NB: This is a guest article by Tsang Shuk Wa from China Travel Daily.
Following the success of partnerships with Google’s Hotel Finder and Room Key, hotel central reservation system vendor Trust International sees a proliferation of online booking channels a boon to hoteliers.
This, coupled with changes to protocols around consumer choice and guarantees, and a need for the Global Distribution Systems to come up to speed with the rest of the sector, could leave to a revolution in hotel distribution and marketing.
Trust’s managing director, Richard Wiegmann, says that it is a CRS’s duty to get in bed with as many channels as possible and extend the reach for hotel clients, even if the channels duplicate each other in functionality.
"From the technical perspective, the business model (of the online booking channels) may be the same, (but) they cover different geographical market segments. They might open new markets for our clients, and this is the key for the hotels," he says.
The partnership with Google’s Hotel Finder that started a year ago is already paying dividends. Hotel Finder has been generating nearly 50 million page impressions a month for Trust’s portfolio of over 7,000 hotels, most of them are live on the Google platform.
Wiegmann is impressed with the Google solution’s delivery of availability and rates and its graphic interface showing geographical boundary and points of interest in the neighborhood of the targeted property.
That the Google search takes a customer to the hotel’s website instead of via an online travel agent (OTA) is a major advantage.
"(This way) the hotelier owns the booking. The hotelier has the unique chance once the customer has come through the Google link to keep that as a direct customer, through direct mailing or whatever. That is a unique chance not offered by the OTAs today."
Price guarantee set to change hotel game
He also sees Tingo’s initiative of offering lowest rate guarantee a positive development for online hotel booking. Tingo has offered to rebook customers if a more favorable rate is on offer after bookings are confirmed, to assure customers that they enjoy the lowest rates even if they book early.
"Some of my hotel customers would hate me for making that statement – I like the idea because it gives customers assurance. In the back end it ruins all yield management of hotels.
"(but) I think it puts more faith into online booking. People will feel a lot more secure. It will increase the lead time for booking, giving hotels planning security."
What remains to be seen is the impact on yield management. "If (the Tingo offer) comes true, it will change the way hoteliers look at distribution and the associated yield management," he says.
GDS should change business model
While multiple online channels are advancing on the hospitality front, global distribution systems (GDS) are lagging behind, he observes.
"The GDSs have missed the plane on the B2C (business to consumers) side clearly.
"GDSs are on their 1990s business trip. They work with the big corporates at corporate rates. Their interfaces are a little bit 90s."
On the B2B (business to business) end of the business, it is essentially down to three GDSs controlling the market, but they don’t factor in the B2C business.
"There are better standard than GDSs. Why is that?” he queries. "Today the OTAs go to 100 places – to the CRS sites and the hotel sites. Why have the GDSs not concentrated on offering better products to make the OTAs go to one place and source their availability and rates?"
"I think the GDSs have lost their unique chance there," he says, while conceding that the GDSs’ focus is understandably on airlines.
"Certainly, the airline side is still dominating on the GDSs. Hospitality is not making as much money as airlines. But it’s a very good story to have success in hospitality and to not be just one-sided, one focus. They should concentrate a lot more on the hospitality side.".
He would like to work with GDSs on a much bigger scale. At the moment, 30 per cent of the bookings on Trust’s CRS are from GDSs, and 70 per cent from other channels. "When I started, we had 85% from GDSs," he recalls.
The barrier for working with GDS is cost. "Given the cost of GDS booking, it is simply not worth anymore compared to what I can generate from other channels," he says.
He urges GDSs to rethink their business model to stay relevant. "They have to understand why consumers go to other channels such as Google, Expedia, you name them… If they don’t change their business model very soon I think the other players in the market have a very good chance of taking them over," he cautions.
"They should rethink their business models and their pricing concepts. Just to increase distribution prices every year does not drive additional demand. The question is what does drive additional demand. This is the sort of question they should ask themselves,” he suggests.
"If they want to get some traction on the B2C side then they have to make a huge change in their strategy and say hoteliers are really important to us and we would like to keep up with the fantastic models and ideas that are out there."
Positioning for a bigger play in China
He believes that the CRS’s knowledge from working with multiple distribution channels will be useful in finding a strategic direction in working together with GDSs in a more cohesive way.
Currently, Trust and Travelsky are in discussions on connecting their systems to drive additional business into China for the 212 hotels in China in Trust’s portfolio.
Acknowledging that China is the fastest growing market worldwide at the moment, Trust is in the hunt for a Chinese counterpart to work in a similar way as per its partnership with Google. "I’m not naming anyone. That will be interesting for us," he says.
In addition, Trust is also looking to connect to China’s major OTAs to tap the market when individual travel takes off as the market matures.
"When that time comes, we would like to be there to ensure that the Chinese travellers, through whatever channels they are choosing, can go to one of our properties," he says.
"What is it that a system like ours can contribute to the market? What do the hotels need in the market? There is a new channel. Would you like to work with our customers? Those are the three key components I’m looking forward to.
"The important thing for us is to be very much aware of what is going on in the market."
NB: This is a guest article by Tsang Shuk Wa from China Travel Daily.
NB2: Wiegmann will participate in a panel discussion - The Emerging Asia Pacific Online Travel Market - in the 2012 China Travel Distribution Summit to be held on 12-13 September in Shanghai.
NB3:Revolution image via Shutterstock.