Win the War by Selling More!
November 14, 2019
November 14, 2019
Let’s start by immediately addressing the elephant in the room.
Hotels are not good at selling travel inventory online.Knows “Everyone”
Hotels lost the digital race to the large online travel agencies a long time ago. OTAs have a wider selection, better customer service, and better tech. When I speak with regular “Joe Schmo Hotelier” about making more money, I tell him to do his OTA research and pick one OTA he can live with and that’s it… no need to do anything else. Don’t create your own web site. Don’t use a bed bank. Instead, focus entirely on that one OTA.
You know why?… Because hoteliers are [still] not digitally savvy and most just want people to magically walk into the lobby. And, because it’s simple and cost-effective. You don’t need to subscribe to a bunch of services like a channel manager. You don’t need more staff or web designer. You can simply focus on being the best hotel on that one OTA in your area.
When you work with only one OTA you:
- Don’t have to worry about rate parity non-sense.
- Get an extra boost for not being on other OTA sites.
- Have a pro organization doing digital marketing and customer service for you.
- Save money on staffing and services
The real costs of doing business
I’ve spoken to large hotel chains that have paid more than $60 million in commission to Booking.com alone. They are definitely feeling the pain but they don’t know how to stop using OTAs. Most hotels leave 35% – 75% of room inventory with the OTAs. It gets sold… but at what price?
The real problem is hoteliers have to contend with more than just the loss of revenue when choosing to work with an OTA.
When you work with an OTA you:
- Lose your brand.
- Lose the experience. The focus is solely on price.
- Only have commission and discounts as leverage.
- Lose your customer.
- Have to work with price manipulation by bad actors
- Bully behavior.
The truth of the matter is that this relationship is not going to get any better. OTAs are at war with one another and all OTAs are at war with Google Travel. Hotels are the casualties war.
Travel tech is legacy
Have you considered that the way we sell travel products today is ancient in “tech time”? Things like:
- On-premises PMS systems.
- 5 monopolies selling 90% of all travel inventory worldwide.
- 100s of travel tech services acting as either middleman for you to distribute your inventory onto the 5 monopolies or offering widgets that promise more direct sales.
- Static rates and the whole sub-culture around contracting and reselling them.
- Rate parity — HOGWASH on the same level as governments bailing out banks with your tax dollars.
- MICE as a “separate unit” of travel with its own department and room blocks.
- Room with breakfast.
- Commissions…. *Mic drop.
This is not to say that hotels are not making incremental steps towards digital mastery. However, the industry as a whole is legacy. At the end of the day, it’s hampering innovation and the casualty is the product; which means everyone loses.
The age of the platform is upon us
I had the honor of speaking [again] this year at the ITB SG 2019 event. ITB is an event for hotels and travel destinations to sell their wares to travel agencies and other buyers. Our talk was scheduled immediately behind the morning’s keynote featuring Google, Agoda, Expedia, Trip Advisor, and Wego. Each representative extolled the virtues of their respective platforms and the valuable insight gained from massive amounts of user data. “The data scientist is the MVP of this new game of travel!”
Our panel discussion was “Hotel inventory distribution is fundamentally broken: How hotels and suppliers are changing the game for everyone”. I was joined on stage by Fabian Bartnick of Infinito, Kevin Rautenbach of WebConnection and Matthew Faull of Swiss-Belhotel.
The premise was “What if hotels had a completely new type of distribution platform to play with; a platform that was made for hotels and other travel suppliers to sell all kinds of travel inventory to anyone, anywhere.”
At ITB you cannot plug your own services during a talk and rightfully so. Instead, we relied on popular tech company analogies so everyone could follow along. Read our previous article for a talk about silos vs platforms and you’ll see the same analogies there. In this article, we don’t have to hold back and we are going to go in-depth into what has taken us almost six years to develop with the assistance of a long list of respected hotel brands and chains around the world.
Say HI! to “The Platform v2020.1“
I want to preface this section with the fact that this platform is the passion project of a few emboldened hoteliers and the result of 10000s of man-hours building a best-of-breed system for hotels to sell their products for decades to come. It’s a platform hotel can come to affectionally know as their own.
We will cover everything in detail below. First, let’s cover the key concepts of this new distribution system.
- The Customer is co-owned.
- The Product is only controlled by the Product Owner
- The Product can be anything.
- The Product can be sold anywhere.
- The Product Owner is always responsible for Fulfillment.
- The Product Owner manages sales channels.
- The Product Owner can sell to all segments: Retail, Corporate, Travel Agencies.
- The Product Seller can be anyone.
- The Product Seller accesses Products via our Web Components, APIs or SDKs.
- The Product Seller can negotiate Rates directly with each Product Owner.
- Product Owner / Seller can access platform-level analytics
- The Platform is a self-contained system with integrations to other major travel tech vendors.
- The Platform contains an App Store with extra services.
- The Platform processes payments for a small fee.
That was a handful. For the remainder of this article, we’ll break down each concept into its own section and clarify the thought behind it.
1. The Customer is co-owned
We put this first because we think it’s a really important distinction. The Product Owner and Product Seller have access to the customers they sell to. If you know your customer, you know how to better serve and upsell that customer. With the help of analytics, both Owners and Sellers can custom tailor their products to target customers.
As a result, customer satisfaction goes up and everyone wins.
There are several layers of customer data and some need to be private or semi-anonymous but the levels boil down to:
- Purchase data
- Profile data: Allergies, food preferences, etc
- Browsing data
- Contact details
- Contact preferences
2. The Product is only controlled by the Product Owner
This is another KEY concept. It is a well-known fact that hotels have lost control over their own rates and availability to the big OTAs. OTAs are notorious for manipulating rates and breaking their own rate parity rule to be able to sell rooms cheaper than everyone else. Hotels are not that sophisticated and can only when other OTAs give them a hard time for something another OTA is to blame.
