"Hotels need to be careful about giving out net rates": Priceline

By EyeforTravel.com Correspondent in Amsterdam
   
The main challenges for a hotel, from revenue management perspective, are maintaining control over inventory and pricing, says Adrian Currie, chief financial officer, Priceline Europe.

Currie, one of the speakers on the first day of the EyeforTravel.com's 'Revenue Management and Pricing in Travel Europe 2005' being held in Amsterdam, on challenges from revenue management perspective, says, "We give hotels tools to do this (control over inventory and pricing ) for prices and availability management. We believe hotels need to be careful about giving out net rates."
   
On challenges related to aligning interests and distributing costs across the processing chain, he told EyeforTravel.com that aligning interests of hotels and distributors can sometimes be difficult.
   
"We believe the commission model (with pricing and availability control with the hotel) works well as all parties wants to sell more and everyone has an interest in getting the price up."
   
On how have hotels taken control of inventory, Currie referred to improved website design and functionality and policies; CRM and loyalty programmes; Aggressive control of brand (e.g. search engines); Re-negotiation of distribution agreements; Tighter control of merchant bookings (via CRS); Promotion of price guarantees; Enforcement of rate consistency; Education & training for hotels.
   
Currie feels rate parity plus reward schemes seems to have worked well for larger groups in the US.
   
"We think Europe is a very different market with 80% independents and highly fragmented demand," said Currie.
   
Active Hotels' recent survey findings indicated that 28% of customers chose to book with Active Hotels because they found the best rate for the hotel. "We encourage hotels to provide us with best available rates in order to optimise conversion.  Hotels control prices on our system and we provide the tools to enable them to do this," he said.
   
On selection of distribution partners, he referred to factors such as strategic fit in terms of being supplier friendly and the area of operations, good user experience, loyal customer base, hotel in control of rates & availability, no advertising on your brand, good training and customer service re extranet (or XML), large distribution network (wide, seasons, etc), flexibility (specials, advanced booking, late deals, etc) among others.