Today, online travel encompasses so much more than booking your airfare or hotel room. The online travel industry has grown to mean making any kind of online booking – from airfare to hotel to cars to a vacation rental unit. It includes not only the major players but also thousands of small- and mid-size boutique agencies all trying to get a piece of the travel pie.
Competition in the online travel industry is fierce, and subject to constant price fluctuations. Each travel destination offers several accommodation options and seasonal deals, with thousands of hotel and room variations. Whether you are a hotel, vacation rental or car rental agency, competitive pricing and product availability is critical. Having continuous knowledge of your competitors’ price and product offerings, recognizing changes to the marketplace, and acting quickly but strategically are instrumental to the success of your company.
Revenue Management is Critical
Revenue management is a process of maximizing revenue from perishable products, through the integrated control of capacity and price. Revenue management maximizes profitability by selling the correct number of seats, rooms or cars at various price levels based on demand and pricing elasticity. Simply put, it’s selling the right product to the right customer in the right place at the right time for the optimum price via the best channel.
Traditionally, there is a lot of focus on costs, which is important; however, there is also a lot of work to be done internally from a revenue leakage perspective, resulting in easy money walking out your door. Revenue managers should tighten up high yield spill, low yield spill, dilution and inventory spoilage, all of which cost many businesses millions of dollars in lost revenue each year. Also important will be to ensure that everything about your direct channels are the most favorable experience and at the very least offer perceived value for the customer.
Web Data is the Key Differentiator
Web data extracted from different travel and competitor sites can be aggregated for many uses. Travel companies use web data to discover the hottest traveling spots, and extract traveler’s profiles to see ones traveling origins and preferences and use the information to make traveling plans that suit most of the potential customers.
To attract a customer, you’re not just trying to gain a ticket or room sale. You’re gaining the opportunity to engage with a customer throughout their travel experience, to upsell or cross-sell them higher-margin services, and ultimately, their loyalty.
Leveraging web data can improve competitive standing and increase market share by optimizing pricing strategies. Extract hotel reviews, travel & hotel price, room availability, hospitality websites and know every detail about their offerings and pricing. Recently, the vacation rental and room sharing industry are experiencing explosive growth and is expected to surpass the hotel industry by 2020. Now you can easily compare rates and charges from vacation rental properties by collecting all the necessary data points to maximize revenue.
How web data has transformed the travel industry
Transparency and Improved Pricing Strategies
The web has opened up a new level of transparency to travelers. Price is a key component for travelers while planning their trips. Using web data, analysts can easily index, track and analyze the competitors’ prices to gain a clear picture as to what’s trending. This automation of real-time web data extraction help companies track changes in pricing and build a consistent pricing strategy for better customer experience.
Competitive Differentiation
Web data enable travel providers the ability to Know-Your-Traveler and differentiate your offerings.
- What are travelers’ feedback and expectations for your properties? Being able to quickly gain insights and take action towards improvement will help protect the brand and improve customer loyalty.
- Customer expectations can change dramatically. Find out what matters to your customers now – is it lower price, more flexible or premium service and amenities?
- Use web data to identify travel trends (eg solo travel, eco travel, local experience, etc…) and use personalized content for targeting
- Understand where travelers are traveling from and to, when they are traveling and the properties they stay in.
Improved marketing strategy
Analyzing big quantities of web data from travelers enables travel service providers to gain valuable insights which will ultimately optimize their marketing efforts. Travel industries can accelerate decisions based on insights generated from web data to maximize sales, loyalty and personalized promotions. This would lead to customer retention and acquisition, along with the profits. The huge quantities of web data from travelers help marketers identify where to focus marketing and promotional efforts.
- Gain a competitive advantage by tracking and understanding competitor promotional and marketing strategies to stay ahead.
- Focus on attracting and retaining new customers by tracking property occupancy to identify areas of traveler concentration across channels.
Common Uses of Web Data for Online Travel
- Price Monitoring: Optimize prices by viewing future availability and pricing of competing properties in target areas. Track how many properties have been booked and at what price.
