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Archives for March 2009

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IHG creates a new role to drive global strategy for its Hotel Indigo brand

InterContinental Hotels Group (IHG) has appointed Janis Cannon as vice president, global brand management, Hotel Indigo.

The newly created role has been established to drive global strategy for the boutique brand. 

In this newly created role, Cannon will lead a global team responsible for strategy, innovation, distribution, and rooms and revenue growth. 

Cannon most recently served as vice president, brand management, InterContinental Hotels & Resorts for the Americas region.  

“Given the current economic challenges, the Hotel Indigo brand has a significant opportunity for global expansion as developers and travellers alike continue to seek value over excess without sacrificing service or style,” said Cannon, adding that she intends to “strengthen the brand’s portfolio and expose the brand to new guests who are looking for a sensible boutique hotel”.  

Launched in 2004, there are currently 24 Hotel Indigo properties open with more than 60 hotels under development, either in the pipeline or in final negotiation. 

Contributing to its global footprint, IHG will open Hotel Indigo properties in San Jose, Costa Rica (2008), Shanghai (2010) and three additional properties in London (2012). In North America, properties are scheduled to open in Baltimore, Miami, New York City, San Diego, St. Louis, and Toronto. 

Related links: InterContinental 

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easyJet signs new partnership with HostelWorld.com

easyJet has signed a new partnership with HostelWorld.com. The airline’s customers will have access to Hostelworld.com’s inventory of over 20,000 properties.

The new service will be promoted via the easyJet homepage and dynamically via the customer’s flight confirmation screen. Reservations can be secured by paying a 10 percent deposit, with the balance paid on arrival. 

The partnership will also allow easyJet customers access to photos and map searches as well as viewing user reviews and ratings to make an informed choice. 

Related links: easyJet, HostelWorld.com 

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Leger Holidays’ agent website revamped

European coach tour operator Leger Holidays has re-vamped its dedicated agent website, Agent Webzone.

Launched in November 2008, the site allows agents to make real time online bookings, view holiday details, check for availability, special offers and late deals. 

Leger has now overhauled the design of the site. It now replicates the look and feel of Leger’s customer website, making it easier for agents to navigate.

The re-vamps will now make it even easier for them to make and monitor bookings, find information and navigate the site, said Ashley Dellow, Head of Retail Sales at Leger Holidays.

Some of the benefits of Leger’s Webzone agent site include: Ability to check availability live on the web; real-time booking facility; instant confirmation by email after booking online; Flexibility for independent agents and those working from home. 

Related links: Leger Holidays 

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American Airlines to expand its in-flight Wi-Fi Internet service

American Airlines Inc. plans to add Internet capabilities to many of its airplanes in 2009 and 2010.

The AMR Corp. unit began offering wireless Internet to domestic customers on 15 of its Boeing 767-200 planes last August. 

Now, it plans to install the service on 150 of its MD-80 planes in 2009 and start equipping another 153 of its Boeing 737-800 planes in 2010 for use on domestic flights. 

“The reception, I must say, has just been phenomenal,” said Doug Backelin, American’s in-flight communications and technology manager. 

American is charging $7.95 for customers who use hand-held wireless devices. Fees for laptops range from $9.95 for flights that are less than three hours to $12.95 for longer flights. Delta’s prices are identical. 

Both American and Delta are using air-to-ground technology developed by Aircell LLC, an Illinois-based company. 

Several U.S. airlines are planning on or weighing offering Internet on domestic flights. Virgin America expects to have its fleet of 28 planes outfitted for Wi-Fi by the end of June. 

Related links: Wireless Internet

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Harvey World Travel stores sold

Stella Travel Services UK has sold its Harvey World Travel agencies for an undisclosed sum to Vacation Travel.

Vacation Travel is a member of Stella-owned Global Travel Group’s Independent Options arm, which offers Abta membership, of which the Harvey World Travel stores will become a member. 

The deal brings the total membership of Independent Options to 350, alongside the group’s 400 franchisee network of members. 

Most of the 58 stores were previously Galaxy Travel in East Anglia and Lets Go in the south-west, both of which were sold to Harvey World Travel. Harvey World is a well-established high street brand in Australia where it has 550 stores and £800 million annual turnover. 

Stella UK’s managing director, Andrew Botterill, said: “This agreement brings the UK business model into line with our operations across other markets.  

He added: “This is about getting the correct structure for the UK and we have managed to do that while retaining the turnover of those stores. There are mutual benefits: they have access to our products and services and they still support Travel 2.” 

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Revenue managers feel the pressure to reduce price to maintain market share

Exclusive: Findings and recommendations based on a worldwide survey with RM executives

With the recent economic downturn, many hotel revenue managers have been struggling with how best to manage declining demand and the pressures to reduce rate. 

