OTAs, the Traditional VS Eccentric, Revenue Manager: be Ready

By.  Ahmed Mahmoud 07th Jun 2012

In today’s competitive environment, your hotel success depends more than ever on a strong, differentiated market presence, and with the midst of improving economic climate and rising travel demand, the OTAs have increased their market share in hotel distribution by nearly 55% over the last few years i.e. Booking.com, Expedia, Orbitz ……etc , though hoteliers are trying to reverse this negative trend and take back control of the online distribution channel?.

Many consumers like to shop for the best deal available. Often they will browse dozens of online travel sites comparing prices, fees and times.

Online travel sites make it easy to find the best deals on airline flights, hotel rooms, cruises and all other aspects of travel, and here it comes the new OTA’s with new challenges to the hotels and more benefits to the consumers.

Let us exam some of the new OTA’s comes recently and takes place on the markets:-

  BACKBID.com Overview:

Backbid.com is a website that allows consumers to post their completed reservations and find the best possible hotel room, for the best price, with no elaborate or time-consuming on searches on the other booking sites, and then encourages competing hotels to bid on that business at a lower rate and/or value add services, like upgraded rooms, free parking or breakfast. Unlike other travel sites who offer discounts without telling you any info about the hotel that you’re booking. And here comes the secret role of Backbid where it is only works if the existing hotel reservation that the consumer posts doesn’t require prepayment and can be canceled before the stay without penalty. Otherwise, the consumer is stuck paying for two rooms. When the customer chooses the bid they want, they book on backbid.com, and the reservation is non-refundable. Backbid.com keeps 10% commission for the “new” booking (It is up to the customer to cancel their original reservation).

Example of how it works: 

Guest books a BAR rate of $250 at one of A Hotel. Guest posts that reservation information on Backbid. a B hotel offers the guest a $230 rate for the same date(s). Guest cancels the A hotel Reservation (before local hotel policy cancellation is due) and books the B Hotel.

What it is for Hotel Chains and its Branded Websites

When a hotel decides to participate on BackBid, hotels will have a granted instant access to the database of all BackBid Travelers traveling to their destination. Then hotels can submit bids to encourage travelers to abandon their current reservation and make direct booking with those hotels if they provide a lower rates or value add services.

Remember, the exclusive offers (value add and/or private rates) offered by Backbid.com might be  threatening to your branded rates and the Best Rate Guarantee policy if you have one in place, as it teach the end consumer that the best offer is available on Backbid.com and not on your own website.

Such kind of lower rates and offers can jeopardizes your existing partnerships with luxury travel professionals, partners i.e. GTA, DOTW, …..Etc and OTA’s i.e. Booking.com, Expedia ….etc, and for sure your rate parity policy.

In aggregate, those kinds of offers lead to rate erosion and brand dilution for your hotels with no proof that the audience reached is incremental.

What it is for Consumers

Saving Money and Time, upon submitting the reservation details on BackBid.com, customers will be notified of all hotel bids via email and can access the details by logging into their BackBid account to check the best rates and offers.

 TINGO.com Overview:

Tingo is a new online travel website, owned by the Smarter Travel Media “Trip Advisor Company”. This new OTA is based on the concept that they offer a “money-back” guarantee if the room rate drops below the original purchased price on their site.

TINGO.com will automatically cancel the consumer’s original reservation, and rebook at the lower rate. And refunds guests’ credit cards the rate difference “within a few days of checkout.”

In all cases TINGO.com receives rates and availability from Expedia With more than 80,000 rooms worldwide which is displayed through Expedia’s affiliate network.

Example of How it Works:

On May 25, guests book a refundable rate of $200 at A Hotel for a 1-night stay on June 15. On June 1st, the rate for June 15 drops to be $180 for the same hotel.

On that case, Tingo cancels the original reservation at $200, and rebooks the $180 rate and refunds the guest $20.

 What it is for Hotel Chains and its Branded Websites

Currently Tingo has not partnered directly with any hotel chains/brands.

Tingo is not the first site to offer refunds when hotel rates drop, as Orbitz. However, through Orbitz, another guest has to book the same itinerary at a lower rate to trigger the refund, and checks are mailed “in about six-eight weeks after you consumer checks out from the hotel.”

The rates on Tingo are the same as on Expedia.com, and the base rates of the rooms, barring any special offers, so hotels should always check Expedia rates vs their own website .

it is up to each property to decide if Tingo bookings will be eligible for hotel loyalty program rewards or not

What it is for Consumers

Consumers won’t receive the sometimes-steep discounts on sites such as Priceline and Hotwire, where they don’t know the names of the hotel prior to booking.

Tingo is doing what consumers should do on their own. But with Tingo, consumers don’t have to scour the fine print in hotels’ cancellation policies, constantly consumers should always check if the hotel lowered the rate, or wait until the last minute to make a reservation, which is consider risk on that case as there might be no available rooms left.

  GUESTMOB.com Overview:

Guestmob is  a USA  new “member’s only” site uses advanced search algorithms to find discounted hotels in major U.S. cities, that allows consumers to enter a date range and offers one heavily discounted rate at a collection of either 3, 4 or 5 star hotel rooms (depending on what collection the consumer chooses). The user then makes the booking on Guestmob’s site, but doesn’t find out which hotel in the “collection” they are booked at until a few days prior to traveling.

Example of how it Works:

Consumer type in the city they want to visit and a collection of hotels in that area will appear on the screen, where it has carefully rated each one to ensure consistency and accuracy.

Guestmob’s then applies its pricing algorithm, which factors supply and demand and well as “social signals” in that region to find users the best price, in some cases Guestmob says they can offer these hotels at prices 50% lower than the best online rates for the same hotels on the same dates on major travel websites.

What it is for Consumers

Consumers won’t know which hotel in the collection they will land until it’s booked, but the bookings are fully refundable.

Customers are guaranteed a room at one of the top hotels selected in the collection, and these rooms are secured via last minute mob auctions, where hotels sell in bulk the rooms they expect to stay empty.

Between Tingo ,BACKBID and others ,  ostensibly it is important to note that we as hoteliers have no control over customer behavior.

Our recommendation is:-

– Make sure that your hotel cancellation policies are up to dates to ensure that your lowest rates have the most restrictive cancellation policies. This will prevent users from “trading down” on rate via other sites.

– Ensure that, the rate parity is in place if you participate on many others OTAs.

– Be aware that, some OTAs’ final prices appear to be wildly divergent from their main OTA competition.

– Remember that , you make money when the OTAs make money , so it worth to list your hotel in 10-20 OTA

About  Ahmed Mahmoud

Ahmed Mahmoud has more than a decade of experience in the hospitality industry and business administration, Ahmed began his career early by holding a variety of management positions with such top hotel chains as Accor Hotels, Hyatt International and Starwood hotels. With decades of revenue management experience Ahmed founded RevenueYourHotel.com the very dedicated site for revenue management news, articles,

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