Industry Update
Opinion Article17 January 2017

A Light in the Tunnel - In the On-Line Travel Agency Hold

By David Lund, The Hotel Financial Coach

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More Creative Disruption?


The On-Line Travel agents, The Expedia's of the world started it all for the hotel business and served as disruption model for many other ideas and innovations. Has the time come for their disruption? Like a restaurant that pops up next to a hotel, the OTA's have been sucking the life blood from hotels bottom lines. It was and is due to the lack of a meaningful platform or a response that created the need in the first place. Brands and hotels were asleep to technology and they welcomed the on-line phenomena until it became omni present and greedy. It's been 20 years since Expedia launched its first on-line travel site, completely revolutionizing the travel industry. But many would argue it's time to disrupt their game.

You don't have to go far to find a disgruntled hotel manager or owner when it comes to the ever-rising costs of the OTA's. It's an all-out war to remove this cancer from the landscape. But how? To-date there has been no platform that has any real potential to impact the strangle hold that the OTA's have on the hotels. Brands and OTA's have messed around with rate parity and this has just frustrated everyone even more. Brands try to leverage loyalty and offer value adds that the OTA can't but that has had little impact on the soaring OTA usage and costs. So, what can a hotel do to reduce these OTA costs and not lose share?

Well, a small light in the tunnel has appeared. A Danish company has developed a peer to peer cloud-based application that allows hotels to have travel agents and corporate travel managers book their rooms without any fees. Both the hotel and the agents purchase a modest subscription and that's it, no percentage of spend. In a typical hotel picture, a 12k US spend in the traditional OTA arena would produce enough commissions to pay the annual subscription fee and the meter stops there. Every reservation and all spend from that point on is free of commission or any other fees. The hotel only needs one subscription for all traffic regardless of segmentation or the orientation of the business. On the travel agent and corporate travel managers side, they currently use the OTA's to book rooms for their clients and one study suggests an average reservation equals 38 different websites are used to research and ultimately book what's needed for their clients. Most of the visits are needed to compare rates, policies, amenities, and services. With the "Request for Proposal" RFP platform all the travel planners and agents need to do is drop a pin on the area they are looking to find accommodations in, put in a few modifiers and the hotels respond with pricing that is not commissionable and this pricing is not in the public domain and not subject to rate parity. The RFP system has over 350,000 hotels in its database for travel planners and agents to choose from.

The system grew out of an apartment exchange site that had some popularity, it was called Shevana. The original idea was to make the travel planner's life easier. There really is not a convenient, modern and cost effective platform for their use. Not until now.

The technology is a breakthrough for hotels and travel planners. It's a breakthrough because the current requirements to book this type of accommodation must pass through a beleaguered landscape of outdated and expensive technology. This new platform resets the game so to speak and now the customer and the hotel can communicate seamlessly with one another. Like in the old days when the travel agent or the travel planners would call the hotel reservations department directly and get a great

rate and service for their clients. Well the old way is back with a new set of tools and maybe it's time has come. Necessity really is the mother of invention.

David Lund

David Lund is The Hotel Financial Coach, an international hospitality financial leadership expert. He has held positions as a Regional Financial Controller, Corporate Director and Hotel Manager with an international brand for over 30 years. He authored an award-winning workshop on hospitality financial leadership and has delivered it to hundreds of hotel managers.

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