In order to gauge how revenue management has changed during these times of economic uncertainty, Sherri Kimes, STB Distinguished Professor of Asian Hospitality Management, Cornell-Nanyang Institute of Hospitality Management, conducted an online survey of hotel RM professionals throughout the world. The survey, conducted in partnership with EyeforTravel, was completed by the end of March. 

Survey respondents were asked to evaluate eight different issues and assess how the importance of those issues had changed from the previous year. In addition, respondents were asked several questions on how occupancy, ADR and RevPAR performance had changed at their hotels during the previous year. 

In addition, the survey posed three open-ended questions on major issues, changes and the future of RM. Finally, the survey recorded various demographic statistics including each respondent’s job position, their RM experience, level of education, and geographic location. 

Demographic Profile 

About a third of the respondents (34%) served in an executive position in RM while more than half (55 percent) worked as a revenue manager. About 10 percent of respondents worked as analysts or consultants. About a third (32 percent) of the respondents worked in Europe, 37% worked in Asia and the Middle East and
29% were from the Americas. Only 5% worked in Africa or Australia. The respondents had considerable revenue management experience, with 58 percent having more than five years of experience (and 20% having more than ten years).

How has performance changed? 

Respondents were asked to compare current hotel performance to the previous year’s on a 7-point scale (1 = much lower, 7 = much higher). 

Not surprisingly, performance was down significantly from the previous year. Occupancy received an average rating of 2.49; ADR, 2.73 and RevPAR, 2.68. Occupancy ratings did not vary by region of the world, position level, education or amount of experience, but North American and Asian respondents rated ADR and RevPAR as significantly lower than did respondents from other parts of the world. 

Guest length of stay was down significantly (2.95) and respondents reported that customers were booking their reservation much closer to their arrival date (average rating of 2.28). Length of stay and booking patterns did not vary by region or education, but respondents with 3 – 10 years of RM experience rated current customer length of stay as significantly shorter than the previous year, and more experienced revenue managers considered the booking window to be significantly shorter. 

Change in importance of issues 

Respondents were asked to assess how the importance of eight different issues had changed since the previous year on a 7-point scale: 1 = much less important, 7 = much more important. 

Issues considered were competition, contract renegotiations, customer rate resistance, price wars, rate integrity, RM hiring, systems integration and training budget. 

The top four issues were customer rate resistance (5.86), contract renegotiations (5.84), competition (5.83) and price wars (5.80). Issues that had not changed much in importance during the previous year included training budgets (3.91) and RM hiring. 

Open-ended questions 

Respondents were also asked three open-ended questions on the most important issues facing RM, the changes in RM practice that they had observed over the previous year, and their vision of the future of RM. The responses were sorted into 8-10 categories for each question. 

The majority (77.5 percent) of respondents answered the open-ended question regarding the issues that they viewed as the most important facing them as revenue managers. By far the most frequent comments had to do with pricing. A number of the respondents also commented on marketing issues (11.6 percent) and on the increased uncertainty facing them (10.7 percent). 

Price wars (21.9 percent of comments) was the most frequently mentioned issue. Respondents commented on price wars and about the pressure they felt to reduce price to maintain market share and stay competitive. Many also talked about how price wars can ultimately affect the grand image of a hotel. 

Pricing (17.4 percent of comments) was also commonly mentioned. Respondents talked about the increased price sensitivity of their guests and how price negotiations with certain market segments had increased. 

Rate integrity (16.9 percent of comments) was another area of concern. Respondents were concerned about the impact of discounts on the long-term rate integrity of the hotel and the difficulty that the hotel might face with increasing rates again after a prolonged period of offering discounted rates. 

Marketing concerns (14.5 percent of comments) were also mentioned along with the need for hotels to identify new market segments and new distribution channels to help maintain volume and market share. 

Future of RM 

Respondents were also asked to identify future trends in RM; over 60 percent (62.6 percent) provided comments. The most frequent comments had to do with pricing (20.3 percent), followed by distribution (17.1 percent), total hotel RM (13.4 percent) and marketing (13.4 percent). 

A number of respondents also commented on the increased role of RM systems (9.1 percent) and how they believed that RM would be integrated with other departments within the hotel (8.6 percent). 

What should hotels do? 

Given the concern that revenue managers have about pricing-related issues, it is imperative to assess how hotels can manage price during an economic downturn. 

One of the keys to success in a down market is to not offer across the board price cuts, but to instead focus on particular market segments and distribution channels. 

Research has shown that hotels with an ADR significantly lower than that of their competitive set have an inferior Rev-PAR performance (Canina and Enz 2008; Enz and Canina 2004). This relationship has been shown to hold true across all hotel market levels. 

When developing a response to a price war, you should assess three factors:  

(1) Your customers. Customer issues that need to be assessed are the price sensitivity of certain market segments and the possible emergence of new segments if new rates are offered. Discounted rates should be targeted at price sensitive market segments and rate fences should be built to prevent less price-sensitive customers from availing themselves of the discounts. In addition, the hotel should identify other potential market segments which might be attracted by a selected discount and determine whether it is a market segment that fits in with the hotel image. 

