proliferation of online booking channels a boon
Trust International looks to leverage new channels to extend coverage for hotel clients
Following the proven success of its high-profile partnerships with Google’s Hotel Finder and Room Key, hotel central reservation system (CRS) vendor, Trust International, is looking out for similar opportunities, as it perceives the proliferation of online booking channels a boon to its hotel clients.
Trust’s Managing Director, Richard Wiegmann, said in an interview with Travel Daily China 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 said.
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.
Mr. 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,” he said.
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,” said Mr. Wiegmann, “[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 said.
GDS should change business model to face challenges from new channels.
While multiple online channels are advancing on the hospitality front, global distribution systems (GDS) are lagging behind, he observed.
“The GDSs have missed the plane on the B2C [business to consumers] side clearly,” he said, “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 standards 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 said, 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 said.
He would like to work with GDSs on a much bigger scale. At the moment, 30 percent of the bookings on Trust’s CRS are from GDSs, and 70 percent from other channels. “When I started, we had 85 percent from GDSs,” he recalled.
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 said.
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 cautioned, “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 suggested.
“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,” he said.
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 discussion 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 said.
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 travelers, through whatever channels they are choosing, can go to one of our properties,” he said.
He will meet with prospective hotel clients, as well as existing clients, and keep tab of the China market when attending the Travel Distribution Summit on September 12-13.
“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 [pursuing in the summit],” he said, “The important thing for us is to be very much aware of what is going on in the market.”
Mr. Richard Wiegmann, Managing Director of Trust International, will participate in a panel discussion on “The Emerging Asia Pacific Online Travel Market” in the 2012 China Travel Distribution Summit to be held on September 12-13 in Shanghai. For more information about China Travel Distribution Summit, please visit the event website http://summit.traveldaily.cn/18/index.aspx .