Industry Update
Opinion Article19 July 2013

The Science of Sorting

By Jean Francois Mourier, CEO of REVPAR GURU

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Many hotel revenue managers live and die by their page position on OTA default searches. From Expedia¹s Most Popular picks, to Orbitz¹ Best Bets, to Agoda¹s Recommended, all of these listings are at the top of search results because the specific OTA made a (very subjective) decision based on a million possible factors, including the relationship that a property has with their OTA market manager, the commission that a property is paying, payment status (paid in full, late payments, etc.), amount of inventory (including last-minute inventory) listed on the site and the pictures included in your property¹s listing, among many others.

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Some revenue managers (mistakenly) believe that being the top (or one of the top hotels) listed on a

given OTA default search, will positively impact their bookings and revenues. They aspire to always stay in that high position, because they believe that if their competition were to overtake their page position, they would most likely also steal their customers.

In our experience working with OTAs and examining consumers¹ booking habits, we have decided that

we disagree with this very common belief among hoteliers.

The default search results don¹t reflect consumers actual search habits

According to Expedia, 95% of all transactions on their site take place with hotels listed on the first

page of a consumer¹s search results (source: HotelNewsNow) ­ which is true. But what this stat doesn¹t specify however, is that the hotels that show up on the customer¹s sorted (not default search) results are the only properties that have a greater chance of getting the booking. Let¹s look at an exampleŠ

I did a search on one of the major OTAs for a hotel stay in Miami Beach, FL from July 20-22 and, as

always, the default results showed ads first and then a list of other hotels (according to the default sort criteria). The first property was listed at $310 (4.5 stars), $89 (2 stars) and $139 (3 stars). Even to a consumer who isn¹t aware of which factors affect a hotel¹s page position, they will be able to see that this list of results are all over the map, and that they don¹t show the property with the best value (which is the primary factor that most consumers use to select a hotel).

When I change the filter to sort by price (which is the most common sorting method for consumers),

the properties are listed in ascending order according to price. After sorting, the first property is listed at $48/night (1.5 stars), $69 (2 stars), $83 (1.5 stars), $89 (2 stars) and $94 (2 stars). The next step most consumers will take to filter the results is to select the star rating(s) that they prefer and, in most cases, this will be three, four or five star hotels. From there, a consumer will search for the best combination of rate, star rating and amenities to determine which property is the best value for their specific needs.

This is the standard search method for the majority of consumers who use OTAs to book a hotel stay.

While there may be a few people out there who useonlythe default search results, most consumers understand online searching enough to know that filtering their results will make it quicker and easier to find the property that best suits their specific needs.

In short, unless your property is listed on search results that reflect consumers¹ actual search habits,

you are highly unlikely to secure a higher number of bookings ­ even if you are listed first on the first page of an OTA¹s default search results.

So how can you improve your page position on sorted search results?

While we would never advocate for discounting, price is the most important factor in securing a higher

page position on the sorted search results ­ and therefore, obtaining the most bookings from potential customers. Instead of discounting, ensure that you are constantly monitoring your competition¹s room rates, the demand in your destination and your inventory levels and adjust your prices regularly according to that info. Because you will automatically earn a higher page position if your rates are better than the majority of other properties in your destination, this will be an effective solution to generating more bookings and increasing revenues.

And of course, the best way to monitor all of the ever-changing factors that affect what entails the

best price at any given time is an automated revenue management system. A sophisticated RMS will monitor all of these factors in real-time, will analyze the data, suggest the best rate and then update all OTAs with that price. In short, a sophisticated RMS will help a property to generate more bookings and revenue through the online channel, without the revenue manager being overburdened with the constant, tedious processes necessary to do so.

Jean Francois Mourier

Jean Francois Mourier arrived in South Florida in 2003 after a successful and distinguished career in Europe as a trader, financial analyst and director for a number of top firms including Merrill Lynch, ING Barings and others. He joined a small Miami Beach hotel management firm as a financial analyst.

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    About REVPAR GURU

    REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment. REVPAR GURU"s solution offers dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU"s software solution has been used by hotels worldwide to increase occupancy and RevPAR. Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.

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