The 24-hour economy

By Gina Matheis, CEO en Paraty Tech

Managing an inventory of hotel rooms doesn’t differ too much from managing an inventory of any other product. In the decision making process you must consider issues such as rooms you want to sell first of all, others you want to sell second, and ones you want to save for the last minute. Likewise, you need to be sure which ones you would like to market through an OTA and when you should close the intermediated channel to optimise your income.

In this regard, the contractual terms and conditions for managing last room availability that you establish with an intermediary are essential. You must consider the dates on which you may receive a greater number of booking requests (hot dates), with the events calendar for the region where your establishment is located vital in this respect.

As a result, for example, variables such as average booking window (ABW) become fundamental to understanding the purchasing behaviour of a client, staying ahead of the game at all times in the appropriate place.

Beyond these prior considerations, hoteliers must have a clear understanding of the maxims of distribution when establishing their strategies. Whether you like it or not, the classic concepts associated with this marketing variable, such as intensive, selective and exclusive distribution, continue to work. Each of these has their pros and cons, and perhaps appropriate scheduling of these will provide the answer to your problems.

As far as intensive distribution is concerned, you can reach a greater number of tourists, exponentially multiplying your market exposure. However, as occurs with the offline market and if you look at the experience of other sectors, it is always a good idea to apply the motto “think outside the box”. Losing control over your product can be a problem, which can have an impact on your brand image.

By talking about exclusive distribution, we are referring to a unique intermediary. The luxury market usually monopolises this type of strategy as it contributes to increasing the prestigious perception on the market.

Selective distribution, on the other hand, concentrates intermediation on a specific group of channels. There are multiple positives to this strategy as it enables you to control your inventory, provided that you manage to align your aims with the selected form of intermediation.

THE PROBLEMS WITH FULL DISINTERMEDIATION

In this context, the debate on disintermediation has become the protagonist of the latest news in the sector. Although the direct channel is more profitable, there has always been a need for intermediaries who position hotels where the client wishes to make their purchase.

As such, when referring to the variable price, this normally means speaking of the economic sacrifice a consumer is willing to make to acquire a product. However, we often forget that the client, in this case the tourist, adds time to the sacrifice. Very few are willing to go website to website to find the hotel they want to stay at. For this reason, either your search engine marketing strategy positions you among the top of the class or you appear on an OTA that provides access to markets that you would otherwise not reach. The question lies in achieving client loyalty such that the second booking is yours. Now, think: who travels to the same holiday destination two years in a row?

Loyalty doesn’t only depend on the establishment. Although it can become the main reason for a client’s trip, you must also consider the characteristics of the destination and its capacity to attract tourists.

JUSTIFICATION FOR REINTERMEDIATION

This fact justifies the appearance of new intermediation agents on the market and, more specifically, on the online channel. In other words, and in any case, they become the best option. Denying their existence is a mistake; it is an advertising error that leads to resignation.

Re-intermediate is synonymous with optimisation, as long as you know what type of distribution strategy to implement and considering the fact that you make the decisions. Revenue management exists for a reason and the technological solutions associated with data, knowledge of the purchasing behaviour of clients, price control and inventory management are essential support mechanisms.

THE 24-HOUR ECONOMY

The most direct consequence of all this is, therefore, the daily management and control of sales, whether they are intermediated or not. When dealing with a 24-hour economy, planning and forecasts must be exhaustive, while your ability to react to possible changes must be immediate. Today, not only are you in the hands of intermediaries, but a simple comment on a tourist’s network or a change in dates of a concert can result in the need to alter decisions that were made earlier, such as those involved in inventory management and last room availability, which were mentioned in the first paragraph of this article.