Catalyst

The big battle to book the guest

Chitra Narayanan | Updated on July 25, 2019 Published on July 25, 2019

Holiday Inn Express exterior and (right) a Radisson property

Exterior of a Radisson hotel; (right) A room at Holiday Inn Express

Hotels and OTAs (online travel agents) have been frenemies for a while now, engaged in a furious battle to get the customer to book through their platforms. Today, nearly 30 per cent of room bookings of a property typically come via OTAs. This means a hotel’s distribution costs are rising and the revenue that could have come to it are going to a third party. Using the power of loyalty programmes, hotels have tried hard to get customers to migrate back to their booking platforms, but these have met with limited success as these are not marketed well and the general perception remains that the OTAs offer cheaper rates.

Now the battle has got an interesting twist with British hospitality giant Intercontinental Hotel Group (IHG) using technology to woo back customers. IHG has rolled out a personalised reservation system in partnership with Amadeus that takes a lot of cues from how airline reservation works. “That personalisation is a function of attribute-based buying,” explains Vivek Bhalla, Regional Vice-President, South West Asia, IHG.

So, if a customer were to book using the IHG platform, she could zoom into a specific room — one with a view, one near the elevator and so on. Just like you can choose the seats in an airline, pre-order meals and so on, you can do many things. “The first piece of this reservation system is that you can do many customisations,” says Bhalla.

The second piece is pricing. “Personalising the guest reservation allows us to monetise the rooms better,” he says.

So, potentially, just like an airline can monetise its aisle and window seats, the hotel chain can — if it wants to — leverage each room’s strength better through a differential pricing. The third advantage, says Bhalla, is that a personalised reservation system leads to more emotional stickiness with the brand.

So what have the results been so far? Has the reverse migration from OTA platforms begun? “It’s very early days yet,” says Bhalla cautiously. “We need to have it in full play for a certain duration — a year at least.”

It started with Holidex

But it’s fitting that IHG is pioneering this initiative. IHG introduced the first centralised hotel reservations system in the world called Holidex. This was in 1965 or so — long before the internet, and was industry-leading, revolutionising hotel bookings. Now one has to wait and watch whether IHG will be able to come up with a breakthrough internet-based reservation model to take the business back from the OTAs. The British chain has been trying for a while to work with OTAs only for incremental business, and migrate repeat guests to its own platforms.

In its annual report this year, IHG says that in 2018, 13 per cent growth in room revenues was delivered through digital (web and mobile) channels generating $5.3 billion globally. Bookings through the IHG app were growing 30 per cent year on year, and that is something the chain is leveraging.

Other chains are watching and learning. This July, Radisson Hotel Group has unveiled new plans for its digital booking platforms, clearly in an attempt to get more bookings on to its site. Earlier this month, it launched a new multi-brand and mobile-first global website, RadissonHotels.com, and by end of this month the Radisson Hotels App will go live.

In the new website, the guest can book a room in any of the group’s portfolio of 1,100 hotels without going into a secondary brand page as it showcases properties from all its seven brands.

Members of its Rewards programme can use the website or App to earn, view and redeem points. According to Eric De Neef, Executive Vice-President and Global Chief Commercial Officer for Radisson Hotel Group: “Having one single touch point for all our brands will strongly enhance the user experience and drive SEO value.” The Radisson App, meanwhile, will also have a credit card scanner, making it easier for guests to complete a booking.

Other chains are also trying out different stuff. According to various trade publications, Wyndham’s sudden growth in 2018 is an outcome of its ability to catch OTA users and get them to book on its own platform. The American chain used the loyalty card — its Reward app, which it had simplified — to shower guests with more benefits. More importantly, it ran heavy marketing campaigns that explained the benefit of booking direct.

Of course, the OTAs are innovating too. But future gazers believe that blockchain may disrupt bookings in a big way and might put the control back with hotels.

Published on July 25, 2019
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