Hotel & Travel Distribution Lessons For Golf Course Owners

Trends & Pitfalls in Hotel & Travel Distribution
Applying Concepts to Golf
Allegiant Airlines/ Teesnap · Milwaukee Golf Group
Scenic View Golf Club – Slinger, Wisconsin
February 8, 2016Image Credit: Julia Rubinic (cc | flickr)

Session Overview
• The Past
• How It Started
• What Changed
• How It Changed
• The Rise of Intermediaries
• Scale
• Market Power
• Compelling Business Models
• The Future
• Disruption
• Technology
• The Solution
February 8, 2016 | Scenic View Golf Club Slinger, WI Trends & Pitfalls in Hotel & Travel Distribution Robert Cole · RockCheetah | 2

In The Beginning
Ellsworth Milton Statler
“A Room and a Bath for a Dollar and Half”
“Location, Location, Location”
“The Guest is Always Right”
“Life Is Service”
Image Credit: Hotel Pennsylvania (All Rights Reserved)

Traditional Business Sources
• Consumer Direct
• Phone / Mail
• Sales Department / Walk-up
• Later - Online
• Retail Agents
• Order Takers
• Order Makers
• Specialists
• Wholesalers
• Aggregate Demand
• Contract Supply
• Channel Business into Partners
Image Credit: Royce Bair (cc | flickr)

Hotels v. Airlines
• Airlines – Centralized
• Equipment
• Routes
• Pricing
• Hotels – Fragmented
• Owners
• Managers
• Brands
• Airlines – Able to Exert Leverage
• Developed Distribution Technology
• Eliminated Travel Agency Commissions
• Control Supply on Non-stop City Pairs
Image Credit: Waldo Jaquith (cc | flickr)

Changing Contracts
• Inventory Risk
• Was: Payment Required – Regardless of Usage
• Now: Wholesaler Pays Only on Consumption
• Shifts Risk from Intermediary to Hotel Owner
• Last Room Availability
• Discounted Rate Available if Rooms Available
• Sustains Availability & Discounts During Peak Periods
• If Not Provided, Search Rank May Suffer
• Rate Parity
• Resale Price Maintenance – Sets Retail Price (Vertical)
• Most Favored Nations – Same Price to Competitors (Horizontal)
• Does Not Apply to Contractual/Private Rates
Image Credit: ZERO1 The Art & Technology Network (cc | flickr)

Introducing OTAs
• Broad Product Selection
• Every Brand
• Every Locations
• Every Quality/Price Ranges
• Best Rate Guarantee
• Designed to Prevent Defections to Other Sites
• Does Not Apply to Private Rates
• Used by Hotels (with Rate Parity) to Define Retail Pricing Structure
• Growth & Power Through Acquisition
• Expedia (Travelscape, Hotwire, Hotels.com, Venere, Trivago, Travelocity, Orbitz)
• Priceline (Travelweb, Active Hotels, Booking.com, RentalCars.com, Kayak)
Image Credit: Jo Guldi (cc | flickr)

Transactional Models
• Agency Model
• Retail Price
• Commission Paid on Retail Price
• Merchant of Record: Supplier
• Merchant Model
• Wholesale Price
• Intermediary Marks Up Net Rate to Retail Price
• Merchant of Record: Intermediary
• Opaque Model
• Package: Bundled Components Protect Retail Pricing Structure
• Opaque: Product Name Revealed Following Purchase
• Merchant Model Transaction
Image Credit: Khánh Hmoong (cc | flickr)

Advertising Domination
• Paid Search (CPC)
• Priceline: $1.5 Billion - 2014 Google Spend
• Expedia: $1.0 Billion - 2014 Google Spend
• Combined, Total 5% of Google’s Total Ad Revenue
• Metasearch (CPC)
• Click Passes User to Supplier Website
• Transaction & Customer Support by Seller
• Priceline + Expedia 62% of 2013 TripAdvisor Ad Revenue
• TripAdvisor Booking Widget – Three Business Models
• Business Listing – Subscription
• Metasearch – CPC (Click-Through)
• Instant Booking – CPA (Commission)
Image Credit: Jumeirah Hotels (All Rights Reserved)

