"Consumers must develop "trust" in pricing" - Revenue Management Special

Hotel distribution has changed from being a non-technical and highly personal business into a highly technology-oriented phenomenon over the years.

Published: 10 Feb 2009

Hotel distribution has changed from being a non-technical and highly personal business into a highly technology-oriented phenomenon over the years.

The growth of the GDS and Internet have changed the business, making it highly transparent as well offering the customer a choice not available earlier.

Assessing the performance across various channels and streamlining processes to effectively implement revenue management, from a chain like Fortune Park Hotels Ltd's perspective, its head of sales & marketing, Abinash Manghani says in the initial phase of growth which Fortune Hotels is undergoing the performance yardstick has to be volume growth and as a percentage of the total business.

"Similarly yield per channel is tracked vis a vis market and the company's average," Manghani told EyeforTravel.com's Ritesh Gupta in an interview recently.

Manghani acknowledges that Rate Integrity is the current mantra and the proliferation of channels of distribution from xml links to various extranets has made today's revenue managers task that much more challenging.

"Today's tools which are able to ensure the same are a welcome introduction. Similarly the ability to view the markets rates on a real-time basis allows the commoditisation of the industry to progress as hoteliers operate within a band as far as pricing goes," he says.

It is being said that there is no excuse for "not being in control and having clarity" - the tools are there and the successful hotelier has learnt not to keep messing around in the dark - technology equips us, our competitors and our customers, and it will continue to change and become more complex and sophisticated.

According to Manghani, the big issue is not information which is now available in abundance but the managerial ability to use the same in a strategic manner.

"The paradox is the more one mechanises the less one puts the mind to work which is why the data is there in the first place."

Transparency in pricing

Ability to make it simple to buy and simple for customers to understand that they are gaining value for money is crucial in setting the pricing strategy.

On achieving the same across so many distribution channels, Manghani said from a brand standpoint, consumers must develop "trust" in the firm's pricing which is why hotel firms insist on a " Best Price Guarantee".

This ensures that no matter which channel the customer touches he is confident (or not confident) of getting the best rate at that point in time.

"If a firm is able to sustain its promise consistently across channels, there is no need to "manage" the pricing strategy. I believe that transparency within and without the firm is the simplest and most effective way of communicating the pricing to the market," said Manghani.

It is said that Web 1.0 and therefore Travel 1.0 was all about the price, and cheap prices at that. The temptation then was to be everywhere, no matter where that meant. In the world of Web 2.0 and Travel 2.0, hoteliers don't need to be everywhere, but rather simply need to be in the right places where customers expect to find them.

For his part, Manghani said, "While all of us aspire to be ahead or with the technology curve, the fact is that the customer is straddling all the various versions of the web, it's just that depending on the technological sophistication of the target segment a hotel firm has the ability to micro-segment the market and be able to target its customers. However, the old adage of "listings" continues to operate and Web / Travel 1.0 has many takers both on the demand and the supplier side."


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