m-Travel.com and Travel Distribution News

Archives for March 2010

« February 2010 | April 2010 »

Special hospitality report: Successful tactics for surviving an economic downturn

In association with The Cornell-Nanyang Institute of Hospitality Management and Professor Sherri Kimes, EyeforTravel is proud to announce the release of The Global Hospitality Report - An in-depth analysis of international hotel performance and strategic manual for Hoteliers facing challenging economic conditions.

Sherri Kimes, Ph.D., is Singapore Tourism Board Distinguished Professor of Asian Hospitality Management at the Cornell University School of Hotel Administration and has over 25 years experience in the Hospitality industry. She has published over 50 articles in leading journals and worked as a consultant to many hospitality enterprises around the world, including Walt Disney World Resorts, Ruby’s Diners, Starwood Asia-Pacific, and Troon Golf.

Sherri will be presenting alongside 50 other thought-leading travel industry speakers at EyeforTravel’s 6th Travel Distribution Summit Asia, held in Singapore on April 28-29th.

The 12 page Global Research Report includes:

• The very latest international revenue performance figures, tends and expert analysis
• A comprehensive examination of the most effective RM strategies available to hoteliers to overcome tough economic conditions
• Detailed breakdowns of hotel performance by sector and region
• Pragmatic strategic advice and tactics – Lessons learnt from the GFC and ho to respond to capitalize on the economic recovery.
• Statistical analysis, graphs, expert insights and much more.

The report is free to download using the following link;
http://events.eyefortravel.com/tdasia/research-report.asp

Report Synopsis:

Drops in occupancies, ADR and RevPAR in 2009 have been widespread in the hotel industry and the trade press has been filled with articles discussing the downturn and proposing possible tactics for surviving it. Not surprisingly, hotel owners and hotel operators have disagreed on how best to manage during a recession as owners try to maintain sufficient cash flow to cover their costs while operators attempt to maintain service levels and long-term brand equity.

One of the keys to success in a down market is to avoid offering across the board price cuts, but to instead focus on particular market segments and distribution channels. An ADR is just that, an average, and care should be taken to keep your ADR at near or above the average of your competitive set. Research has shown that hotels with an ADR significantly lower than that of their competitive set have an inferior RevPAR performance relative to their competitors. This rela­tionship has been shown to hold true across all hotel market levels. For example, in the luxury market, hotels that have an ADR that is higher than their competitive set have the same or slightly lower occupancies, but have a 8- to 14 % higher RevPAR than their competitive set.

Conversely, hotels that have a lower ADR than their competitive set have about the same to slightly higher occupancy levels, but report a RevPARs of 3- to 9-percent lower than their competitive set.3Given that knowledge, the challenge for hotel manag­ers is how to compete in a price war. In a previous study, I discussed ways in which hotels can ‘intelligently’’ discount. Essentially the two ways this can be done involve either non-price methods or price-related methods.

Non-price methods include competing on the basis of quality, creat­ing strategic partnerships, leveraging your loyalty program, developing additional revenue sources and developing ad­ditional market segments.

Price-based methods consist of offering packages, using opaque distribution channels and offering discounted rates to selected market segments. It’s not that hotels shouldn’t discount—it’s that they should do so in an intelligent and strategic way. The intent of this study is to determine what tactics hotels used during the economic downturn and to evaluate the performance of these tactics. In addition, the study sought to solicit advice on how to approach future economic down­turns so that I could develop specific advice for hoteliers on how to approach the next economic downturn.

Download the full  report here; http://events.eyefortravel.com/tdasia/research-report.asp

Or for any other information please contact:

Marco Saio
EyeforTravel Global Events Director
Email: marco@eyefortravel.com
Direct line: + 4420775 7219

| Comments (0)

Group Travellers Flock to Holiday Apartments

Holiday apartments are becoming an increasingly popular alternative to traditional forms of travel accommodation, such as hotels – especially for those travelling in a group.

It’s difficult to calculate exactly how popular: industry data is notoriously hard to come by, since many holiday apartments are second homes, managed by non-professional owners as an additional source of income. As one industry expert has put it, “it’s a mom and pop industry”.

