ASPAC Is E-nnovating a Path to Recovery
Attendees also learned how the industry in the ASPAC region – including tourism authorities, hotels, airlines, distribution companies and online travel service providers – are collaborating to satisfy demand.
During the HEDNA Committee update, attendees welcomed the formation of the HEDNA ASPAC Education Subcommittee and applauded the re-introduction of the HEDNA-U initiative.
Speaking on the subject of hotel performance, keynote speaker Paul Southey, vice president Asia Pacific, TravelCLICK Inc. shared some encouraging news for the ASPAC region. There are initial signs of recovery in some segments of the market. For most hotel chains, electronic distribution continues to drive the growth.
Speaking on the subject of direct web bookings, Southey said "most of the markets in the Asia Pacific realized stronger growth than other regions. This channel is still an emerging opportunity for this region. As there is continued investment in the market and the consumer more rapidly matures, we should anticipate this growth will continue deeper into the year."
On the subject of global distribution systems, Southey shared some compelling statistics that indicate that the ASPAC region was among the worst impacted – down by approximately 40%. But, going forward there is a trend of a month-on-month gradual, yet steady, recovery for the region.
On the topic of online travel agencies (OTAs), Southey commented that "we look at major OTAs gaining revenue, but we are also seeing the resurgence of sites that had lost some ground in recent year." Citing the example of Priceline's realized growth at 30.4% in revenues year-over-year, Southey added that "this is great news for hotels as the opaque channels will allow hotels to move distressed inventory while protecting their rate strategies through more transparent channels."
While it's easy to get lost in the doom and gloom about the global economy, Southey suggested "it is very important that hotels make note of their individual segmentation and have defined strategies for each. Wholesale discounting across the board will only lead to diminishing revenues and profits," he said. "Focus on competitive strengths. Your local market is your local market. Don't let the glut of daily bad news make you react to things going on outside of your market." Since local market conditions vary greatly, "it's imperative to fully analyze your unique source and destinations markets," Southey said.
Look for recovery in small wins, he said. Ask yourself, which of your market segments will recover first? What associations and affiliations are gaining traction within your local market?
Southey also recommended keeping an eye on how you are influencing the consumer through positioning, pricing and perception. "Be competitive throughout each step of the travel planning and booking cycle," he said.
"Make those decision smart decisions. This is not the time to follow the herd. Set yourself apart from the pack by targeting any discounting that you need to do. Work within individual segments to make the most of the decisions that you have to make. Additionally, make sure that you match any pricing decisions with a communication. This is not the 'field of dreams' where if you discount they will come. It is more like a tree falling in the woods with no one to hear it. If you don't tell people they won't know about. So, pick targeted reductions, communicate them effectively then measure the results. Then start all over again."
Tapping alternate distribution channels
The ASPAC region is experiencing the benefits of unprecedented growth in electronic distribution channels. The global economic crisis has driven more consumers to the Internet at the expense of the traditional channels such as the travel agent, noted Grant Colquhoun, director of hotels Asia Pacific for Travelocity.
In order to stimulate demand, OTAs need to work together with suppliers in both traditional and innovative ways, he said. OTAs and suppliers need to partner together to bring consumers information about all aspects of their trip. To do that, new models of partnership need to be discussed and potentially developed.
Colquhoun stressed that OTAs and suppliers "absolutely must collaborate together to ensure our customers have that trip of a lifetime" and that the customers return to book more travel.
One of those new models is utilizing social media to attract new customers or create more loyal customers. "This is a very powerful channel to adopt, but you need to think carefully how you develop your social media strategy, and that the chosen channel or channels deliver bookings and importantly brand integrity," said Colquhoun.
The idea that the future will be composed of brand loyal customers, unbranded shoppers and "Facebook travelers" was addressed by Craig Hewett, founder and chief commercial officer, Wego. To protect the loyalty of these customers, companies use personalization and user preference, online loyal programs and online customer care, to name a few methods, Hewett said.
The unbranded shopper - someone not bound to a particular brand - needs special handling. Some methods to attract this customer include ensuring that OTAs have the best photos and description about your hotel and that you offer parity rates extending promotions to these shoppers. Hewett also suggested to be aware of user reviews on OTAs and use those reviews to monitor how you are positioned versus your competitors.
And what about the Facebook shopper? Hewett sees the day coming when social media sites will have the ability to develop travel mashups and become important for third party distributors. He asked attendees to ponder whether or not this would benefit hotels – something for the industry to think about.
Focus on SpendPAR
The hotel industry is quite familiar with the term RevPAR. However, Puneet Mahindroo, corporate director of revenue management and global distribution for the Taj Hotels, Resorts and Palaces, believes that in today's circumstances it's all about unlocking SpendPAR or spend per available room.
The hotel industry is one of the largest verticals. Just within a hotel, customers have various touch points such as restaurants, coffee shops, the spa, etc. The customers today are sensitive towards overall "travel value," be it for business or leisure.
Using the examples of Amazon.com, Starbucks, Nike and others, Mahindroo pointed out that these companies are successful since their "value is based on unique, personalized experiences of the consumers." He added, "these firms focus on one consumer at a time even when they serve 100-million consumers," he said. "The key here is collaboration and focus by micro-segments." Similarly, hotels to be successful will need to vertically align with respective partners right from the initiation to fulfillment - TajHolidaysFlyNStay.com being one such example.
On another note, Mahindroo stated that the overall Revenue Maximization approach must be based on the age-old CRM Practices. In his opinion, (C) + (RM) = CRM and the future of Revenue Management is in its alignment to the core principles of CRM
GDS usage grows
GDSs offer many advantages including a seamless solution and technical innovations. However, changes in the hotel electronic distribution industry necessitate revolutionizing their approach. The GDSs understand that and are making moves in that direction.
Amadeus is working to bring everything into one hospitality platform, said Kartikeya Tripathi, regional director, hotel distribution Asia Pacific for Amadeus Asia Ltd. In addition to other enhancements of its network, Amadeus is launching the Amadeus Hotel Store which "provides travel agencies with an integrated solution to search and book multiple hotel consolidator content not available through the Amadeus System," Tripathi said.
Travelport GDS is working to develop the first fully integrated agency desktop, noted Joe Lim, regional director, hospitality and car rental Asia Pacific for Travelport GDS. This desktop is designed to support multiple GDSs and to encourage up-selling, cross-selling and unbundling. Travelport plans to have data-rich travelers profiles that will enable suppliers to reach these customers with unique offers.Social media is the channel being used by Abacus International Pte. Ltd., said Brett Henry, vice president at Abacus. The company is using social media such as Facebook and Twitter to develop targeted niche GDS campaigns.
UGI project update
HEDNA's Unique Global Identifiers (UGI) project is proceeding, said Laury Behrens, business development and corporate project director for Worldwide Payment Systems, and head of HEDNA's UGI Committee.
The UGI initiative seeks to solve the sometimes confusing systems of identifying entities involved in travel transactions. The UGI initiative would provide an unique global identifier for every hotel and organization in the sell/stay transaction process. The UGI Committee is exploring a business model that includes fee-based registration and utilization, low cost of acquisition, and variable costs for higher level services.
Summing it up
Attendees came away from the HEDNA ASPAC Meeting with four important take aways:
- The economy is stabilizing
- By Dec. 2009, it's expected that global hotel performance will be at a par with 2008
- The industry is seeing slow and steady growth
- The industry is poised to innovate in a price and cost-effective manner.