WHITE PAPER EXPLORE MORE It s time hotel booking got smarter
INTRODUCTION The travel industry has weathered a lot of change in recent years. The rise of digital has taken travelers off the high street and onto the internet in search of the best deal. This has resulted in a more competitive marketplace and aggregators being able to expand their offering to a wider, more demanding customer base. As competition intensifies, the ability to deliver quick itinerary options for customers, value and savings in travel bookings, and insightful reporting, is becoming increasingly important. So how do agencies do that within such a fragmented segment like hotel? They need to rely on technology to be one step ahead.
02 THE WELL-TRODDEN PATH Traditionally, travel agencies and travel management companies (TMCs) have used the established and well-tested Global Distribution System (GDS) to book travel and hotels for their clients. However, in recent years aggregators have challenged this model by directly offering the traveler hotel comparison shopping online and in one place. Despite corporate travel policies often directing travelers to only book through a TMC, there s little to stop corporate clients booking hotels independently. This is termed hotel leakage, and while it s motivated by perceived better value, it has further fragmented an already highly competitive market. But what are the consequences of this leakage? Out-of-policy hotels, not hitting corporate booking targets, missed agency revenue, gaps in TMCs and travel managers reporting, hidden charges, minimal personalisation of travel preferences and unfavourable or out-of-date rates. Worse still, there is a risk of inaccurate records and travelers turning up to find they don t even have a room booked. Efficient booking processes are also a key consideration for agencies and TMCs. But how can they make this the norm when they are booking via multiple platforms and through multiple suppliers? There is also the time cost of sifting through this glut of information, as on average an agency has to visit up to five different sites in search of the best offer instead of just one platform. The knockon effect on productivity can seriously affect a travel agency s profitability and customer service. This study correlates with our business intelligence projections that 2015 will be a record year for GDS hotel bookings The desire to improve productivity, efficiency, remain competitive and offer their travelers the best possible service, has seen a shift by agencies to making more bookings through a single, integrated platform. In September 2015, TravelClick surveyed more than 900 travel agents across 48 countries. This reported a record use of a GDS to make hotel reservations. Over half of global travel agents who were surveyed (51%) stated that they are using the GDS more often compared to the past two years. Travel agents around the world are increasingly utilizing the GDS for hotel research and reservations, said John Hach, senior industry analyst, TravelClick. This study correlates with our business intelligence projections that 2015 will be a record year for GDS hotel bookings. This upward trend in the industry shows that TMCs and travel agencies are using the GDS for more than flights alone it s now a key distribution channel for hotel bookings. However, these findings also show there is still a lot of room to grow and harness that power of the platform.
03 MEETING THE NEEDS OF THE STRATEGIC TRAVEL MANAGER Corporate travel managers transitioning into more strategic roles value visibility. They look to their TMCs to help them analyze travel data in a meaningful way and provide them with actionable insights that match their business goals. Booking outside the platform makes this considerably more challenging. Granular booking information and reporting is something corporate clients expect as a matter of course. A single platform allows better control of travel budgets such as information on hotel nightly rates and seasonal fluctuations to guide businesses on the best times for their employees to travel. Manju Goel, Director of Sales EMEA, Park Plaza Hotels agrees, TMCs with GDS are important to us as they help the visitor find the most suitable hotel for them. This offers the customer better service and increases the average value of the booking. TMCs also need to help their corporate customers keep costs down and make sure bookings stay in policy to maximize discounts and savings. This is particularly valuable when you look at the effect leakage can have on both a travel manager s budget and travel programme if it becomes widespread amongst corporate travelers. TMCs with GDS are important to us as they help the visitor find the most suitable hotel for them. This offers the customer better service and increases the average value of the booking
04 EFFICIENT, ACCURATE BOOKING Accuracy is a key requirement for agents and customers. Incomplete bookings or hotels failing to receive requests, incorrect dates or payment emails being misdirected can result in travelers being left out in the cold. The impact on the traveler is clear, but the repercussions for the reputation and future business of the travel agency can also be serious. Consistency and reliability of the bookings are critical to our business, that s why we make 80% of our bookings via GDS A smart, accurate and efficient booking system, with one central database stops this from happening. Eradicating the potential for data entry mistakes means more satisfied customers and safer travelers. Shouldn t that always be the goal of any travel company? Francois Calvino, owner of UNIGLOBE Agis Voyages, agrees that accuracy is critical for TMCs, especially when making bookings for corporate clients. Consistency and reliability of the bookings are critical to our business, that s why we make 80% of our bookings via GDS.
05 BETTER SERVICE, SAFER TRAVELERS Service can be the first casualty when hotel bookings are made out of policy. Harnessing the power of in policy hotels means a win for agents and the traveler. Agents not only get the best commissionable rates, but the hotel values the business and passes this appreciation on to the traveler with benefits such as greater personalisation and service. If the hotel is out of policy, and not put back into the PNR (passenger name record) a passive segment is created. Often the agent doesn t have the time to merge this passive segment back into the PNR and this impacts on their duty of care. This results in fragmented data and records and the agent not knowing where their traveler is at any one time. Plus, the additional links in the chain from TMC to hotel increase the risk of booking errors, make 24/7 service more of a challenge, and the process of amending bookings more time consuming. With a GDS travel managers have clear visibility of the prices being offered, so the relationship is closer to the hotel. Corporate clients really value this. Riko van Santen, Vice President Digital Strategy & Distribution, Kempinski Hotels S.A. Travel agencies need to streamline this process so they can offer their customers a more personal service, preferential rates, secure bookings, guaranteed rates and availability, and instant confirmation. For TMCs, retaining a strong negotiating position with hotels is paramount. The more data they have at their fingertips, the more power they have to secure the best and most competitive deals with hotel chains. Leakage impacts on pre-negotiated discounts, future volumebased discounts and can have a significant impact on contracted rates. With a GDS travel managers have clear visibility of the prices being offered, so the relationship is closer to the hotel. Corporate clients really value this
06 CONCLUSION: THE FUTURE OF HOTEL BOOKING So, while 51% of TravelClick s surveyed agencies are increasingly using the GDS, what s stopping more from doing the same? One reason might be a perception that the GDS only offers chain hotels and that to find independent offerings, agencies need to look elsewhere. GDSs have recognised this and started to add more non-chain hotels to their system. However, it should also be noted that the majority of corporate bookings will be in major cities and hubs where chain hotels are often preferable. The idea that aggregators offer more choice and variety of hotels is losing traction. However, this does not mean there is no place for aggregators in hotel bookings. Providers such as Sabre are harnessing the power of technology to drive change. Hubs that extend the market place inside the GDS point of sale, offer the optimal solution for the industry and for the customer. These best of both worlds platforms, not only provide rich content and the most up to date offers, but an automatic merge of the passive segment into the PNR. This enables agencies to provide the most complete availability of content and offers in policy, without the risk of booking errors. Whatever the future holds for hotel booking, one thing is clear; advances will help agents harness the power and efficiency of the GDS for themselves and their clients.
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