Nevertheless, there is no doubt that the number of apartments being rented out is rising year by year. A recent market report suggested that 87% of travellers who had previously investigated staying in a holiday apartment actually plan to stay in one in 2010 – a significant increase from 67% in 2009.

Yet this increasing popularity does not hold true for every travel sector. “Only 1-2% of HouseTrip bookings typically come from solo travellers, which is somewhat different from hotel demographics!” said Ben Doyle, co-founder of holiday apartment website HouseTrip.com. “Over half our bookings tend to come from groups of at least four guests. Our holiday apartments are very popular with larger groups”.

HouseTrip was founded in 2009, and the website has only been live for a few months, but it’s already gathered thousands of holiday apartments – as well as considerable interest from the industry. HouseTrip differs from the classified advertising model of most holiday apartment websites by offering a direct booking and payment solution, with no listing fees for owners. As well as winning VentureKick and VentureLeaders, two Swiss entrepreneurship programs, the Lausanne-based company was elected ‘Best Travel Startup’ at EyeforTravel’s 2009 Get Funded Show.

Doyle explained that holiday apartments hold certain advantages for groups of travellers, which hotels struggle to match. “If there are four or six of you staying in a hotel, your options are really limited. You’ve basically got to go out to spend time together, unless you go to the bar or reception, and you’ve got to eat out every meal,” he said.

“In a holiday apartment, you’ve got a furnished lounge with a sofa where you can chill out, watch TV or share a bottle of wine, and a fully equipped kitchen which gives you the option to eat in. It’s much easier to spend time together.”

With simple additional benefits like these, it’s easy to see why holiday apartments (a.k.a. vacation rentals) are seen as one of the hottest growth areas in online travel. But Doyle feels that one stumbling block is the lack of consistency.

“It’s both an industry strength and weakness,” he explained. “Guests like the fact that every holiday apartment they stay in will have its own idiosyncrasies and won’t look like a chain hotel room. What they don’t like is the fact that on most sites, every apartment they book will have different booking, payment and cancellation policies.”

“That’s where HouseTrip is different: you book and pay through the website, you know what will happen if you cancel, and we hold your payment until after you’ve arrived, so if anything goes wrong, your money’s in safe hands. It’s really the safest place you can book a holiday apartment online.”

Read Eye For Travel’s interview with HouseTrip CEO Arnaud Bertrand here.

| Comments (0)

Calidris to become part of Sabre Airline Solutions

Sabre Holdings has acquired Iceland-based Calidris, a revenue integrity and business intelligence solutions company.

Calidris will become part of Sabre Airline Solutions. 

Calidris’s revenue integrity, business intelligence and data capabilities will become part of Sabre’s integrated suite of airline products.

“The enhanced revenue integrity solution allows quick and easy access to business data making it an integral part of successful revenue planning and revenue generation not available today. It also gives airlines a more responsive, smarter, well-tuned and fluid customer sales and service environment,” stated Sabre. 

TPI

Airlines are relying on revenue integrity principles to stem revenue leakage. This way the airlines can yield more revenue improvements and cost reductions.

According to Calidris, the transformation to a lean and agile organisation must be carefully planned and supported by effective solutions. Underlying lean techniques are four principles: 

• The elimination of waste, including revenue leakages
• The control of variability 
• Flexibility 
• The full utilisation of human talent 

The company is helping airlines to achieve these goals by applying Total Profit Integrity (TPI), a methodology based on the success of revenue integrity.

| Comments (0)

AirTran and Southwest poke fun at each other

Low-cost carriers AirTran Airways and Southwest Airlines have been in news for having a go at each other via their respective videos.

As per the information available, Southwest has highlighted that AirTran charges fees for checked bags, whereas AirTran has responded with video showing Southwest passengers being treated like cattle.

According to CNN.com, Southwest recently took a jab at its rival with a commercial called “Battle Cry”. It shows airport workers lining up on the tarmac in front of a plane (whose logo is pixelated but still recognisable as AirTran’s) and yelling to get the attention of the passengers inside. Once they have an audience, the men lift their shirts to reveal giant letters on their bellies that spell “Bags Fly Free”. The ad is Southwest’s not so subtle way of pointing out that AirTran charges coach passengers $15 for the first checked bag and $25 for a second, while Southwest does not have any fees for those items.

