BTO2017 | TEN - The Prons and Cons of Revenue - Luciano Scauri
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Day TWO BTO2017 | TEN Giovedì 30 novembre FOCUS Hall The Prons and Cons of Revenue https://www.buytourismonline.com Keynote Speaker Andrew Morsi eRevMax Fabian Bartnick LodgIQ Talkback Wilko Weber Swiss Hospitality Solutions Luciano Scauri SKL International Consulting
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BTO2017 | TEN - The Prons and Cons of Revenue - Luciano Scauri
- 1. PROS AND CONSOF REVENUE MANAGEMENT ANDREW MORSI - eRevMax FABIAN BARTNICK - LODGIQ WILHELM WEBER – SWISS HOSPITALITY SOLUTIONS LUCIANO SCAURI – SKL International Consulting
- 3. Evolutionof Revenue Management SHS nextGeneration Model 2016 1978 1989 2009 Airline De-Regulation Act 2011 2020 Revenue Management 5.0 Digitalization / M2M/ Predictive analytics/ Death of the human RM? Revenue Management 3.0 Profit / GOP (?) / GOI / Dept Income (performance management) Revenue Management 2.0 RevPAR (dynamic pricing) Revenue Management 1.0 Occupancy Driven (Rack and Discount) Revenue Management 4.0 Customer Centric Profit Optimization (Personalized Pricing)
- 5. What‘s the meaning of having a forecast, If not striving to change everything Yuval Noah Harari
- 7. Technology is reshaping the customer buying journey SEO PPC Social Email Review Sites Website OTAs Metas Social OTA Agents Blog Direct Social Review Sites Booking Window Booking Source Price Point at Conversion Loyalty Device / Platform Marketing Positioning Customer Booking Booking Analysis Stay Reputation Management Repeat booking
- 8. Booking brands now dominate consumer Point of Entry Consumer Stay BrandsBooking Brands
- 9. A guest visits 38 websites for over 45 days to book a trip Intent Content Input Content Brands Interest Retail Peers OTAs Friends Research Content Meta Discovery Validation Content Content Decision
- 10. Rate Parity Over The Years in Europe 2014 2015 2016 20172013 December, 2013 HRS banned from using any rate parity clause in Germany 2014 HOTREC went to competition authorities in Europe to ban all rate parity clauses June, 2015 Booking.com & Expedia stop using wide rate parity clauses in EU July, 2015 France banned all Rate Parity clauses November, 2016 All rate parity clauses banned in Austria August, 2017 All rate parity clauses banned in Italy
- 11. Is ‘Airline’s Dynamic Pricing’ the way forward? $235 Seat 18A $232 Seat 18B $300 Seat 19D $405 Seat 19E $458 Seat 15K $512 Seat 18K
- 12. Rate Disparity: It matters 1/4 $1B $10.26 On average, a hotel website’s price was undercut by OTA Annual cost of the undercutting for hotels as result of losing direct bookings Direct prices cheaper than OTAs across board in spite of undercutting
- 13. Convenience, Choice, Content… and Price drives guests to book 75% Travelers use OTAs to shop for hotels 47% Travelers use OTAs for ease of use 82% Travelers use OTAs to get the lowest price 29.8 m Hotel Shoppers spend on website before making their reservation
- 14. The status of Rate Parity in Europe 14 No wide Rate Parity clause for Booking & Expedia Ban for some OTAs Ban Announced All Rate Parity Clauses Banned
- 15. Rate Parity generally applies to PUBLICLY AVAILABLE RATES That means if you have a loyalty club, a discount group or similar , you can offer them better rates privately: via email, a login system on your website or over the phone.
- 16. Saver BAR (Desktop) Breakfast Breakfast Promotions Saver BAR Static Corporate Static Wholesale Dynamic Wholesale Mobile Closed User Group Private Sale Closed User Group Value Package (Value) Package Dynamic Corporate Geo fenced Closed User Group Promotions 10% 5% 10% e.g. China Not prime market Prime Market China Package (Room + Flight) Closed user at Point of Sale 24hr hold Buying from each other Buyingfromeachother
- 17. Rate Integrity over Rate Parity I Setting your prices according to the market conditions I Keeping your prices rational in relationship to the best available rate (BAR) I Suppliers match inventory to demand curve
- 18. Price matters and so does experience
- 19. The 4 Levers of Revenue Management Rate Strategy Inventory Control Distribution Mix Marketing
- 21. ▪ Lorem Ipsum Fabian-Speed Round (2 slides-3 minutes) 100% OF DATA AVAILABLE 10% OF DATA YOU ARE ACTUALLY INTERESTED IN
- 22. OUTPUTS INPUTS
- 23. Price is only 1 of the 4 P´s of marketing Promotion SEO Direct Booking Promo Review User Generated Content Place Packaging Platform Based Pricing Brand Website Regional offerings Best Producing OTAs Closed group offers Brand only Value Additions Loyalty Program Sales conditions
- 24. Thank You
Editor's Notes
- the way in which guests make their selection of hotels and evaluate their experiences has radically changed. “It is the digital transformation of consumers, our guests, that is the driving force behind these changes in our industry,” he said. “Every day, for example, there are new hotel booking sites and artificial intelligence guiding how we get things done.” So yes, it’s apparent that technology is re-shaping how consumers enjoy their entire travel experience. Whether hotels feature Amazon’s Alexa or Google Home in the rooms, a customer today now expects these technological privileges. And these home-like features are the foundation in which hotels can keep up with the emerging role of technology and address the growing need for comfort and convenience while traveling. For example, if guests stream television shows or movies when they’re at home, it makes sense that these same guests would expect this amenity during their hotel stay.
