#tourismbusinesssales

Tourism operator maintains rate integrity

Not so many years ago tourism operators relied on travel agents, word of mouth and advertising to source their customers. In today’s world we have an ever growing number of online travel booking services, feedback back sites and a digital world that is easy to become lost in. A digital disadvantage is common and something we coined as result of becoming aware at just how many businesses end up this way. It is not just small businesses or those in rural or remote locations, many businesses large and small end up this way through buying an existing business, a change of their operational location or simply wishing to delete a series of poor comments left by disgruntled customers of the business they have just purchased.

The most common mistake tourism operators make is handing all their sales and marketing investment work, to online order takers. This essentially affects their relationship with travel trade partners and their own booking processes in place. Recently whilst consulting to a small resort operator we learnt that they were being bullied by a well-known online booking agent who we choose not to name. The partnership abruptly ended as the resort came to realise the OTA was simply flogging their business as well as that of their trade partners by simply discounting the available product. All whilst stating in the contract terms that the resort was not able to undercut them in the market place, something they themselves were doing to the resort and its distributors. Additional to this, the resort in question was receiving bookings from customers that were not choosing their product because of its attributes or location, or because they wanted to be there, but were simply booking the property because all other nearby online options were unavailable or full so the properties client base changed which was leading to less favourable online feedback. Additionally the B2B distribution of this source lead to the product being misrepresented and often stated as BOOKED OUT when in reality there were plenty of rooms left. The online agent or B2B partner simply had no stock left to sell so directed the client to what their algorithm perceived as comparative products that were nothing of a sort.

As the relationship soured and the staff became fearful of those clients coming from that booking source the resort management made a conscious decision to terminate the contract in question along with others similar and swallow what looked to be a heavy revenue loss. They did so knowing this to be the case and the potential consequences. To minimise the losses strategic action was immediately put into place by remaining with other online agents and reviewing their supply contracts. This lead to stating clearly and enforcing in these supply contracts that no discounting of their product was on offer to club members or casual shoppers of those online sites. The operators were not keen at all, but agreed in order to maintaining the listing revenue. What we all learnt was that these online travel sites were offering every shopper a discount not just members and were changing this discount offer according to the origin of visitors and or bookings. So essentially whatever market the product was popular in, due to the resorts marketing investment, in order to secure more bookings from that market the online agent would tailor the algorithm to attract more customers from those markets. Why was this working? Because many punters want a deal or a perceived better price. 10% off is a substantial lever to make that process work.

Sticking with the new online plan was difficult, but management did so confidently. They had invested so heavily in marketing to those source markets, had great referral lines from in market agents and previous clients that they had to be able to claw back that lost market share. What happened surprised us all? The telephone started ringing again, online and agent bookings again surpassed those taken by online order takers, and the best of all, those that called to make an enquiry would book direct or with their local travel agent. Why? Because the price was the same! Additionally the service and information received through that change was accurate and personalised to their needs. Rate integrity is something many hotels, tour operators and accommodation providers overlook. For those that have no market relationships they have no reason to care. For those that do and additionally invest in their business future by marketing their product through distribution channels and their own online booking systems, rate integrity is paramount!