Re-capture OTA business – A flagship store approach!
Updated: Sep 11
The challenge with perishable products & services and the need for diversity
As we know, hotel rooms are perishable and cannot be sold when the arrival day has passed. It is therefore understandable that many hotels will create a variety of products and services to attract different travel segments to increase the overall occupancy over 365 days a year. Obviously, all travel segments might have different needs, travel patterns or seasonality and require a different marketing approach and attention. It is understandable that increasing diversity in experience offers is needed to balance occupancy levels over the year and increase overall hotel performance.
A classic example here are leisure hotels which also target meetings & incentives or business hotels trying to fill their weekends with staycation or wellness experiences. The challenge with targeting too many different travel segments also holds a danger and can create a disconnect between the overall brand positioning and consistent experience delivery for all experiences promised. Just marketing all the various experiences for respective travel segments can cause already a disconnect along the customer journey and retail experience overall.
The disconnect between experiences promoted and the actual online purchasing experience!
An obvious example of this challenge is the disconnect between beautiful presented hotel websites showcasing numerous experiences and the actual purchasing process where various room types, but no experiences are being offered. Not only is there a lack or no personalization within the online booking process - experiences shown on the website are actually not really bookable online in particular if they are more complex.
For example, customers who have tried to book a family vacation with 2 kids - just requesting two-rooms-interconnecting - are pretty quickly challenged even if the hotel promotes family friendly accommodation options. At the end, they usually need to call the hotel to confirm what they require and what was promised on the hotel website.
Third party distribution players have done a much better job retailing hotels!
OTA’s in contrast added a lot of own content themselves to their platform, simplified hotel room inventory and making hotels very comparable. A booker can simply search, compare and book the best option. This way of retailing however degrades hotels to acommodity, even the ones with strong brand recognition. Often only customer reviews serve as a key quality assurance and differentiator for guests using those platforms. Whilst those room aggregators with comparability options are surely a benefit for a customer when looking for functional stay purposes, they may not be the best option for all travel purposes. In particular when emotional benefits and details are getting more important for the choice of the right hotel, other platforms or distribution channels might provide a much more personalized service.
For example, when booking a family vacation, travel agencies are much more powerful in providing an individualized experience and helping customers to find the right hotel match. With digitalization and online distribution increasing, a lot of people suggested that travel agencies will soon run out of business, however, this prophecy has not become true. In contrast, with the lack of online personalization during the retail journey for travel experiences, travel agents are as valuable than ever. Good travel agents sort out your questions and provide an individualized purchasing experience with recommendations, even to the level of detail suggesting specific room types, available features like panoramic views or amenities at a hotel. Good travel agents know the products they sell very well and are able to recommend the right hotel to the right customer. This also highlights the importance for hotels to deliver ongoing educational activities to travel agents ensuring they can drive more business to them.
Why are hotels not able to provide a better retail experience themselves?
One of the main reasons for the lack of online individualization is the dominance of hotel legacy systems and the way room inventory is being managed, which makes it difficult for hotels to copy best practices known in other sectors like Amazon for example. Common internet booking engines available on the market and used for hotel individual websites are simply just selling room types and not experiences. Room types are also often deliberately simplified so hotels can manage and distribute them easily via other third-party distribution channels such as OTA’s and GDS. This of course adds to the problem of commoditizing hotel offerings in order to increase reach.
Another issue is that some hotels prefer to keep room allocations flexible, not committing a certain room number to a guest, since prices may change on a daily basis subject to demand and it allows for allocating guests yielding a higher return (price * length of stay) to a more appropriate room closer to arrival.
However, what the hotel believes is the better room fit based on their own perspective, does not necessarily concur with the guest expectation. This can cause a different experience gap issue and is also a highly in-transparent process from a guest perspective.
Some smaller – family owned – leisure hotels in particular are often not even using a booking engine and still work with online request forms instead. Not providing an instant booking confirmation option in the first place however increases the danger of losing the customer to a third party unless the client is reaching out to the hotel directly via phone or email.
As long the staff is well trained, getting a phone call from a guest is actually a good thing since hotels are able to provide a very individualized service matching customer needs with the right room product and services instantly. It is common knowledge for hotels that reservations through phone yield significantly higher revenues per available room (RevPAR) than other sales channels.
Make your own sales channels your flagship store.
Since we know that individualization yields a higher RevPAR and retail practices from other sectors like for example the known Amazon phrase “people who bought this also bought that...” are improving overall business performance, we recommend hotels to re-kindle their retail experience - making their own sales channels a flag-ship store!
Think of brands like Adidas, Nike or even Apple for example. While you can buy their products through other retail channels, they also have their own flagship stores where the purchasing experience is much more controlled and closely linked with their brand promise, ultimately supporting their brand positioning. Take for example a Nike sports shoe: You can purchase most of Nike’s shoes through various different retailers, their own flag ship store provides additional limited-edition shoes and an enhanced purchasing experience you cannot experience nowhere else.
In addition, flagship stores provide a lot of different benefits to brands besides encouraging customers to buy directly despite alternative sales channels available to them. The flagship stores can also be leveraged for public relation activities and provide the image of how the brand wants to be seen in the world, ultimately a tool of breaking out of the sea of sameness.
So what? Now what? The opportunity of a dual distribution strategy!
Of course, this is easier said than done and when it comes to how this can be actually achieved, there is usually a lack of guidance or solutions. We have formed with many of our ex-colleagues and customers the World Hospitality Alliance to exactly guide hoteliers through this process and help them to drive more direct bookings and expand their own sales & marketing activities in markets which matter to them.
Our technology solution, the GauVendi Retail System (GRS) not only closes the gap between hotel websites, selling experiences, yet it also elevates the hotel own website to a real flagship store while allowing hotels to drive a dual distribution strategy and continuing to sell common room types via third parties.
More information about the GauVendi Retail System
The GRS retail system connects directly to the property management system and allows for true personalization, making the entire retail journey non comparable with other third parties. There are no classical room types anymore, customers select their preferred room features & attributes and are presented with best room matches showing a percentage score.
In addition, dynamically bundled stay options can be promoted online, selling experiences and improving organic search and direct bookings. GauVendi’s build-in inventory management intelligence enables feature-based revenue management increasing yields (RevPAR), automates room assignments, making life easier for hotel operations and allows for smarter capital investments due to newly gained customer behavior insights.