- Countries where narrow and wide rate parity clauses are strictly prohibited: France – July 2015 – The “Macron Law,” which outlawed all rate parity clauses, was adopted in July 2015. Austria – November 2016 – Austria amended the Competition Law to outlaw all rate parity clauses in November 2016. Italy – August 2017 – The Competition and Market Law, which outlawed all rate parity clauses, was adopted in August 2017. Countries where rate parity clauses are prohibited for some OTAs: Germany – December 2013 – The Federal Competition Authorities prohibited all parity clause used by HRS, a major German OTA. December 2015 – The Federal Competition Authorities ordered Booking.com to remove all rate parity clauses from its contracts before January 31, 2016. A temporary injunction in May 2016 by Booking.com was unsuccessful; the decision remains in force, though a full appeal is still pending. Countries where Booking.com and Expedia have agreed to use only narrow rate parity clauses: European Union – June to July 2015 – In agreement with regulators in Italy, Sweden, and France, Booking.com changed its rate parity clauses in Europe from wide to narrow at the end of June 2015. Expedia followed suit shortly thereafter at the beginning of July 2015. Australia – September 2016 – Expedia and Booking.com agreed to amend their contracts from wide to narrow rate parity clauses, after an investigation by the Australia consumer watchdog. New Zealand – October 2016 – Expedia and Booking.com subsequently agreed to amend price and availability clauses to be in line with their approach in Europe and Australia. Countries where plans to ban rate parity have been announced: Switzerland – March 2017 – A Council of States Resolution on March 6, 2017, instructed the Federal Council to submit legislative amendments that would prohibit rate parity clauses in contracts between online booking platforms and hotels. Belgium – July 2017 – The Federal Government of Belgium announced that it will adopt a parity rate decision by the end of the year. Countries where rate parity has not been regulated: USA – February 2014 – In the USA, no uniform regulation of rate parity clauses has emerged. In February 2014, a significant antitrust case against 22 travel brands including Marriott, Expedia, and Priceline was dismissed, which reduced pressure for regulation in the country. Latin America – Rate parity clauses are widespread and not specifically regulated in Latin American countries.
- Hilton just announced it will roll out a “flexible pricing approach” that likely mimics airlines. Hotels may want to price like airlines, but are they ready for the related customer satisfaction nightmares? On the positive side, flexible pricing like this could definitely benefit owners and operators, and their revenue managers who are dealing with inventory, no question about it. The big disconnect is that hotels want to price like airlines, but they definitely don’t want the customer attitude of “all they want is my money, customer service is dead, they’re just nickel-and-diming me” that goes along with airline pricing. If that happens for hotel brands, they’re dead. Doomed. Retention and loyalty will go to whatever brands don’t do it—just like how I threw my loyalty to United Airlines out the window the first time they sneakily booked me into that awful Basic Economy tier where I didn’t even get a seat assignment or overhead bin space. http://www.hotelnewsnow.com/Articles/252076/Hotels-want-it-both-ways-but-thats-impossible
- On average, a hotel website's price was undercut by an OTA 1 in 4 times This undercutting is costing hotels over $1B annually in direct bookings Despite this, direct prices were an average of $10.26 cheaper acrossthe board.
- The challenge to parity from hotels and accommodation owners has come about as guests had been educated that the same or bookable best rate was through online travel agents (eg: Tnooz article from July 2016 found 75% think travel agencies are cheaper). When making an online reservation, guests use four major elements in their decision – choice, content, convenience and price. They have choice, content and convenience wrapped up with leading technology platforms which are powered and perfected by hundreds of developers, product managers and marketers. Adding the best price seals the deal. If you’re a guest – why book direct? Three key elements have combined recently, which have led to change: legal rulings, cheaper and better SaaS tech for hotels, and importantly, attitudes from hoteliers - as they see less control and engagement with their guests pre-and-post booking when the booking comes via the OTA - and of course increasing commissions payments. In developed markets, between 61-75% of customers used an OTA to shop for hotels and accommodation, but just 15-44% visited a hotel website. OTAs have become the masters of user experience, orientating themselves towards an increasingly tech-savvy customer. It’s an investment that’s clearly paid off: a huge 47% of customers stated that they like OTAs because the websites were easy to use. OTAs have invested heavily in conversion-orientated websites to give customers everything they need to make a booking decision efficiently and with confidence. As mobile usage has grown, OTAs have invested in dedicated apps and created an optimized experience across all devices, enabling users to easily browse and book a hotel room anywhere, any time. http://www.traveltripper.com/blog/why-do-travelers-prefer-booking-with-otas/
- In Europe, several national jurisdictions (France, Austria, and Italy) prohibit all OTA parity clauses outright, with two more (Switzerland and Belgium) having announced concrete plans to follow suit. In Germany decisions by the competition regulator only apply to certain OTAs (HRS and Booking.com), while other OTAs continue to use wide and narrow rate parity clauses within the German market. In Australia, New Zealand, and the European Union, Booking.com and Expedia have, in agreement with regulators, adopted only narrow rate parity clauses. In other major markets, however, these OTAs continue to use wide rate parity clauses. Some smaller OTAs continue to use wide parity clauses across all markets, except where they are banned.
- While having the right price will get consumers to an advertiser’s site, it is also crucial that the landing page is welcoming, useful, and personable to secure the booking. Price may be the biggest factor in a customer’s decision-making process, but experience is increasingly running a close second. With the rise of metasearch publishers as a significant step in the booking journey, marketing activity and parity management are increasingly dovetailing in importance. A consumer’s interaction with a brand will be bound up with both how it’s represented by pricing, and also how the brand is presented online. The guest experience goes hand in hand with competitive pricing.