.

The industry has witnessed the emergence of web-based services that make it easy to acquire, organise, manage, and analyse large volumes of complex, interrelated data. How do you assess the maturity level of data-as-a-service in the travel sector?

Vishal Jain:

The maturity of the data from the technical point of view is only as good as the technology that is involved in culling it out for you. It is important for you to know that the data they are referring to is fresh and not aged; it has to be consistent and accurate from source and unit level point of view (not just the cheapest). Such data sets when culled, can be organised in easy to analyse formats that can be further used by revenue and pricing professionals to analyse at the granular level (apple to apple) and arrive at the most relevant pricing decisions. This effectiveness reflects the maturity offered by the data vendor.

Although data extraction for business decision making has matured in the sense that a lot of the suppliers and intermediaries get this internally or externally. But from a perspective of being able to use that data to its fullest and take action on it is something that is limited to very few companies. Resources, both in terms of numbers and skills, are something that becomes a bottle neck in most cases. This presents an opportunity for data providers today to move up the value chain and actually provide not just data but professional services that help with the right and full consumption of that data for their customers.

What do you recommend to travel businesses in order to become nimble and make the most by measuring their competitiveness? What sort of benchmarks can they set to assess their competitiveness/ or be proactive?

Vishal Jain:

There are two issues:

1) a soft approach in terms of using the right reports, data vendors and frequency and

2) the hard approach of training your team to check the sites competitiveness on an ongoing basis. Speaking to suppliers or member hotels (in case of Hotel Chains) who breach the contractual agreements from a consultative point of view is an important aspect and will benefit the industry a lot.

The need is to educate the industry people to understand the criticality of contractual agreements and how it can positively or negatively impact not just the future reservations/bookings but also their brand integrity in the longer run.

OTAs should show flexibility in providing a choice or pricing options to match the rate merchandising capability of a booking engine in terms of restrictions, dynamic packaging and promotional derivatives of standard rates/fares. For example, majority of the OTAs loose out when they are not supporting the FPLOS (full pattern length of stay) pricing strategy of a growing number of Hotel Brands, they start appearing more expensive than the brand sites and unwittingly contribute to the “billboard effect” more than they should.

Corporations are capitalising on the techniques of business analytics to achieve new breakthroughs in process performance. Which according to have been critical breakthroughs in data mining over the past few months? How do you assess the maturity level of these offerings as of today?

Vishal Jain:

The capability of data mining on a consistent basis is worth mentioning. The ability to hedge around the risk of IPs being blocked or rates getting reflected as an image / Captcha reader, which your data provider cannot read are important breakthroughs. Also to add the ability to present the data in terms of calculating tax and charges incl. or excl, good product/rate mapping (with advances in NLP technology this has significantly improved matches) is important for a true apple to apple comparison. Additionally, the data representation tech on the web is also evolving and this presents an on-going challenge to the data mining business.

Lots of CRM and Enterprise solutions (CRS/PMS/RMS) are exposing their APIs for 3rd party systems, it has led to ease of automating the BI driven action items. However a lot of this is secondary. The primary focus is to have audits and checks in place to even know if you are facing the issues mentioned earlier.

As a specialist in this arena, can you elaborate on what factors should one take into consideration when it comes to data aggregation and implementation strategy?

Vishal Jain:

It is important to maintain consistency in terms of access to fresh and consistent data, ability to customise, to present insights by using the data mash ups, to co-relate two separate kinds of data e.g. competitive fare to own yield, customer satisfaction to ADR, and more.

Implementation to the desired level of format and data presentation is important as it will ease out the consumption process at the RM’s desk.

What do you think is critical when it comes to relying on data management for new product launches?

Vishal Jain:

Measure, Measure and Measure ….the age, the accuracy, the source, the conversion, the entire data scope of what was shopped and presented.

Only when you have audited that something works correctly, you can rely on it for something as important as your pricing decisions for new products.

Consumer interactions are taking across new web platforms such ones related to social media and also mobile platforms. As both suppliers and intermediaries are vying aggressively for the online customer, can you reflect upon what is being done by the BI solution providers to monitor and measure brand perception and respond on a real-time basis?

Vishal Jain:

The BI around reviews and guest commentary is also provided on similar data extraction principles as rates are extracted. However, we must consider that consumer interactions are happening all over the place and not necessarily in a structured display format for any vendor to extract. The tools available out there are of all sorts. One must try and work with partners offering a sound sentiment engine behind the tool so that the first round of analysis of all consumer commentary can be done and categorised for the business user in an easy to relate format. These tools should have high precision in terms of retrieving relevant data so that the aggregate is a qualified one and not just a sentiment from select sites or sources.

The commentary is the voice of the customer, it is important to use this to hear the guest feedback and make necessary changes in service and product standards. If done well you can even tie it to the value proposition and charge a premium and hence get a breather from the never ending pricing battle with the competition.

There is a growing demand from industry players to integrate business intelligence with their existing or new revenue management systems. These companies are looking for an integrated solution through which they can control their pricing as well as execute an analytics based competitive pricing strategy. How is this arena shaping up?

Vishal Jain:

Previously RMS would just look at your own historical data but the scenario has changed now. Now by taking feed from price intelligence tools they are able to calculate more accurate hurdle rates. This area has a lot of opportunities as the consistency of data gets defined better and the data consumption becomes more structured. It is however important to know that the RMS and data feed provider are tightly integrated and can identify the data feed in the right manner. In hospitality industry, specially the smaller hotels that do not use RMS’s still are continuously looking for data feeds in their CRS or channel management solutions.

There is a need though for RMS players to start thinking beyond rate BI and move towards evolving their models to take into consideration BI data around self as well as competitive customer satisfaction, online reputation, social recommendations (tied to consumer influence index) and its impact on rate recommendations that they churn out.

 

Product Development Strategies For The TravelIndustry Conference   Vishal Jain, Head, Product Management, RateGainis scheduled to speak at the forthcoming ProductDevelopment Strategies For The Travel Industry Conference in London(November 3-4) this year.   For more info, click here   Or   Contact: Marco Saio Global Events Director +44 (0) 207 375 7219 marco@eyefortravel.com   or   Tim Gunstone Managing Director +44 (0) 207 375 7557 tim@eyefortravel.com