(2) Your hotel and your competition. Discounts are affected by the cost structure of the hotel, the capabilities of the hotel and the strategic positioning of the hotel. Hotels with a lower cost structure than their competition can more profitably offer discounts since they may be able to withstand the reduced margins. In addition, the type of hotel matters. Luxury or upscale properties should exercise great care before discounting because of the potential impact that this could have on the hotel’s long-term image. Conversely, budget or economy hotels may not be as affected by a price war because they may benefit from customers ‘trading down’ from more upscale hotels. Their lower prices may appear to offer better value. 

The same analysis should be conducted for your competition so as to gauge their potential response to a price war and to determine their strengths and vulnerabilities. 

(3) Your distribution channels. In addition, the hotel’s distribution channels should be assessed to determine which ones are most effective at delivering business and also if the volume sold would increase if the commission or percent. 

The study also recommends approaches for competing in a price war without suffering long-term damage. These comprise both non-price and price methods. 

The full version of the study, Hotel Revenue Management in an Economic Downturn, is scheduled to be released through EyeforTravel shortly. 

EyeforTravel’s Travel Distribution Summit Asia 2009 

Professor Sherri Kimes of the Cornell-Nanyang Institute of Hospitality Management, will present the results of this survey during EyeforTravel’s Travel Distribution Summit Asia 2009 (Singapore, April 1-2).  

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TUI Travel and Air Berlin sign cooperation agreement

TUI Travel has agreed the terms of a strategic cooperation between Air Berlin and TUI Travel’s German aviation business.

According to TUI, the transaction satisfies the key strategic goals of de-risking the TUIfly business through an exit of the scheduled flying operation and secures optimal capacity for its tour operator in Germany. 

Some of the key benefits of the transaction to TUI Travel are: Eliminates dilution of tour operator margins caused by excess capacity; Eliminates losses in the scheduled flying operation of TUIfly, which generated an operating loss of c.€35m in the year ending 30 September 2008; Retains economies of scale benefits in TUIfly. 

TUI Travel will acquire a 19.9 percent equity stake in Air Berlin for cash consideration of €64.8 million, via a capital increase in Air Berlin. Air Berlin will acquire a 19.9% equity stake in TUIfly for €36.3 million, also in cash. Upon completion, TUI Travel will receive the right to nominate one non-executive director to the Board of Air Berlin. 

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Royal Caribbean’s first-ever blog

Royal Caribbean has launched its first-ever blog, which made its online debut on the Oasis of the Seas website.

The blog will be authored by Richard Fain, chairman & CEO, Royal Caribbean Cruises Ltd.  

As the company enters the final seven-month stretch of Oasis’ construction, the company will update its site with both the latest news and additional reflections by Fain on his chairman’s blog. 

Harri Kulovaara (executive vice president, Maritime) and Adam Goldstein (president & CEO, Royal Caribbean International), too, will contribute in the blog. 

Oasis, to be launched by the end of this year, will feature the unique neighbourhood concept that will provide guests with the opportunity to seek out relevant experiences based on their personal style, preference or mood in seven distinct areas of the ship. 

Related links: Royal Caribbean, Blog 

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Concur launches a mobile solution

Concur has introduced Concur Mobile, a solution that will allow travellers to manage their itinerary, conduct in-policy business travel transactions, capture T&E expense data and approve expense reports - all while on the road.

The solution also lets business travellers capture miscellaneous out-of-pocket purchases and tips, ensuring that these commonly forgotten transactions are automatically and accurately accounted for within the expense report. 

It also helps companies more tightly control the significant amount of unmanaged employee spend that occurs during business travel. The solution is available in English, French and German.  

Leveraging Pyxis Mobile’s Application Studio, Concur Mobile extends Concur’s on-demand travel and expense management services offering to popular smartphones. 

Related links: Mobile, Corporate Travel 

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Hoobing.com adds more than 3000 registered hotels

Hoobing.com, a hotels directory that includes links to hotels' official website, has added more than 3000 registered hotels within its first four months of operation.

The portal, which terms itself as “the first intermediary‐free hotel search engine that incorporates a social network for travellers and a tourism blog search engine”, intends to reach 20000 registered entities by means of the registration form included on its website. 

The project, which is still in its beta stage, is currently in the process of adding functionalities for hotels, bloggers and Hoobbers or registered users, who complete their booking processes directly with the service providers.  

Among the new functionalities Hoobing has implemented in the recent past include integration with key channel managers (RateTiger, Channel Direct and EZ Yield) to boost the visibility of rates offered by the hotel; New homesite for Hoobbers comprising features such as multimedia galleries, advanced search engines, travel diaries, public user profiles etc; New site for tourism blogs: includes a “blog of the week” section and an advanced search engine. The site has also integrated Google Maps and Street View. 

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