The Platform allows the Product Owner full control over inventory at all times. The access layers are:
- Organization level: The Product Owner can ENABLE / DISABLE the organization. No inventory will be available anywhere.
- Channel Group level (CGL): The Product Owner can ENABLE / DISABLE a CGL at any time. E.g. All travel blogs.
- Channel-level: The Product Owner can ENABLE / DISABLE an individual channel at any time.
- Inventory-level: The Product Owner can ENABLE / DISABLE specific inventory for any channel at any time.
- Top Channel level (TCL): The Platform also reserves the right to create / update / remove TLCs. E.g. Corporations. This happens rarely if at all.
3. The Product can be anything
The Platform was built with the premise that:
- It needed to be future-proof and
- The way to be more competitive is to sell a bigger experience.
A Product Owner can sell/upsell things like:
- Car service
4. The Product can be sold anywhere
This is a KEY differentiator to anything else available out there. We turned the model in-side-out on purpose. Instead of hotels working towards spending hard-earned money integrating only with a few large costly silos (See above), they can make their inventory available to an ecosystem of new sales channels and segments. Why sell on two channels when you can sell on hundreds with less work and cost.
We democratize travel inventory the same way ride-sharing companies democratized the driver. We empower The Product Owner and their Products to take center stage.
5. The Product Owner is always responsible for Fulfillment
Ultimately, it is the responsibility of the Product Owner to handle fulfillment for any booking that occurred for one of his products. The connection between Traveler and Product Owner should always be direct. This is where hotels need to take some responsibility. Nothing is really ever free. The cost of making this work smoothly is for hotels to support sales across all channels. In return, funds flow directly into their bank account. There is no other party holding onto their funds. The onslaught of savvy new FinTech payment startups has made this possible.
6. The Product Owner manages sales channels
As mentioned previously in point #2, The Product Owner has layers of sales channels at his disposal. For every channel, he controls the discount, promotion and commission structure. For example, he can choose to give all Travel Agents 10% commission and Travel Agent X 12% commission.
There are also two unique channels on The Platform:
- Traveliko.com, the only 0% commission OTA
- The channel a Product Owner uses to sell his own inventory on his brand.com website
7. The Product Owner can sell to all segments: Retail, Corporate, Travel Agencies
Segments are fully configurable channels and can be managed as such.
8. The Product Seller can be anyone
Anyone wishing to sell travel inventory can sign up with The Platform as a seller and start selling today. Depending on their proficiency they’ll use our Web Components, SDKs or APIs. There is no cost for signing up.
9. The Product Seller accesses Products via our Web Components, APIs or SDKs.
A Product Seller can be up and running with a completely configurable OTA on her web site in minutes. Our Web Components require a minimum amount of technical knowledge.
If you want even more control over how you display travel inventory on your site or travel app and you are a programmer or have a development team, our REST APIs and SDKs are well documented and you can get started integrating right away. There is no cost for signing up.
10. The Product Seller can negotiate Rates directly with each Product Owner
Instead of hotels gaming a few large OTAs with the commission, we turned this model around as well. When a Product Seller gets started selling travel inventory, she will be given the default commission structure by each hotel on The Platform. If she produces well for a couple of hotels, it would be in her best interest to seek out those hotels and ask for a better commission and/or discounts to make her earn more money and channel more attractive.
This is great for Product Owners as it diversifies risk across multiple sales channels AND it keeps commissions in check due to more Product Sellers.
11. Product Owner / Seller can access platform-level analytics
The Platform makes available analytics to parties doing business on The Platform at no cost. This insight can be instrumental in creating a better “product fit” during high/low demand or upselling with a bigger product because that’s what is currently in demand.
12. The Platform is a self-contained system with integrations to other major travel tech Vendors
As we all know, no man is an island. This is especially true in the travel tech space. We integrate with the most popular vendors so Product Owners can easily onboard The Platform with the least amount of manual steps. We are not here to supplant existing travel tech businesses. On the contrary, we have created an ecosystem where everyone benefits.
13. The Platform contains a Marketplace / App Store with extra Services
No one platform will ever be good enough for everyone. For that, we have created the Marketplace and with a handful of other vendors, have created value-added services platform users can subscribe to. We’ve started with the basics with the goal of being a one-stop-shop.
- Website creation
- SEO support
- Rate Parity tool
- Revenue management assistant
- Booking Engine
- …and more
14. The Platform processes payments for a small fee
At the core, The Platform is a payment gateway with a lot of travel data analytics. We want everyone to use our technologies to sell all kinds of travel inventory everywhere. We take a small fee for every transaction made. It maintains The Platform and continued development to create an even better travel experience for buyers and sellers alike.
As a Product Owner, start thinking bigger. You have a wide variety of things you can sell, on or off-premises. Get creative! Give travelers a reason to visit your property and sell them something they can’t buy through the regular OTAs. “Room with breakfast” scratches the surface of what’s possible. Win the WAR by selling MORE!
As a Product Seller, you’ve been underserved. If you wanted to sell travel inventory, you only had sub-par affiliate programs available to you. You couldn’t build your own travel brand. You were also always feeding the large silos with eyeballs. With The Platform v2020.1, you have a direct connection to 1000s of suppliers all over the world and you can choose what kind of relationship you want with each one of them and how you would like to sell their products.
Travelers can expect to find epic inventory for sale everywhere. Head on over to your favorite travel blog, start dreaming and when you ready, book the entire trip right there.
The travel space just got a whole lot more exciting. This is the future of travel!
Bjorn Harvold is the CTO and co-founder of iko.travel and traveliko.com