Frederick DeKay

Selling rooms: hotels vs. third-party websites.

Hotels have a variety of internet distribution channels to help them sell rooms, including sites that have come to be called online travel agents (OTAs), or third-party websites, but the cost of using these intermediaries is considerable. This article examines how hotels can sell room inventory while maximizing net room revenues—chiefly, by steering customers to their own sites, rather than to the OTAs. Even though hotels want to sell rooms via their own channels, the hotel industry relies heavily on efficient and convenient OTAs to sell rooms. Based on eleven interviews (nine hotels, one third-party website, and one airline), we recommend the following ways to strengthen sales on hotels’ websites: maintain a best-rate guarantee, optimize the website for search engines, mine data from customer profiles to provide custom offers, retain premium rooms for sale on the hotel website, offer discounts or other promotions to customers who book on the hotel website, offer incentives for returning guests who book on the hotel website, avoid giving loyalty points for OTA bookings, and enrich the hotel’s website with information. Because the ability to offer low prices is a chief advantage of OTAs, many hotels have promoted price parity as one strategy for attracting customers. The results of tracking room rates of 13 hotels posted by third-party websites and hotels over a 17-week period demonstrated, however, that room rate parity is rare, even though all selling parties espouse such parity. Parity generally was found only for smaller hotels. The study also found that room rates fall as the date of arrival approaches, and it became clear that individual properties in a hotel chain follow the chain’s overall pricing strategy.

Hotel Room-inventory Management An Overbooking Model

Abstract The gentle art of overbooking can be augmented with a carefully constructed computer model— but human expertise will always be necessary.

Loyalty Programs Airlines Outdo Hotels

Compared to hotel frequent-guest programs, airline frequent-flyer programs have gained not only more membership but greater penetration of key groups of travelers, notably, business travelers and high-income, high-frequency travelers. Based on a survey of 287 guests at nine hotels in Seattle, Washington, airline loyalty programs have gained considerably greater awareness among travelers than have hotel programs. One-third of the leisure travelers in this survey reported that they were not aware of hotel loyalty programs (even though they were staying in a hotel). The study found that travelers who join both hotel and airline loyalty programs are also the most frequent travelers. By far, the proportion of travelers who join airline frequent-flyer programs exceeds that of those who have joined hotel frequent-guest programs. Perhaps most critically for hotel programs, the surveyed guests would prefer to receive airline miles for their hotel stay than to receive hotel points.

Characteristics of members of hotel frequent-guest programs: implications for the hospitality industry.

This study, based on a current sample of 304 hotel guests, examines the demographic, behavioral, and attitudinal characteristics of hotel frequent-guest program members. Based on our findings and our search of the literature, we present the marketing and operational implications for the hospitality industry. We recommend that frequent-guest programs be targeted not only toward male business travelers, but also to women who now make up one third of hotel frequent-guest program members and are a growing segment of the travel market. Because the larger hotel chains have greater geographical coverage, they have the inherent advantage, but smaller chains can be competitive by giving more generous awards that never expire and are instantly redeemable. We also recommend that hotels partner with airlines so that members can earn hotel points by flying, and conversely can opt for airline miles by staying in hotels. Also, because frequent-guest program members tend to make their own travel arrangements, often online without the help of corporate travel planners and travel agents, hotels should promote directly to members. Finally, because business travelers are very averse to the confiscation of their awards by their corporations, like the airlines, hotels should not allow corporations to register as corporate members

Hotel Room-inventory Management

With their insistence that guests guarantee room reservations with a credit card, hotel operators have taken great strides to address the problems caused by no-shows, both for individual travelers and group-related guests. Moreover, some hotels are attempting to address the other end of the no-show problem, by imposing early departure penalties. Nevertheless, no-shows and early departures still cost hotels money. The credit-card guarantee compensates hotels for one night’s stay in the case of a no-show, but the hotel still needs to make up for a revenue loss if that noshow guest had a multiple-night reservation. Because of the prospect of no-shows and early departures, the hotel manager almost inevitably must engage in some BY REX S. TOH AND FREDERICK DEKAY The gentle art of overbooking can be augmented with a carefully constructed computer model— but human expertise will always be necessary.

When and where to buy airline seats on third-party websites.

This is a 3-month time series study of airlines fares on three third-party websites (Expedia, Orbitz, and Travelocity), showing the level and changes of fares and their implications for traveler decisions as to when and where to buy airline seats. We discovered that it is best for travelers seeking the lowest fares to purchase tickets early, because fares tend to be volatile on the upside over time, culminating in the highest fares on the days of departure, and to fly on weekends. It is also best to check fares on as many websites as possible to get the lowest fare, because the evidence seems to suggest that fare parity does not exist, and not all airlines are represented on all third-party websites.

Executive training exercises in non‐performance and attrition charges in the hospitality industry

Purpose – The aim of the paper is to help graduate students in the area of hospitality management to understand and deal with non‐performance charges and attrition issues.Design/methodology/approach – The paper uses case studies to illustrate the issues that must be resolved.Findings – There are many ways to look at issues – from the hotels perspective, from the customers viewpoint, and from an independent observers position.Originality/value – This training exercise highlights the complicated issues surrounding non‐performance charges and attrition issues, and suggests ways in which they can be fairly resolved to the mutual satisfaction of all parties to preserve goodwill all around.