REPORT FROM THE U.S.—Travel agents’ calls for simplified rate structures, which prompted an overhaul in at least one major cruise line, are unlikely to target the hotel industry, sources said.
Carnival Cruise Lines earlier this month announced a new booking model it will roll out by the end of the year. The changes came after fielding complaints from travel agents that the existing system was too complicated and featured too many categories.
Though the hotel industry has grown increasingly sophisticated in the way it packages various room offerings and rates, it has yet to become so cumbersome as to deter travel agent bookings, sources said.
“It can be confusing, but I think the agents, the savvy ones, sell a particular hotel chain that they’re confident with … and they know those pricing structures very well,” said Ann van Leeuwen, VP of the National Association of Career Travel Agents.
To their credit, hoteliers have made efforts in recent years to streamline the booking process, said Kristie Dickinson, VP of Capital Hotel Management, an asset manager with 25 properties throughout the United States.
“From the hotel standpoint, there’s been a lot of effort within recent years to really try to revisit the different rate and room categories that we have out there to sell and simplifying not just for travel agents but for all guests,” she said.
Whereas in the past revenue managers might have offered different rates for rooms with 10% more square footage in the bathroom, for example, today that type of rampant segmentation has been compartmentalized to more directly address guest needs, Dickinson said.
“Really taking a hard look at the way you’re selling your product and only offering different rates for a particular product or service or something that speaks directly to a guest need,” she advised.
Doing so ultimately makes the job of a travel agent easier, said Scott Pinheiro of Santa Cruz Travel who also serves as director-at-large with the American Society of Travel Agents.
While he said hotel rate structures are easy to navigate, he advised hoteliers to keep one simple principle in mind: “To us, time is money.”
Segment or risk sameness
Chad Sorensen, principal and managing director with asset manager Warnick + Company, does not prescribe to the simpler-is-always-better philosophy.
“I don’t think they should follow the cruise industry,” he said. “I don’t think it’s something that the lodging industry is hearing. And frankly as pricing models become more dynamic, as operators continue to find ways to target different segments, that all lends to more complex pricing structures, more offerings, and I think in the hotel industry, I actually think it’s going in the opposite direction.”
Unique packages and pricing structures allow hoteliers to differentiate their offerings, Sorensen said.
“A lot of that is originated because of all of the online distribution channels and hoteliers doing a pretty good job of trying to fight the commoditization of hotel rooms. One way to do that is to differentiate the offerings through different types of packages, rate products, offerings. That is extremely important for the industry so that it does not turn into an industry like the airline industry, which is a commodity business,” he said.
Dickinson also acknowledged the importance of disciplined segmentation in revenue management.
“In this business in order to keep growing your rate, you can’t just (forgo) revenue-management practices for the sake of making something so simple to book,” she said. “You still need to have some level of structure and strategy to grow your business and grow your profits.”
Agent outreach
While approaches to revenue management might vary, sources agreed hoteliers and travel agents must continue to work together to drive demand.
“Travel agents are still very much a part of the distribution for hotels even though their share of business has gone over the last several years just with the advent of the (online travel agencies),” Dickinson said. “Hotels, I think, could benefit by hearing what they have to say and making their lives easier.”
Most of the major brands continually reach out to educate and engage the travel agent community, Sorensen said.
“Everyone has come to terms with travel agents being important to the industry now and in the future,” he said.
“Just continue to build that relationship,” Sorensen added. “It’s the educational part of it, it’s the training, it’s getting in front of those end users, those travel agents. … That relationship is important.”
Van Leeuwen pointed to Starwood Hotels & Resorts Worldwide as one chain that has done an excellent job facilitating a strong relationship with NACTA.
“Through that relationship, that open communication we have with that hotel chain, we’re able to move some significant business for them. It’s reciprocal. It works both ways. They support you, you support them,” she said.
When asked what advice she would share with other hotel companies, she said, “Stay in touch with the agents. Ensure that they’re providing the marketing tools, keeping the agents current in their programs.”
But above all else, van Leeuwen called for a fair playing field.
“What our agents are telling us more is to ensure that the best pricing is available for an agent to offer to their client versus a client being able to go to the hotel direct,” she said. “That continues to be a common theme—pricing integrity, so an agent can sell a hotel with confidence.”