Make "channel conversion" techniques top priority.
Douglas Kennedy ~ The Douglas Kennedy Company
Monday, 14th August 2006
Make "channel conversion" techniques top priority for reservations and front-desk training. Increasingly, savvy revenue managers are learning how to properly utilize third-party online distribution channels in a way that has a positive impact on revenue per available room and profits.

Recent trends such as offering best available rate guarantees for reservations booked directly at the hotel (or brand) Web sites, rewarding frequency points only when guests book directly and establishing rate parity across all distribution channels are helping bring a regular "core" market of guests back to booking via traditional, proprietary channels.

These RMs have realized that they no longer can allow the third-party distribution channels to erode their profits by luring away their property's existing client base who used to book directly, especially when the transaction fees and related costs of using these channels result in a much lower "net" average daily rate.

But rather than "throwing out the baby with the dirty bathwater" and dropping out completely, smart RMs continue to participate in select third-party travel Web sites that fit their overall e-commerce strategy. It's all a matter of how and when. They know how to properly utilize third-party channels to reach out and grab new guests whom they might otherwise have been able to reach, and when to open these channels during periods of moderate to low demand when rooms would otherwise go empty. So revenue management best practices certainly have evolved significantly, especially recently.

But most hotels still are missing out on perhaps the biggest opportunity of all that these third-party distribution channels create when properly utilized, which is to redirect guests who originally find you elsewhere into booking directly next time.

Scott Anderson, the legendary hotelier and current president and c.e.o. of Club Holdings, calls this channel conversion. When delivering the opening keynote address for the recent Hospitality Sales & Marketing Assn. International Revenue Management Strategy Conference, which was attended by close to 100 of the industry's top minds in the revenue management profession, Anderson suggested that channel conversion was a topic nearly everyone in attendance needed to address at their hotels. His definition of channel conversion is very simple: "Move them from where they are to where you want them to be," he said.

The whole idea is to reroute these "new" guests to booking future return reservations via direct channels, such as the hotel's own Web site, calling directly, or even booking in person while they are still in-house.

So when the guests comes back next time, rather than watching transaction fees and commissions erode away as much as 35 percent to 40 percent of the rate they actually pay, reservations come in through your preferred channels at relatively minimal costs.

Anderson and others at this conference offered numerous suggestions hotels can use to train their staff to redirect guests who have booked via third party channels to "where we want them." The actual techniques you would want to use vary according to which third-party site or partner that is in question, your pricing philosophy and core strategy and according to the specific caller's or guest's circumstances. That being said, here is a collective list of possible techniques for your next front desk and reservations training meeting to help your staff practice channel conversion:
  • Upon arrival, welcome these "new" guests, and acknowledge in a positive way that they have booked via a third-party site. Personalize the relationship and build rapport with a welcome amenity, upgrade or preferential room location instead of treating these guests who have booked elsewhere as "steerage" class upon arrival.

    Also upon arrival, offer incentives for the guest to book directly next time. Depending on your hotel, brand and market niche, this might include double frequency points, a coupon for upgrade to higher room category or perhaps a 10-percent-off coupon for booking directly next time.
  • Collect as much guest-history data as you can without seeming intrusive, especially their e-mail address for future marketing. Attempt to secure this during the reservations inquiry, or if you have not done so, then upon registration.
  • When fielding reservations inquiries from callers who simultaneously are looking online and questioning special offers, when possible offer a comparable price/value option. Offer to help the caller to secure the reservation right now without further effort being required on their part. Even when "exclusive" rates, or rates you have agreed not to match, have been extended to third-party partners in exchange for search engine positioning, it often is possible to offer callers an upgraded accommodation at only a slightly higher rate while still playing within the rules.
  • Capitalize on opportunities to secure return reservations from your guests while they still are in-house by making it easy for them to book. Consider a throw-back to the old days of putting the red "hotline" phone to the 800 number call center by extending your front desk into the "return reservations booking center."
  • Instruct your front-desk team to engage your guests in dialogue and simply ask guests if they can assist with future reservations. Or put out signage appropriate to the decor of your lobby. Make available booking forms so the guest can fill it out and drop it off later during their stay.
  • Consider promotional offers to in-house guests with their express check-out envelopes for booking directly next time.
  • Consider inserting a "return reservation request form" into your express check-out packages.

Most of all, as Anderson said, empower your staff to make a deal. Based on the hoteliers I've spoken with at this conference and elsewhere, Anderson hit a grand-slam with this one. Word on the streets seems to be that more and more callers are online while on the phone. And with Consumer Reports magazine just last month running a cover story on this and reporting that they got the lowest rate 75 percent of the time by calling the hotel directly, don't expect this trend to change soon.

The good news is with a little training and a lot of consistent effort, your front-desk and reservations team can maximize your hotel's opportunities to practice channel conversion effectively every day and to develop a win-win-win relationship between your hotel, your guests and your third-party distribution partners.

Originally published in Hotel & Motel Management online.

Doug Kennedy is the owner of The Douglas Kennedy Company. He delivers keynote addresses and conference presentations for lodging and tourism organizations, and provides sales and training consulting services. For more information, visit www.douglaskennedy.com or alternatively email, douglas@douglaskennedy.com
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