In 2012, Harris Interactive reported that almost 70% of consumers booking hotel rooms through the Expedia mobile app were looking to travel within 24 hours. Similarly lastminute.com recently reported on their increased mobile usage and mobile bookings within 24 hours.
This coupled with the recent surge worldwide of same day booking apps, hotel chains know they need to get on board but there are significant challenges to overcome in the same-day booking market – to avoid cannibalisation, to avoid paying high commission on already discounted rates and not relinquish control of how their last minute inventory is sold and promoted via third parties.
We call this the ‘3 C's' of the Same-Day Booking market – Control, Cannibalisation and Commission.
Let's take a look at how hotel chains can address the 3 C's when considering how to tackle the same-day booking market. Control
The plethora of same-day booking apps on the market in the last year or so has triggered some concerns amongst hoteliers that they are, despite relative enthusiasm for the model, forced to relinquish control over their product and pricing.
It is vital that hotel chains will be able to control their own pricing for same-day offers, how they set exclusive deals and the number of rooms made available each day or each week.
And importantly it is vital that hotel chains have control over how they promote last minute offers and the language that is used in order to clearly differentiate the offering from that other guests receive when they book in advance and pay a higher rate.
To summarize, the control challenges include:
Positioning and timing of the last minute offer is key
- No control over who hotels' empty rooms will be competing against
- No control over a pricing scale - pressure to drop prices lower to secure that days app listing
- Once listed for that day may be unable to sell room to walk-ins willing to pay rack rate
- No control over the marketing of your hotel in a third party same-day booking app
- No control over the customer targeting with a third party same-day booking app
- No control over the time of day and which days they promote last-minute inventory
- No control over reacting to unexpected situations (e.g. Bad weather) which may leave a large portion of people looking for a last-minute room
An important point to bear in mind is that most, if not all last minute bookers are not hotels' loyal customers who will book in advance.
They are last minute deal seekers. The last minute market for hotels is about securing new customers and incremental revenues for rooms that would otherwise go unused.
The ability for the hotel chain to have control over how they target this market is very important, so this approach is not targeted at loyal customers and instead the hotel can carefully choose which nights and which cities and which hotels it offers last minute deals for, the time of day it promotes last-minute deals and importantly the hotel maintains ownership of the customer relationship.Cannibalisation and how to avoid it
A key challenge with last minute offers is to ensure the guests who book in advance and pay the higher rate are not ‘trained' to become accustomed to waiting the day before check-in to book and get a discounted rate. Read the full story HERE