OTA Marketing Capabilities
• Big Data
• Customization
• Personalization
• Multivariate Testing / Predictive Analytics
• Tailored Experiences
• Behavioral Targeting
• Adaptive Content
• Dynamic Advertising Bidding
• Eliminate Supplier Risk
• Broader Reach
• More Precise Targeting
• Pay for Production
Image Credit: nist6dh (cc | flickr)

OTA Revenue Management
• Pricing Strategy
• Alter Sort Order to Optimize Profit
• Differentials Relative to Competitive Set
• Ultimately Goal – Create Value
• Distressed Inventory
• Target Dates
• Exclusive Pricing
• Increased Compensation
• Total Revenue Management
• Suppliers Must Understand Total Costs
• Acquisition Costs
• Distribution Costs
Image Credit: Pictures of Money (cc | flickr)

Modern Hotel Group Strategy
• Go Asset Light
• Divestiture of Properties / Leasing of F&B / Spas
• Management Contracts for Key Properties
• Franchise for Rapid Growth
• Expand Brands
• Maximum Number of Rooms in Prime Markets
• Soft Brands – Keep Name & Participate in Reservations / Rewards
• Hotel Brands Beginning to Look More Like OTAs
• Relying on Rewards Programs
• Frequency Programs / Not Loyalty
• Reward Business Traveler Spending Employer’s Money
• True Loyalty is Earned – Customer Pays Premium for Product
Image Credit: Richard Matthews (cc | flickr)

The Battleground
• Customer Information
• Intermediary Maintains Extensive Profile
• Minimal Customer Information Passed to Supplier
• Limited Ability to Engage Prior to Arrival
• Rewards Programs
• Intermediary Bookings Not Eligible for Points
• Metasearch Bookings Maybe Eligible | Instant Booking Not Eligible
• Suppliers Attempting to Influence Direct Booking
• “Closed Group” Eligibility
• Profile
• Password
• Opt-in
Image Credit: Kyle May (cc | flickr)

The Disruptors
• Technology Eliminates Pain Points
• Faster
• Cheaper
• Better
• No Supply Ownership or Management
• Focus on Doing One Thing Well
• Minimum Viable Product
• Rapidly Scalable – Simple Onboarding
• Limited Human Capital
• Hilton – 53.8 Staff Create $10 Million in Market Cap
• Priceline – 2.1 Staff Create $10 Million in Market Cap
• Airbnb – 0.6 Staff Create $10 Million in Market Cap
Image Credit: Bryan Burke (cc | flickr)

Modern Technology – Changes the Rules
• Cross-Platform User Tracking
• Google Advertising ID
• Apple Advertiser Identifier
• Facebook App User ID
• Digital Wallets
• Apple Pay
• Android Pay
• Payments in Facebook Messenger
• Messaging Platforms
• WhatsApp (Owned by Facebook) – 42 Billion Messages/Day
• SMS (Text Messaging) – 20 Billion Messages/Day
• WhatsApp Staff = 57 Engineers
Image Credit: Amber Case (cc | flickr)

The Solution
• Retain Control
• Authenticate Ownership
• Defines Rules
• Authorize Distribution
• Simplify Access
• Validation
• Robust Content
• Industry Standards
• Reduce Friction
• Platform Agnostic
• Simple Connectivity
• Promote Efficiency & Speed
Image Credit: Marc Treble (cc | flickr)

Trends & Pitfalls in Hotel & Travel Distribution
Questions?
Copies of the Presentation?
Comments?
Hoteliers Have Made Their Bed, And Are Now Being Forced to Lay In It
If Not Careful, the Golf Industry Can Repeat the Same Mistakes
Robert Cole
robert@rockcheetah.com
+1.262.309.9560
@robertkcole
rockcheetah.com
Image Credit: XXXXXXXXXXXX (cc | flickr)

Hotel & Travel Distribution Lessons For Golf Course Owners

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