For its part, on its “Inside AirTran” employee website, wrote: “We’ve heard from many Crew Members from around the country about a funny ad currently running on network TV. We’ve been asked again and again how we planned to respond. Well, we thought about it and thought about it and decided to not respond at all. After all, focusing on running the best low-cost carrier in America is enough to keep us busy.”

It continued: “BUT ... if we were to respond, it might look something like this.”

The page then includes a video showing passengers dressed as cows waiting at an airport gate for the boarding process to begin.

The gate agent, waving a cowboy hat and speaking with a strong Southern accent, yells “Yeeehaw, we’re about to board this airplane here, it’s every steer for himself!” The passengers are then shown pushing each other as they run down the gate to grab their seats.

In its post, insideairtran.com concludes by saying, “Thanks to all of our volunteer Crew Members for donning these costumes and playing along. Your dedication to AirTran and your performance was truly MMMOOOOOOOving.”

(It has been reported that AirTran spent $38.1 million on marketing and advertising last year, while Southwest spent more than five times that amount at $204 million).

| Comments (0)

Macau government revokes Viva Macau Airlines’ operating licence

The Macau Civil Aviation Authority recently revoked budget airline Viva Macau Airlines’ licence to operate. 

The Macau government revoked the airline’s air operator’s certificate (AOC) after a review of the airline’s financial situation and the stranding of more than 300 passengers when services were cancelled last Friday.

The airline explained that it failed to finalise an agreement with the sole fuel supplier in Macau. 

The carrier cancelled services on March 26 because of “fuel payment issues” and did not cooperate to help passengers, according to a statement on the government’s website.

“The government was greatly concerned with the negative impacts of the Viva Macau incident towards passengers and the community,” said a statement, citing the Civil Aviation Authority.

The government will also pursue repayment of $25 million in loans made to the carrier between 2008 and 2009 “through legal means”.

Airline’s explanation

“Viva Macau Airlines had taken steps, including prepayment for all weekend flights last Friday afternoon. Our shareholders had also offered credit guarantees to the supplier. Unfortunately, no agreement could be reached and therefore flights were stopped unexpectedly,” stated the airline. 

“Viva Macau Airlines staff and representatives have been in action to assist affected passengers. We also actively communicate with all parties involved to come up with a solution. Therefore, Viva Macau was deeply surprised to learn that our AOC (Air Operator’s Certificate) was revoked without any prior notice. We are continuing our communication with all parties to seek a solution.”

The termination of AOC affected flights to destinations including Tokyo, Sydney, Melbourne, Jakarta, Ho Chi Minh City and Hanoi. 

A total of 33 flights have been cancelled, affecting a total of 4739 passengers. 

Viva Macau Airlines says it has been in active contact with passengers and providing refunds in accordance with its Conditions of Carriage.

Shareholders of the privately owned airline include Ngan In Leng, also the carrier’s Chairman, and MKW Capital, a venture capital firm with investments in Macau.

| Comments (0)

swapsystems.com launched to meet the needs of travel agents

A new online marketplace, described as the Facebook for the travel industry, has been launched in the UK.

The offering, swapsystems.com, has been developed to meet the needs of travel agents wishing to grow their dynamic package sales and looking to work directly with new hotel partners.

The system gives the power to buyers and sellers to create their own relationships and terms of trading. 

Bookings can be made directly on your own selling platform via XML links or online with www.swapsystems.com using a unique password.

“Our in-built flexibility means that individual Hotel relationships can be created and any special agreed prices, room allocations, early booking discounts and trading terms can be applied to your own profile,” stated the company. 

How the system works?

The company says just like “Facebook” agents can request to trade with any hotel on the swapsystems.com website and the agent sends a request email to their selected hotel or apartment. The hotel will then confirm that they are happy to work with the agent as a partner and will forward their trading and payment terms. 

Until a hotel has confirmed the relationship their property remains on the agents “wish list”. Once confirmed the agent can then view the hotels net rates and can start making bookings. swapsystems.com will add new hotels on a regular basis and agents will be able to search these hotels as well as the ones who have already agreed to trade together, these hotels are listed on the system as “My Hotels“.

