An unapologetic look at Hospitality

Entries tagged as ‘hotel’

Mac users sleep better!

July 26, 2012 · Leave a Comment

Just about a month ago now, the Wall Street Journal published an article about Orbitz presenting more expensive hotels to Apple Mac users. They found out that people using Apple products spend 30% more on hotel rooms than Windows and/or Android users and are 40% more likely to book 4 and 5 star hotels.

I fail to see how this is news… We all know that Apple users pay more for a computer than Windows users and it seems they do for hotel rooms as well. How dare Orbitz target customers? The horror! For serious now, that whole storm in a tea cup got me to thinking…

Several times in my hospitality career I have been asked if it is possible to track “page positioning”. That is, if a consumer looks for a hotel in my city, on which page do I show up and on that page in which slot do I sit? Sure that’s possible! Matter of fact, I’ve already built it. But there is one question, the longer I look at it, that looms darker and darker… Why would you want to measure that?

The WSJ article makes something painfully clear. There isn’t a damn thing you can do about it anyway!

The first few slots, high up on the page, are reserved for hotels paying for placement. After that, it’s anyone’s guess where your property is going to display. Most of the things that affect placement can only be influenced by the consumer, not the hotel. That means that worrying about it is roughly as effective as painting your house with a mascara brush. Here are some of the things that are being used by sites to influence search results.

Location. It turns out that people living in New York typically book a different type of hotel than people from other places.

Referrals. If you end up on a site because you were referred by Kayak.com you are most likely to be price conscious. Likewise, if you come from Tripadvisor.com you are more likely to care about quality and less about price.

Repeat traffic. If you keep looking (even if you are just window shopping and not booking) at Holiday Inn, more than likely you will start finding more and more of those on consecutive search results.

Dollars off. Throw a nice little discount in the mix and all of this stuff is out the door yet again.

Most web sites also offer a handy little sort tool to their users. Regardless of how the site decided to display my search results, I can obliterate any of these efforts with a simple click. After all that research into which of my competitors are listed above and which below me, what have I really learned?

 

 

Categories: Hospitality · Search
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Rate Parity, what the hell is that?

January 28, 2011 · Leave a Comment

This article first appeared on jeroenschouten.com

In the hotel industry (I work there) the big thing at the moment is rate parity. What that means is this, if you sell a hotel room you want it to be the same price on say Expedia, Orbitz and your own web site. This, is to not confuse the customer the hotel says. Everywhere they look, same price. Cool!

Easy for the consumer, bad for the industry. If I am buying a TV, I shop around. I might find that the Samsung I am wanting is is 2500 dollars at Best Buy, 2359 at Target and only 2200 at Amazon. Why would I buy it anywhere other than Amazon? Well for starters, Amazon has to ship it to me. Not only do I have to wait for the thing to arrive, it’s now also going to cost me more money (IN SHIPPING). At Target I can pick it up today. However they are not a dedicated electronics outlet and their service is just not as good as Best Buy.

Should I decide that I really just want a second TV in my kitchen for when the world cup is on, I might go to Target. I have the option… Back to the hotel industry. Let’s replace the word Samsung above with Marriott. Let’s also replace the words Best Buy, Target and Amazon with Travelocity, Orbitz and Expedia respectively. You would think it works the same way… Marriott (the supplier) wholesales a room for 100 dollars. It’s now up to the retailer (Expedia and them) to decide what the mark-up on that room is going to be. Right??

Wrong!! The OTAs (that is what those web sites are called; Online Travel Agents) demand rate parity. If Marriott gives a room to Expedia for 100 dollars (that’s the retail price) then Travelocity also wants to sell that room for 100 dollars. Fine, but Expedia says my commission is 20 percent so Marriott, wholsesale me that room for 80 dollars. Well… says Travelocity, I don’t care what Expedia says we charge 30% commission so you better be selling me that room for 70.

I am not an economist, but it seems to me that something clearly is broken here. As far as I know, in every other industry in the world the supplier (Marriott) sets the wholesale rate and the retailer (Expedia, Orbitz and all them) sets the mark up and thus the final price. If Sanyo sells a clock radio to Walmart for say 10 dollars wholesale then Target needs to buy just as many of them to get the same wholesale discount. Otherwise Target is going to pay 15 dollars to Sanyo.

Not so, when it comes to hotel rooms. And to me that seems wrong. If a retailer says to me I want to mark up your TV by 100% and therefore you have to lower your wholesale rate otherwise I can’t stay competitive… I say go screw yourself! Take a lower profit! I know what it costs to manufacture that TV. Hotel owner, do you know what it costs to manufacture a TV?

Categories: Hospitality
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