Sam and another speaker discuss how hotels integrated revenue management with digital strategy, covering pricing across OTAs and using digital channels for market-specific targeting. They argue that coordinated teams are essential to optimize both efforts together.
You know what I was thinking? I said, you know what? Let's talk to the viewers on this channel and tell them how, see, revenue management was perceived as one discipline and digital another. Of late, it's come together. Unless both these disciplines are in sync, a hotel doesn't seem to be getting to the next stage of their revenue making online. What do you think about that?
Yeah, absolutely. And it's going to be becoming truer and truer as time goes by. Now you will see there was traditional revenue management where all you did was as long as you put the right rate out on any of the platforms that was considered that you are practicing revenue management. Of course, there's a little bit more nuances, but basically you are trying to get the right data. Now, what is happening is, because how digital experiences are evolving and how digital revenues are growing, you have to make sure that not only your pricing is right, but at the same time that pricing is right for that person that's coming to your website or your app or interacting with an email that you're using.
Why do you say that is important? I know why you're saying, I just want it for the, for the audience or viewers of this channel to understand more why you said that pricing has to be perfect. Because you're talking about pricing on a digital channel, but pricing is a revenue concept, right? Yeah. So help us clear this, because what.
Is happening is, I am telling you that this is how much a room is going to cost. Great. I know the price. But in the end, when I want to make that transaction happen, most likely I'm going to be at a digital interaction point where it could be an app that the hotel may have, or it could be just your website, or it could be that you sent out an email promotion. So I saw a price, but when I saw that price, I was at a digital device looking at the price and saying, okay, this seems that, you know, I want to make that reservation, I want to go to that hotel and stay there.
But this also means that if. So you mentioned it could be the hotel's app or the hotel's mobile device or, you know, desktop site, but also could be the OTA side, because we're talking about revenue management and price across all channels. So he could be at the OTA app or the OTA site and the OTA desktop version right there as well.
Yeah, see, and that's completely a great point. Why? Because when you look at the OTA experience, if I go to the website, I do a search, I will see the rate. I will be able to make the reservation. These are not two different experiences, it's all blended into one. But when I go to the hotel website, what will happen is I will land there, I will see the website. When I do an inquiry, it leads to a booking engine. Now, nine times out of ten the website experience doesn't translate to a booking engine. So you may have a great website, but if your booking engine is also not equally great or better, your chances of conversion are going down. Which the OTAs do extremely well. I mean if you look at The Expedias and booking.com of the world, that is one of their biggest trends. Not only they are looking at your digital interaction points, they are of course studying that data. Then they are presenting you according to a search that you have done. These are your options. And when you go ahead and make a booking, all those interaction points are fine tuned. So you are never experiencing these two separate entities altogether.
So where would you. So for example, if you're positioning a hotel, let's say $200 for the winter season and on the direct website, would you put the same rate on an OTA channel or would you put a different pricing on it? Or would you put a different, would you bundle the pricing? What should be hotel strategy if they want to do it on their own?
See, that's a good question because question that it leads to is the question of price parity. Will that stay around? Is that a better way to do it? Or should price parity die, which is most likely what's going to happen? Price parity will die or may not exist in a year or two or even sooner. If you look at what is happening in Europe, booking.com or Expedias, they have to relax on price parity. So but they had to relax and.
They also cutting down on their commissions.
And all that, not on the commissions. It would be great if that was happening as well.
Okay.
But price clarity is something that's always been questioned like why do we, why hoteliers have to price their own inventory the same on every single digital or any other channel? Like why does it have to be the same? So what I would say to that is you have to instead of looking at should it be the same pricing or should be a different pricing, look at what converts on which channel, what kind of channel provides, provides you the best traction.
That's a good point because you know, I want to interfere here and you know, make a point. I remember one of the conversations we had and you know, there was this particular hotel in North America which wanted to get Japanese clients and their own SEO and their own btc. They didn't get them any traction, but they knew that a certain OTA had a huge Japanese influence. So they went after that OTA and they went after, they asked their OTA that what did it take to get a Japanese brand to my hotel in North America? I think the OTA came back to them and said that a Japanese client, when he's coming to this particular town in North America, he wants an all inclusive six night, seven days package. So they exclusively give that price, that package. And the OTA obviously promoted them in Japan and they started getting groups and groups full of people from Japan. So that is, you know, I think the point that you're trying to make that if you're working with an ota you can be, you can use their strength to be going to different markets, which sometimes for a hotel it's very difficult to do.
Absolutely.
I think you have to look at.
It as a distribution channel. If they are strong in a particular area, why not leverage their strengths and you look at your business, can you get there individually? If the answer is no, then use your partner's strength and use that strategically. You don't have to give drop credit pricing, but you have to price it according to the market that's going to be using that platform. And if you do that, absolutely, you'll gain traction. An example of that will be the Japanese market is also a similar example that you'll see in the Chinese market. There's so many agencies there and travel sites that you have to be on there if you're not attract business in. So it translates to various markets.
That's a very interesting point because you know, there are many like Trivago, ico, you go, you know, some in Japan, some in. So there are those regional OTAs are becoming very big in India now they're coming, I've heard they're coming up with some very interesting regional OTAs and they're not out yet, but some Hindi, some Malayali and you know, different. So those should be very interesting. But you can't do without them because people are, you know, some people book only on those OTAs. So you need to. Your strategy, OTA strategy on your digital and your revenue strategy goes beyond just your direct website, your channel, your OTAs and the regional OTAs. So that brings us back to the point that I always try to make that it is not, it is not a function of, it's not a standalone function, it's a function of a team. It is a function of an experienced team. It's a function of an experienced, dedicated team which is keeping its eye on the market and on multiple markets, with an experience in revenue management and a team on digital. So you need a lot of stuff to today deliver the perfect digital and revenue strategy for a hotel to implement such a strategy, however, it is possible. A lot of people are doing it, and I think it's more and more important because today digital and revenue together is contributing up to 50% of your business. So all this exercise, hiring these people or hiring an agency, getting all these channels, you know, worked upon, keeping that price parity, doing digital, doing revenue management, all of this is worth it is the only way that a hotel in 2015 and beyond will be able to survive. Hope you like this video. Thank you for watching. Sam.