Agents will be made aware of which hotels are promoting special offers and be able to make price comparisons between these hotels and the “My Hotels” list giving opportunities for new hotels to be contacted and added to your own list.

The team was looking at developing a system which is free from any expensive set up charges and implementation costs for all users. In doing so, the company says it is now offering a system which is available to even the smallest of travel businesses on a low monthly charge or a cost per transaction basis. This means that hotel rates will be at the best net rates available and free from many associated extra charges and mark ups, added the company.

The only cost for using this system is a one percent charge on revenue for each completed transaction.

| Comments (0)

Lonely Planet promotes Shona Gold

Lonely Planet has appointed Shona Gold as its marketing and sales director, EMEA.

Gold will be responsible for leading the company’s marketing across both print and digital, and the print sales function in Europe and Lonely Planet’s online shop.

She will report to Lonely Planet’s MD, Douglas Schatz.

Gold joined Lonely Planet in December 2006 as marketing director for EMEA. During her tenure, she led the marketing strategy for the brand in the European market and was responsible for expanding the reach of Lonely Planet beyond traditional audiences. She developed reciprocal TV sponsorship deals with Eden and BBC Knowledge as well as working with BBC Worldwide on launching the Lonely Planet Magazine in the UK and other commercial synergies.

“A key area of focus for the next three to five years will be increasing brand usage and digital engagement by growing audiences from core independent travellers to a wider psychographic target. We will continue to grow our all important print revenues while changing perceptions of Lonely Planet as we transform into a cross media organisation,” said Gold.

| Comments (0)

Clearing some common myths about revenue management systems

Examine everyday life for a short amount of time, and you’ll discover hundreds of little myths that are assumed to be reality.

The Discovery channel has a whole show based on this premise: Mythbusters.  Though the myths that compelling TV hosts Adam and Jamie have tackled lately have departed a bit from those little myths we all deal with, the show has nonetheless encouraged a healthy questioning of status quo assumptions.

As it happens, there is desperate need for this type of “mythbusting” in the hotel industry, particularly with respect to revenue management.

The practice of revenue management is rife with misconceptions about best practices and what roles technology and personnel ought to play.  Often, these arise from the inertia of traditional revenue management tactics, as hotels continue to do what they have always done to manage their pricing, sales and inventory.  Sometimes, however, certain revenue management activities are simply assumed to be the most effective, even if they are essentially obsolete, or worse, detrimental to a hotel’s bottom line.  

We’re here today to debunk both sets of myths.  And unlike TV’s Mythbusters, we encourage you to try this at home - or rather, at your hotel.

Myth 1 - Day-to-day revenue management functions, like pricing changes, are so sensitive they must be handled by revenue managers themselves.

FALSE - This is a popular misconception; the truth, however, is that the best pricing strategy is one that can react quickly, and often, to subtle market changes, in order to present the best rate to a potential guest at the right time. If a revenue manager, or revenue management personnel, were to engage in this on a day-to-day basis, it would consume all of their time.  Instead, pricing changes should be automated, with a degree of control reserved for the revenue management department, which will free up revenue managers to focus on proactive, not reactive, pricing changes. This is a far more efficient use of labor, and results in a far more efficient pricing strategy.  

Myth 2 - Revenue management systems will eventually replace revenue managers’ jobs.

FALSE - You can almost imagine the guys on Mythbusters welding together an antagonistic RevMgr Bot bent on the total annihilation of all revenue managers.  This might make for good TV, but it certainly isn’t the case in the hospitality world.  Revenue management systems have indeed become more sophisticated in the past decade or so, and many have been instrumental in managing distribution of room inventory across multiple sales channels, but they are still just a tool for revenue managers to do their job more efficiently.  Revenue management systems serve only to highlight and augment the efficacy of a revenue manager, by removing the burden of manually modifying prices in a real time environment (and enabling, in some cases, continuous automated pricing adjustment), by computing optimal rates and by interpreting historical data and competitor’s data.  No RMS can ever replace a strategy formulated by a revenue manager, or make the complex decisions revenue managers must make on a daily basis.

Myth 3- Average daily rate (ADR) and occupancy percentage are the best metrics for evaluating the performance of revenue managers or revenue management systems.

