Five steps for hotels to deliver higher revenue from yieldable channels
It is important to develop confidence in the channels that yield the most and to nurture them carefully. Hotels need to continuously review their allocation commitments to non-yieldable channels and also respect their group ceilings. If done properly this improves the chances of garnering higher revenue. EyeforTravel’s Ritesh Gupta digs deeper.
From a hotel distribution executive’s perspective, the game of generating higher revenue can only be described as a balancing act. When one considers the numerous factors at play such as the lead time associated with booking channels, the selling strategy for a particular channel (packages, value added offers and so on) and the demand profile of different channels, it is clear that more astute hotel companies become in nurturing yield, the easier it is to find a balance.
Here are five steps to success
1. Understanding Lead Time
Matching revenue generated by a channel with its lead-time is very important.
As Chetan Patel, VP, Strategic Marketing & E-Commerce, Onyx Hospitality Group explains, certain channels have higher lead times with higher average value per booking. Others have higher lead times but lower value per booking. Yet some with shorter lead times can achieve similar average revenue per booking.
Forecasting the demand over a particular period is also important so that you do not miss any opportunity to generate higher revenue. “Put this together with how a channel is driving sustained volumes to your property for the whole year and you are all set,” says Patel.
“If you have to fill gaps last minute you could do what works well on Agoda [a discount booking engine], for example. Similarly, you could employ the channels with higher lead times when you need business further out. Some channels like direct have very mixed demand profiles but they are also good to fill the gaps. Once again awareness of source markets is a must to optimise revenue,” adds Patel.
2. Approach each channel in a targeted way
Patel points out that strategies can be driven by what will work the best on a targeted channel in any a given situation. If you are largely targeting Asian and last-minute markets, a competitive rate is very important. He says value-added offers work better further out, while discounts can also be used to increase average length of stay, provided you can make up the lost revenue through other spend. “Opaque channels have a mixed record with us,” explains Patel. “They are difficult to rely on but can be used if the situation is really dire.”
3. Differentiate where possible
It is important to assess how suppliers or OTAs can differentiate for different segments of travellers – think the value-conscious traveller, mobile booker and so on.
Travel suppliers, of course, are able to sell packages. According to Patel, packages are quite effective in targeting particular markets. Depending on your systems they could be priced differently according to the segments and lead times. “We also focus on optimsing cross selling and upselling opportunities on our booking engine,” he explains. In fact, some Onyx resorts have half of their bookings through the direct channel being made with packages or with add-ons. Although such options should not be an obstacle in the booking flow, they are important to have. “Rate sensitive guests should be able to book your lead in room category without a breakfast add-on with equal ease,” says Patel.
OTAs, on the other hand, have the ability to sell multiple hotels or destinations in one booking, or they can package hotel plus the flight to differentiate. Unfortunately a large majority of OTAs are focused on getting more rate sensitive guests to book even more last minute, argues Patel.
On one thing Patel is clear: “For mobile bookers, we think convenience is of the greatest importance. Our mobile sites allow quick and easy booking – and this includes packages. We do not think that price or offers need to be differentiated for mobile bookers.”
4. Think mobile – and not just for the last-minute
Mobile specialist booking platforms have been talking about their offering going beyond last-minute bookings. But it is important to note that suppliers haven’t really witnessed the craze for the same-day bookings in the same way as intermediaries.
“For some reason our experience of bookings via mobile is different,” says Patel, who wonders if this down to Onyx being the official channel. In fact, the company has more regular bookings from its mobile site than last-minute bookings. “We have longer stays and high value bookings through this ‘channel’ as well. In our opinion, it is a mistake to consider mobile just for last-minute bookings. As smartphone becomes the primary computing device for a large section of our guests, it should be considered as the same channel, as the brand site, just a different device.”
5. Nurture the direct channel
It is widely accepted that ‘direct’ should be the most important channel – and potentially the one that can yield the most - but many hotels choose not to nurture this channel. They prefer paying out to OTAs rather than investing in website development and digital marketing.
“For us, the investment in promoting our direct channel is continuous and ever-increasing. We have also worked hard to get our hotels to hold on to the rooms for the brand sites and other yieldable channels,” says Patel. “At the same time we also have direct bookings with the lead time similar to wholesale and we are looking into strategies to get more business like this.”
Indeed, hotel companies need to regularly assess their allocation commitments to non-yieldable channels and also respect their group ceilings. Many hotels make the mistake of accepting too much business at lower rates because it comes in with higher lead times. When the higher rates and yieldable channels kick in, the hotel may not have room or may argue that the remaining rooms should be sold at higher rates.
“Now, there is a rate threshold for every channel and just because you have fewer rooms available does not mean the market is willing to pay more. In the end, the hotel loses out on both fronts,” says Patel.
On the other hand if you nurture the yieldable channels you will progressively generate more business from them. You have to keep that momentum.