A case of poacher turned game keeper
Booking.com is closing its rate manager tool according to a report from NextGen Opti. RateManager is a subscription service from BookingSuite that provides rate recommendations and forecasted room occupancy.
Most hotel operators have woken up to the benefits of using data to help make pricing decisions. They realize demand levels shift and who better to know about the nature of reservations than the largest seller of hotel rooms in the world, Booking.com.
Is it a bad thing if RateManager is terminated?
As a solution, RateManager no doubt ticked many of the right boxes for a lot of operators, regarding budget and functionality. But don’t worry, if the prediction is correct this could be a positive thing – would you want OTA’s, the dominant force in online distribution to have even more power?
The OTA market share is at an all-time high and climbing, along with the costs of doing business. OTA’s, and their budget-busting brand building activities and mounting awareness amongst consumers, continue to drive a wedge between guests and operators.
Hospitality is a world more used to order, so we need to adopt a smart strategy to address the uncertainties of the business. Whether that be the economy or how to manage the dominant forces of the online world.
Operators need to implement a robust approach to revenue management, reducing the cost of sales and growing reach to achieve future revenue and occupancy goals.
In 2015, according to Phocuswright, OTA’s represented 71% of all online sales in Europe, a trend which continues to grow and one that hospitality has a love-hate relationship with.
The lure of OTA’s is the power of their distribution and reach, and who can resist the temptation of tapping into that rich vein of reservations, that these tech giants can deliver – but at what price?
OTA’s as a channel tend to have the highest cost of sales for hotels, but they can boost occupancy and deliver reservations when needed. An OTA has the ability to “cast a far wider net” and extend your reach, for example with key feeder markets that you would not typically have access to.
The volume of online business today driven into hotels via OTA’s is both significant in its size and value, some may say it’s almost a colonization of the hospitality industry. So, when you begin to imagine a world where the OTA’s are not only the dominant distribution channel but like the example of RateManager have developed software to help set your prices – it’s probably a good time to start asking questions.
So why did Booking.com want to make hotel tech? What was in it for them?
Taking advantage of a strong position in the market is familiar territory to The Competition and Markets Authority that not so long ago looked into the tactics of Booking.com and Expedia around pressure selling.
Booking.com may consequently consider it a risky strategy to be perceived as taking advantage of a dominant market position, on the one hand, is the largest seller of hotel rooms and the other providing tools to recommend you the best pricing points?
Or maybe it is merely so that the uptake has not been strong enough to show a return on their significant investment to maintain and manage the software – especially in contrast to their home turf core business.
Hotel operators need to play smarter in this environment, to employ a more proactive approach to revenue management themselves and listen to the compelling argument to invest in their own technology and expertise.
It’s hard to do revenue management properly without collating your competitors and the market’s past, current and forecasted data. Revenue managers are searching for a more intuitive experience and faster ways to act on real-time data.
Hoteliers are also looking for a relationship, a two-way communication that means a supplier understands an individual property’s needs and a pricing model that scales with your growth.