Online channel management and Revenue Management has begun getting more difficult every day. There are two reasons for this:
1-) The mutual difficulties that hoteliers encounter.
2-) Changing in customer habits.
A-) DIFFICULTIES HOTELIERS ENCOUNTER
1-) The number of competitor hotels increasing every day
The supply rate of newly built hotels, which is not increasing parallel to demand, makes it more and more difficult to predict demand. For example, let’s say in the year 2015 a hotel that had 5 competitors would close at 85% occupancy and an 89 € ADR. If in 2016 two brand new hotels in the region having 100–200 rooms open up, it may not be able for this hotel to just look at its 2015 data while making its 2016 budget since it has mathematically changed.
2-) The number of discounts offered because of pressure from OTA’s and their rates progressively increasing
As you know, many OTA’s provide an advantage in their rankings and marketing channels to hotels who have join discounted campaigns. This causes these hotels to rigorously create campaigns. As campaigns help sales to increase, ADR decreases.
3-) The Number of Distribution Channels Increasing
The number of online and offline channels hotels sell their rooms on is increasing every day. It is becoming increasingly difficult to keep the same rhythm, keep control, do the math, and provide rate parity on these channels that have different features and dynamics. This also brings problems with rate parity and management difficulty.
4-) Rate transparency increasing
One of the most important topics is this, that is the hotel’s ability to easily see rates through online channels. Prices that should be offline and B2B are shown as B2C and continually changed and published through websites making it more and more difficult to segment these rates for the hotel. For a company executive that doesn’t like the rate it got for his company, he can say “but on Trip Advisor and Trivago, I see you have a cheaper price” and be offended at the hotel. This can be experienced in the agency as well.
5-) Rapidly changing market conditions not having as rapid a response
Today’s technology marketing conditions and people’s tendencies are changing very quickly. These changes make predicting demands more difficult. And big data that is coming out cannot be analyzed by a person’s brain at the same speed, and it is very complex. In the end, making a parallel pricing model based on the demand curve is difficult.
6-)The amount of technology used and its complexity increasing
The extranet usage, every extranet’s substructure, the technical language used and their features, and ranking algorithms is different for every OTA. By saying Channel manager, rate shopper, booking engine, gds, crs, rms, who, who is with who, where are they, how … It’s ridiculous. In order to manage all of these, you need to understand them all; it is become more and more difficult to achieve the sales graph that you want without knowing it all.
B-) CHANGING CUSTOMER HABITS
1-) 80% of customers make their decisions after viewing different prices from different sources. Technology such as Meta Search (Trivago, Kayak, etc.) allow customers to make this comparison within seconds.
2-) They can easily get any information about the destination they will stay and the hotel on the Internet. The information here can seriously influence the customer’s decision.
3-) Because of the politicaland economic crises in the world recently, people have begun to stay away from home less.
4-) People have intensively begun staying in cheaper hotels, because the increasing competition has provided the opportunity to stay in good hotels for cheaper.
5-) Because of the rate advantage, many people prefer to travel during the off-season instead of the peak season.