Mr. Kistner

Website / Online Mechandising / SEO

Maintaining Your Web Site and Channels with the Right Information

By Mike Kistner, President, Chief Executive Officer & Chairman of the Board, Pegasus Solutions

Given the economy we are all experiencing, it shouldn't be a surprise to anyone that industry numbers, as reported in The Pegasus View, show there has been a global decline in net reservations, length of stay, average daily rates (ADR) and net revenues. The most dramatic 2009 declines occurred in January and February, and the hardest hit was the global distribution system (GDS) channel, which represents corporate and business travel. Year-to-date, GDS net reservations are down 8.43%, which, combined with declining ADR (down 20.53%), places net revenues down 28.62%.

Even with 'staycations' abounding, the alternative distribution system (ADS) channel, which is comprised mostly of leisure-based online travel distributors, has fared better as the year has marched on. Through summer, year-to-date global ADS net reservations were essentially flat, but had seen positive growth in four of the previous five months. Not surprisingly, the ADR associated with these reservations was down at a greater rate than the GDS channel, going from $119.48 to $83.86.

We have information gleaned from the nearly four billion hotel transactions a month that go through the Pegasus switch, and from where we sit, we can see how certain bets are paying off for hotels. The hotels that put all of their money on corporate programs are probably wishing they had left something for the online travel agencies (OTAs). The other hotels that went all in with the OTAs are considering where they might have redeemed RevPAR with a more strategic and dynamic pricing strategy. And the hotels that diversified are probably faring pretty well, considering.

The Formula: Channel Management

Diversification here translates to distribution channel management. Successful marketing and sales of hotels begins with sound distribution - deliver your hotel to your target customer, whoever they may be: 18-year-old spring breakers, forty-something executives, retirees, or all of the above. The ways you deliver your hotel to those audiences are your channels - travel agents, corporate travel buyers, OTAs, tour operators, etc.

Keep in mind the term is channel "management," not channel surfing. It's not as simple as creating a Web site and sending it to all of your audiences along with a wish that they'll catch the wave and start booking your rooms. It's in-depth, everyday, active management of each of your channels to ensure up-to-date rates, availability and content. This process begins with your central reservation system (CRS) and your Web site.

The Control: How you sell

Your site and CRS are the foundation of effective channel management and selling. Without the right technology and content, you won't even compete for the business that is being booked. Think of it as one of the few areas where you have complete control. Understand it as an area that will determine whether your target audience is able to make informed booking decisions.

Descriptive content should be complete, fresh and appealing. Images should display clearly and easily, and should serve to give a complete picture of the hotel experience. Where budgets allow, virtual tours and video can be used for better merchandising. Research used by VFM Leonardo shows that online travel shoppers are 67 percent more likely to book a hotel that displays a virtual tour, and a staggering 89 percent more likely to book when a hotel displays video. Address, directions, travel information and local attractions should also be used to help make your hotel more accessible and put it in "context" with the respective destination.

Again, keep in mind the importance of diversification with regards to content. While some hotels are obviously meant for the business traveler or corporate meetings, economies like ours have helped remind us of the importance of flexibility. If you don't make the appeal to another audience initially on the site, be prepared to have the option should circumstances create the need.

Additionally, your Web site technology should enable content to work for you. At the very least, use of a booking engine on your site allows you to capture reservations directly. A next generation CRS can also facilitate updating information on the site and in the online distribution database (ODD) through a single point of entry, which translates to more efficient content management and distribution of information.

Next generation CRSs also allow you to handle the information requests coming into your site, not only from Web shoppers, but also from the ADSs and the GDSs. For example, we reviewed the case of a hotel this year that had missed two million shopping queries in just one week because the hotel CRS was not responding to information requests quickly enough. Your replies to shopping and booking requests need to be on their way back to the customer in a fraction of a second. Exceed the response time limits, and you won't be returned. And I think we all know the importance of consistent CRS reliability and availability.

The Variable: How they shop

By voice, by Web or by agent? You probably have a pretty good idea. For example, The Stafford in London recently reported it was able to actually adjust what consortia to work with based on historical and forward-looking data provided in business intelligence reports. But, in the absence of a sophisticated solution, you can still ensure you distribute correct information everywhere.

Again, consider your content. Is the same content you poured over on your Web site being distributed accurately and consistently across all channels? How does it make your hotel look when one site shows you're 11 miles from Dallas-Fort Worth Airport on highway 190, and the ODD places you 10.5 miles from DFW on George Bush Turnpike? You're local, so you know it's generally the same location, but the Atlanta-based agent working with specific client instructions and not knowing local vernacular may see the inconsistency as reflective of an unreliable hotel experience.

Rate and availability content is even more important. You may have the resources and systems in place to update room rates for the trade show when you're a year out, but you can you do the same in a dynamic environment while also updating availability and adjusting to other circumstances. And, can you do so accurately and consistently by voice, ADS and GDS? As I stated earlier, the name of the game this year in the ADS has been average daily rate. While it has fallen 29.81%, you can put in place systems to make sure you don't drop too soon or too early, or that, hopefully, you can rise again.

The time to prepare is when things are calm, or even slow. Put in a place a rules-based engine that allows you to create standards for setting rates and availability, and subsequently updates those across your distribution channels.

For instance, these engines allow you to state that when the hotel hits 80% occupancy on a Tuesday, rates automatically increase 5%. Or, when the hotel remains below 50% occupancy on a Thursday, rates automatically adjust downward. Immediate distribution and automation, especially with tools integrated into your existing systems, ensures you're doing everything to reach your customer where they're shopping, and equipping them with the tools they need to buy.

The Result: How you fare

If there's one thing we've consistently seen this year, it's that many of the companies who aren't surviving on shifting demand had already committed to strategies that would only succeed if certain trends continued. However, the nimble and smart companies have been prepared to respond quickly to changing trends; and have had strong, solid and flexible business processes in place.

They've managed their channels effectively, making the effort to deliver the right information to the right audience.

Mike Kistner is Chairman, President and Chief Executive of Pegasus Solutions. He joined Pegasus from Best Western, where he was CIO and SVP of distribution. Mr. Kistner holds a BS from Northern State University, Aberdeen, S.D., and a MS in Information Systems from Colorado State University. He is the past Chairman and current member of the e-commerce committee of the AH&LA. From 2000 to 2005, he served as Chairman of the Open Travel Alliance (OTA) and has been recognized as one of the leading CIOs in the hospitality industry. Mr. Kistner can be contacted at 480-624-6450 or mike.kistner@pegs.com Extended Bio...

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