Importance of price

Hotel search engine

It’s already been many years since the hotel industry decided to throw itself into the adventure of trying to capture clients directly.

It made sense in theory, the numbers seemed to justify it and every day 10 new businesses with fantastic reservation systems appeared (although many only offered a simple reservation “motor”) that for a reasonable price, or even better, for a commission, were available to develop a new web page for the hotel and integrate it in its reservation engine.

In addition, there arose an infinity of online marketing agencies certified by Google to manage pay-per-click (PPC) campaigns, all specialists in search engine optimization (SEO), in e-mail marketing, and, finally, in the management of social networks.

Clearly this is a world that changes with incredible speed, so that which is right for today, is less so tomorrow, and what we learned at the last conference will be old news in six months.  Nevertheless, those of us involved in this sector all try to stay up-to-date to make sure we don’t miss the train.

At the InnWise team of which I am a part, we believe in the comprehensive management of the business cycle in order to guarantee the optimum performance of a hotel’s Web page as a sales channel.

That means we need to have Online Marketing to attract or “capture” a client, we need a good web page to convince him that our product is what he is searching for, or “make him love it.” A good reservation engine is fundamental so that he can buy on our page confidently, or “convert him,” and, finally, we have to manage our post-reservation relationship in order to “make him ours.”

We really believe in this.

Unfortunately, all the above is completely irrelevant if the Web page price for our client is greater than other intermediary channels. It’s that simple. I don’t have facts or statistics at hand (although they exist) that explain why a client chooses a reservation channel based on where he finds the best price, but it is common sense, and the intermediaries know it.

After all these years of trying to improve all areas of the business cycle, we continue to trip over the same obstacle, one that is both very easy and very difficult to resolve – the parity, or more precisely, the disparity of rates.

I’m not going to analyze the advisability of whether or not to maintain a parity of rates in this post, since much has already been written about it. What I really want to share with you is a recent study by Rate Gain, published on the HSMAI web page, which looks at the percentage of 3-, 4- and 5-star hotels in the main American cities that have a rate on their Web page that is cheaper than the one given by the different Online Travel Agencies (OTAs).

The result is devastating, from which one can draw some interesting conclusions. For example, the Americans OTAs are making a killing on 5-star hotels in Las Vegas.

Three-star hotels:

Four-star hotels:

Five-star hotels:

* Price data studied by Rate Gain from February to April 2012.

*  The prices are as indicated and Rate Gain cannot be held responsible for possible errors.