FALSE - This was the prevailing wisdom a couple of decades ago, and it persists in some places today.  Clearly, these two figures remain important to hotels, but the best measure of a revenue manager’s (or an RMS’s) efficiency is revenue per available room, or RevPAR.  Maximized ADR can result in low occupancy, and high occupancy can be the result of artificially low ADR.  RevPAR, however, takes both of these figures, accounts for available rooms and produces a dollar amount that provides a better overall picture of a hotel’s operational health. More to the point, while ADR and occupancy are numbers on a P&L, RevPAR you can actually take to the bank.

Myth 4 - All revenue management systems are created equal.

FALSE - In the slightly techie world of hotel revenue management systems, there is a fair bit of obfuscation and outright duplicity when it comes to marketing various products.  Many competing RMS providers claim their software can perform multiple functions, when in fact their programs address only a part of the revenue management spectrum.  One RMS may be capable of managing multiple sales channels, but relies on manual input for rates and pricing.  Another may manage inventory well, but lack the capability to distribute that inventory across channels. True comprehensive systems are available, and these tend to distinguish themselves through the results they deliver to the hotels that utilize them, not in the questionable messages that they deliver.

Myth 5 - RMS are really only useful in managing online sales channels and inventory distribution.

FALSE - Though the rise in consumer internet booking and the proliferation of online sales channels has given rise to the development of more capable RMS, most of these systems go above and beyond simple channel management.  The RevPar Guru system, to cite one example, controls eight key revenue management aspects, including yield management, competitive pricing, inventory control, rate optimization, GDS distribution, booking pace, page positioning on third party websites and, of course, channel management.  This sort of comprehensive revenue management empowers revenue managers, enabling them to concentrate on strategy and business development rather than the mundane aspects of day-to-day revenue management.  Though channel management and distribution are key aspects of this, the best RMSs are certainly not limited to this function.

The field of revenue management isn’t a new one, and so it’s no surprise that there are entrenched beliefs and persistent myths about how it should be practiced.  Many developments in revenue management system technology are challenging and refuting these myths, though the systems themselves have generated myths of their own.  It’s the task of savvy hotel owners and managers to sift through the potentially faulty conventional wisdom and ascertain the truth behind the myths.  In doing so, it’s important to remember that not all RMS systems are created equal, that they feature a range of capabilities not aimed at replacing revenue management personnel, and that the best ones are focused on increasing RevPAR, not the component measures of ADR and occupancy percentage.

By following these mythbusting tips, a hotel can avoid seeing one of TV Mythbusters’ favorite signs on their income statements: BUSTED.

(Contributed by Jean Francois Mourier, CEO of RevPar Guru)

| Comments (0)

Chinese budget hotel group makes strong stock market debut

China Lodging Group rallied as much as 26.5 percent in its Nasdaq trading debut on Friday before settling 13.6 percent higher at $13.92.

FinanceAsia reported that demand was robust during the bookbuild for the initial public offering, but the strong debut suggests that it was probably the right call not to price above the initial range. Given the poor performance by several other IPOs in the US recently, including a few deals that have been pulled, the initial success could quite easily have been turned into failure by being too greedy and, in the long-run, the company is likely better off for having been a bit generous towards its new shareholders from the start.

Ctrip- China Lodging Group deal

Earlier this month, Ctrip.com International entered into definitive agreements to acquire minority stakes in two hotel operating companies. Through two separate transactions, Ctrip acquired minority stakes in each of China Lodging Group, Limited and BTG-Jianguo Hotels & Resorts Co., Ltd.

Ctrip reportedly indicated that it doesn’t rule out further investments.

“Chinese people are going to be travelling more in the years to come but they are frugal and so hotels have to offer value to customer,” Ctrip CFO Jane Sun, said according to forbes.com. “We like this segment (economy hotel market). We’ll keep our eyes open for good opportunity.”

China Lodging operates a leading economy hotel chain in China. It offers three hotel products: HanTing Express Hotel, HanTing Seasons Hotel and HanTing Hi Inn. 

At the time of this deal, it was shared that China Lodging had filed a registration statement with the U.S. Securities and Exchange Commission in connection with an initial public offering with an estimated price range of $10.25 to $12.25 per American Depositary Share (or $2.5625 to $3.0625 per ordinary share).

