IHG changes the way it distributes its hotel rates to increase direct bookings


As online shopping options multiply, major hotel groups have struggled to keep pace. Hospitality companies want to manage the discounts that are displayed on various sites and apps.

Over the past year, IHG (InterContinental Hotels Group), for example, has recruited new employees, new software and new processes to improve its distribution game. (What is IHG? See our IHG explanation.)

IHG hired Jamie Cole earlier this year as senior vice president of global channels. Cole previously led digital marketing at Mandarin Oriental and worked at digital players Travelocity and Travelport.

Cole, who now oversees IHG’s distribution, helps control the rates at its 5,795 open hotels. It is an important role. Unlike many other large hotel groups, IHG consolidates all of its channels into one team for oversight.

It is a tall order.

“The waters are muddy,” Cole said. “Some TMC [travel management companies] now display OTA prices [online travel agencies] as well as GDS [global distribution systems], and some companies go through different partners like Egencia or HRS.

“Before, it was clear that companies went to GDS [global distribution system] and consumers have taken another route, now it’s getting a lot more ambiguous, ”Cole said.

IHG represents a broader industry trend in that it is becoming more difficult with online travel agencies and wholesalers in the West while also becoming more experimental with online travel sellers in Asia, where it is needed. help to develop sales.

This year, IHG renegotiated its contract with Expedia Group. The companies did not disclose the terms of the contract, however.

Asia is one of the geographic areas where the British hotel group is seeking help. He works with China-based online sellers like Fliggy, Baidu, owned by Alibaba, and WeChat, owned by Tencent. This year, the company has done a lot of work with Tencent’s WeChat in particular. (For a free summary of how travel brands are using WeChat, check out this cheat sheet from Skift Research.)

Hotel distribution in the news

Hotel distribution is a hot topic. Average revenue per available room or (RevPAR) has been slow in several markets. The causes vary, with an oversupply of new buildings being a factor in some cities. Economic weakness in some markets, such as the UK, Germany and Italy, may also be a factor.

However, in a report in late October, Morgan Stanley research analyst Jamie Rollo presented data suggesting that neither hotel supply issues nor economic factors could explain the slow growth in average daily rates for hotels. rooms, which grew just 1.2% last year in the United States, well below the 6-7% increases recorded over long periods of time over the past two decades.

“We believe that this breakdown in the pricing mechanism is in large part due to the Internet allowing greater price transparency,” Rollo wrote. “Hotels experience this through online travel agents (which encourage hoteliers to match prices to save on commission) and the shadow offer through other accommodation providers. “

True or not, many companies have changed their approach to how and where their rates are posted on the Internet.

In a move that has taken effect in recent weeks, Marriott International has made Expedia Group the exclusive distributor of its wholesale and promotional room rates, availability and content to resellers under most circumstances.

In September, the online travel agency Amoma collapsed. Hoteliers have long offered discounted rates to niche offline channels, such as ethnic travel agents, tour operators, and airline websites. Amoma would get these deals and deliver them to consumers online instead. This year, Amoma lost those discounted rates when Hotelbeds, a travel technology and distribution company, caught them in violation of their terms.

Earlier this week, Hotelbeds said it had increased its investment in stopping tariffs intended for offline channels to be sold by online travel agencies and had stopped around $ 325 million ($ 300 million euros) of otherwise profitable sales to ensure compliance. Over the past six months, it has reduced inventory incidents it processes by 90%.

Hotelbeds is perhaps the largest company that distributes hotel inventory wholesale. Yet dozens of other smaller players remain, and they can be more lax on compliance.

The end of static rates

To manage distribution more tightly, IHG is trying to modernize its pricing process, although some segments of its sales are still a long way off.

“We have worked hard to dynamically move the rates up and down in response to supply and demand,” Cole said. “We want these rates to be synchronized between call centers, online agencies and elsewhere.”

“We want all fares to be connected to our new reservation system, either directly or through third-party intermediaries,” Cole said. “In the past, owners offered static or fixed rates. When they send static rates, it can cause them to lose control. “

During off-season periods, days of low activity and for new markets, IHG will use third parties to fill vacancies. Otherwise, it will try to drive consumers to its mobile app and website to book directly, which costs it less.

“Our strategy is that, rather than having generic contracts, we will identify where we need third-party distribution the most, whether by geography, day of the week or season, and then structure the contracts to reflect this need, ”Cole said. noted.

Technological bets

Over the past few months, IHG has used a “rate match” matching service from OTA Insight, a business intelligence provider. The software helps properties check if their rates match, are cheaper, or more expensive compared to direct online travel agencies and other channels.

“We want to help the people who run our hotels see which rates are showing up where, so everyone can better manage that,” Cole said. “We also provide our hotel owners with tools from other vendors, such as web analytics tools to understand conversion. “

In August, IHG invested with Marriott, Accor and Hilton in Groups360, a meeting space booking engine that IHG properties will adopt.

IHG recently adopted a new central reservation system from Amadeus. The system will allow him to make an attribute-based reservation, which means selling rooms starting with a base price and then adding costs for additional amenities and perks.

“We’re starting to test this at some hotels at the end of this year,” Cole said. Providing consumers with the new ‘build a bear’ style booking flow could make its application more attractive.

IHG has revamped its mobile app, which is the fastest growing place to take direct bookings, to be useful to all customers, no matter where they book.

Cole said the buyer segment looking at luxury hotel purchases may have additional questions. IHG therefore continues to invest in its call centers. Cole said the company needs to boost its digital content to better visually present its luxury offerings online.

Once a business jumps on a new trend like dynamic rate fixing, it has to spend to stay ahead. IHG tries to keep its technology spending tied to its basic needs.

“We are looking to keep our product management experience in-house with people who are very knowledgeable about our industry, our company and our customers, such as in our development center in Shanghai,” said Cole. “But otherwise, we work in partnership with suppliers who have the technical expertise to build them.”

Source link

Leave A Reply

Your email address will not be published.