Key Learnings from Our Hospitality Revenue Management Report, Part 3 of 3

EDITOR’S NOTE: In part three of a three-part series, we share our thoughts on what we learned from our 2019 Revenue Management Trends in Hospitality report.

Revenue Analytics recently released a research report on Revenue Management Trends in Hospitality, incorporating the findings from our survey of close to 1,000 senior hospitality execs across North America and our own original industry research.

Our goal? To better understand where the industry is going, where companies are investing, and what Hospitality insiders think is coming next.

Thanks for joining us for our final blog of the series!

As mentioned in part two, the looming threats of a one-size-fits-all approach and the scrambled search for a tailored and integrated RMS have created unusual bumps in the road.

In part three, let’s look one step further into the online travel agent (OTA) problem and into ways to you can combat it with technology. 

OTAs, margins, and disruptors, oh my!

As we touched on briefly in the first blog, we still see OTAs as a threat to hoteliers, as they continue to take a larger and larger share every year in terms of digital bookings—up to 39% this year and an anticipated 41% by 2020.

Beyond that, there are folks who continue to disrupt the distribution landscape, including Google, Facebook, and Airbnb. And we know that trio won’t stand alone for long.  

So, what can hoteliers do about it?

Every year we’re losing ground in terms of holding onto guests, but some have fought back and found ways to soften the blow with “book direct” campaigns that are exclusive to the brand’s own site. These allow the brand to sign up more folks with the hope they’ll be able to leverage them down the road, turning them into loyal guests.

Is this working? Yes and no. By all accounts, these “book direct” campaigns are putting only a small dent in the OTAs. However, between those campaigns and all the newly enlarged chains thanks to mergers, hoteliers have more access to even a broader audience of loyalty guests.

Even better, they now have negotiating power to get back some of those margins they’ve been losing to the OTAs over time.

For the first time, there appears to be a playbook on how to combat the OTAs taking your customers, whereas for a long time there was nothing—and it seemed like a free-for-all. 

Disruptors still got you down? Add more value

We’ve seen a couple of good strategies come about in the last several years to combat this OTA problem. But I think we’d all agree that it’s not enough.

We haven’t stemmed the tide, we haven’t turned back OTAs, and we don’t know what we don’t know about other disruptors that are coming down the pike.

Remember that hoteliers are now investing in data and analytics blocking and tackling, which could provide future capabilities to serve their guests in ways OTAs can’t replicate—such as filling their needs in exactly the way they want, offering them the unique attributes that different rooms have, and adding value to their stay that they’re willing to pay for.

This helps pull the guest into the direct channel and is what we affectionately refer to as attribute-based selling (ABS).

If done correctly, hotels have a unique opportunity to approach ABS in a way that improves the overall guest experience rather than degrading it.

Even more, there’s some opportunity we can take right now in terms of merchandising. Next, we can extend that into bundling and upselling after the sale occurs. Then finally, we can move fully into attribute-based selling.

Also, with ABS you have things like non-room inventory serving as another effective way to help fend off the OTAs. Inventory they don’t have means there is a lack of inventory to bundle, providing a serious competitive advantage for the hotels.

With new disruptors barging into the industry more frequently and older ones not wanting to budge, it goes without saying that hotel industry leaders—though not new to the game—should be highly considering ABS and exploiting the elements of these discussions to earn their stronghold in the industry again.

Until next time

We truly hope you have enjoyed this series on trends plaguing the hospitality industry and were able to get a better glimpse into the true challenges that this industry faces and deeper insight into how they’re dealing with it.

To stay up to date on all the issues, download our entire  2019 Revenue Management Trends in Hospitality report. And, if you first joined us for this final blog, be sure to check out part one and part two for the full story.

Have questions? Let’s grab some time to chat.