The topic of ‘rate leakage’ is increasingly a hot topic for our hotel partners, so we’ve interviewed our very own Sam Turner, Director of Wholesale Sales & Sourcing, to discuss the matter in depth:
Recent developments in the market by some mainstream players are leading to more OTAs selling on third-party rates, but without giving hoteliers oversight of where those rates come from. What is the Hotelbeds view on this?
From our end we are certainly not encouraging or supporting this recent change in the market. To be clear, we are not making available to any of these channels those FIT rates that are meant to be packaged. Additionally, we´ll also be taking a stance proactively to ensure that our customers don’t use those rates in that way.
Where is this 'rate leakage' occurring?
There are two principle areas where this is happening most. Firstly from the wholesalers that are proactively trying to maximize their volume and taking an unsustainable approach to rate distribution. And secondly, where accommodation buyers then take those FIT rates that are meant to be packaged and sell them downwards onto such channels.
What type of wholesalers should a hotel be concerned by?
Unfortunately we suspect the smaller wholesalers will undoubtedly try to take advantage and hoteliers understandably should be concerned about them.
Is this happening at Hotelbeds – and what will you do if you discover it?
We at Hotelbeds will be watching out very closely for anyone we feel is doing this and will take action where necessary to stop it, if necessary penalizing and disconnecting customers who take advantage.
Our objective is always to be the perfect ally to our hotel partners to complement their distribution – and we fully understand and are aligned with them on the importance of this matter.
But what are you doing to proactively try and stop this?
Recently we have taken two very important steps to proactively deal with this as we understand and share the concern or our hotel partners.
Firstly we have been segmenting our distribution by leveraging the advanced data analytics capabilities that we now have; and secondly we have tripled the size of the team dedicated to monitoring this area.
What should hoteliers be doing in general to best work with wholesale partners and prevent rate leakage?
The wholesale space is immensely complex and fragmented. So the best way to prevent leakage is to work with fewer but better quality wholesale partners. It is important that their partner not only offers solutions to resolve this challenge, but that they also fully respect a hotel’s needs: only distribution partners with a long-term, win-win approach should be considered viable.
What do hoteliers need to understand about the problem of 'rogue rates' appearing on OTAs?
There is an understandable but mistaken belief that this is an easy to fix problem, when in reality it is a very complex challenge that requires much experience, maturity even, to resolve.
Additionally many hoteliers think that the ‘rogue rates’ are associated just with static FIT rates – when the reality is that this problem can happen in a dynamic pricing environment too. Hoteliers mustn’t lose sight that static contracts can have great relevance, as this is what many travel buyers value most, not least tour operators.
Even if a wholesale partner such as Hotelbeds can overcome some of these issues, why should a hotelier work with you – what is your core offering?
Our belief at Hotelbeds is that what the wholesale channel does best is offer hotels non-domestic bookings from markets where they could otherwise have never gained bookings – or from niche channels, such as points redemption schemes, airline websites, tour operators, or retail travel agents, that again a hotel could not access cost-effectively themselves.
This is why we have stepped-up our efforts considerably over the last years to find more and more travel buying customers from these niche channels to connect to our platform – we now have over 60,000 such customers globally, making reservations for around 50 million room nights a year through our platform.
Tell me more about how the Hotelbeds overall offering has changed since Tourico Holidays and GTA joined you recently?
We are currently refocusing our energies towards providing the maximum value for our hotel partners.
As part of this we are now fully committed to providing hoteliers with bookings that complement their distribution efforts, be that from non-domestic sources or from niche channels such as retail travel agents, tour operators, airlines or loyalty schemes, with guests that book earlier, cancel less, pay more, stay longer, spend more in-destination and come back more often. Who doesn´t want that? Together these segments make up 75% of the bookings that go through our platform.
Where is the integration of Tourico Holidays and GTA at currently and what does this mean for me? Are you now one company?
We are now one organization, offering our hotel partners one point of billing and account management under one contract and on one platform. Our objective now is on focusing on perfecting the new offering to keep giving our hotel partners an ever evolving, cost-effective and revenue-generating distribution solution.