It was also mentioned that the aggregate number of ordinary shares that Ctrip will purchase from China Lodging and the selling shareholders pursuant to the agreements will be equal to approximately 8% of China Lodging’s total ordinary shares outstanding immediately after the closing of this investment, which is expected to take place concurrently with China Lodging’s initial public offering. Ctrip will pay the purchase consideration in cash at a price equal to the initial public offering price of China Lodging’s ordinary shares.

| Comments (0)

“We have created history for the world to follow”: TAAI

IN-DEPTH: Interview with Rajji Rai, president, Travel Agents Association of India

The Directorate General of Civil Aviation (DGCA) has issued a directive that agents will have to stop charging transaction fee and has also asked international carriers to resume their commissions to travel agents in India.

A section of the DGCA order read as follows:

“Firstly, since the zero commission system is loaded with a transaction fee, the consumer has to pay extra money in the form of transaction fee.  Secondly, an unscrupulous agent can charge an exorbitant amount as transaction fee from the customer. Thirdly, this system is giving rise to market dominance by some big agents, who are paid hefty amounts by the airlines in the name of productivity. This phenomenon too is not in the interest of the consumer as it reduces competition among agents. Overall, it may be seen that the impact of the zero commission system does not help consumers.  The zero commission system coupled with transaction fee (i.e. the net fare model) is not as per law and is devoid of merit from the consumer point of view.”

“All the airlines that had gone to zero (commission) have been notified about the DGCA’s order dated 5th March,” said Rajji Rai, president, Travel Agents Association of India (TAAI).

In order to know the perspective of the agents, EyeforTravel’s Ritesh Gupta spoke to Rai. Excerpts: 

How is the issue expected to shape up now especially in the context of not charging transaction fee and rather gaining commissions from the international airlines?

TAAI: The much awaited news of the directive that the DGCA has issued dated 5th March 2010, wherein they have ruled out zero commission in India and have passed the order to this effect is fantastic. 

The DGCA has directed all the airlines that had gone to zero (commission) to reconsider this decision in consultation with agents and decide on a suitable commission that has to be paid to us. This has been the fruitful culmination of our long tirade with the airlines and my team and I, along with other associations, are proud that we have achieved the desired results we wanted and have created history for the world to follow!  

It is a victory for all the members. But there is a lot of work yet to be done to achieve the rightful commission and there are lot of meetings and consultations with airlines to be held. But the ball has started to roll and we are confident of being successful. 

How do you expect your interaction with the airlines to proceed? What’s on your agenda as of now?

TAAI: There are meetings to be scheduled with the airlines that have gone to zero. This is on our agenda right now.

What are going to be the consequences for airlines in case they don’t abide by the latest directive? 

Too early to comment.  But the DGCA has also set up a monitoring mechanism to ensure compliance of the provisions of Rule 135 by the airlines (As per the information available, the directive also mentioned the following: The statutory position under Rule 135 requires airlines to determine tariff in accordance with law including commission payable to agents. The existing law also requires airlines to display total fare and its components).

Last year, you mentioned that the distribution costs must be built into the fare structure. The reason being the travel agents act on behalf of the airlines and therefore the customer comes to a travel agent to transact a business. How do you think airlines are in position to do the same considering the economic environment?

TAAI: Yes, we are still of the opinion that distribution costs must be built into the fare structure. 

The DGCA order clearly states that agents and airlines have to agree to a quantum of commission payable to agents so that customers are not charged a transactions fee as is being done currently. This means that agents and airlines have to come together and decide the commission and fare components most satisfactorily and that passengers are not charged unnecessarily.  

Airlines say that service fees are not only a way to compensate for the loss of commissions but also generate new revenue streams that guarantee long term profitability. Fees have increased customer loyalty and satisfaction, as has been demonstrated in other parts of the world. How do you assess this viewpoint?

TAAI: We endorse the same viewpoint as the DGCA that when customers have to dole out a transaction fee apart from the fare, it is a burden on them. 

The market scenario in India is different from other countries. Therefore you can’t make a comparison between India and other countries. Revenue streams that guarantee long term profitability must come in the form of commissions to agents and not tax the customer with a transaction fee.

| Comments (0)