- Predict Occupancy Rate: Tracking sold rooms to predict when the rooms will sell the most as well as when there will be a lot of vacancies is an important factor for an effective pricing strategy to maximize revenue.
- Competitive Research: Stay ahead of competitors by automating the harvesting of market data to get visibility of emerging trends, benchmark property performance and drive additional revenue.
- Market Intelligence: Establish automated, daily extractions of data from various online travel websites for listings, reviews and reviewer profiles to better focus marketing and promotional efforts.
- Inventory Listings: Expand your addressable market by keeping up to date the market opportunities in areas where competitors may have a foothold or where new businesses have opened.
- Listing Images and Details: Keep listing information up to date. Extract high quality images and product details from target sources to ensure accuracy and current.
- Traveler Sentiment: Leverage social media data to gain deeper insights into traveler feedback and expectations, so you can take steps to protect your brand and improve customer loyalty.
Web data brings opportunities for travel providers to improve their offerings and increase their sales. The ones that realize the potential of web data in the travel industry, will identify market trends, increase customer loyalty and foresee opportunities so that they will be one step ahead from their competitors.
If you can’t measure it, you can’t improve it.
Measuring success via Key Performance Indicators (KPI) is critical for hotels, vacation rentals and other perishable products. Here are some important key terms and KPIs to be mindful of.
Revenue Management
Revenue management is the application of disciplined analytics that predict consumer behaviour at the micro-market level and optimize product availability and price to maximize revenue growth. The chief purpose is to increase revenue by matching supply and demand. Successful revenue management involves understanding how customers think and what their perceptions of value are.
Yield Management
Yield management is a variable pricing strategy, based on understanding, anticipating and influencing consumer behavior in order to maximize revenue or profits from a fixed, time-limited resource.
Average Daily Rate
Average daily rate (ADR) is a KPI that calculates the average rental income connected to occupied rooms each day, which is valuable for revenue management. It can, therefore, give hotel owners an idea of their current operating performance. ADR = Room Revenue / Number of Rooms Sold
Occupancy Rate
Occupancy rate refers to the number of available rooms in a hotel that are occupied at any given time. Occupancy Rate = Total Number Of Occupied Rooms / Total Number Of Available Rooms.
Revenue per Available Room (REVPAR)
RevPAR is a performance metric that is calculated by dividing a hotel’s total rooms revenue by the room count and the number of days in the period being measured. It is a measurement of both a hotel’s average daily rate and its ability to actually fill those rooms. RevPAR = Room Revenue / Number of Rooms Available.
Gross Operating Profit Per Available Room (GOPPAR)
GOPPAR gives greater insight into the actual performance of a hotel than the most commonly used RevPAR as it not only considers revenues generated, but also factors in operational costs related to such revenues. GOPPAR = Total Room Revenue – Gross Operating Profit / Number Of Available Rooms
Average Revenue per Account (ARPA)
ARPA is used to show the average amount of revenue generated per customer account, over a particular period. It can easily show hotel or property owners the average revenue value of existing customers, or the value of new customers. ARPA = Monthly Recurring Revenue / Total Number of Accounts.
Average Rate Index (ARI)
ARI shows how your rates compare with other hotels to help determine if you should raise, lower or hold your room rates. A rate greater than 1 shows that your hotel is on averaged priced higher than your competitors. ARI = Your Average Rate Index (ARI) / Competitor’s Average Rate Index (ARI)
Market Penetration Index (MPI)
MPI compares your property’s occupancy percentage to the average market occupancy levels. MPI = Hotel occupancy % / Market occupancy %
Look to Book Ratio
The look-to-book ratio is a figure used in the travel industry that shows the percentage of people who visit a travel Web site compared to those who actually make a purchase.
Lose it Rate
Lose it rate is a rate where the hotel would be better off leaving the room unsold than sell at this rate.
Metasearch
A type of search engine that aggregates inventory from several sources and presents it in a single space.
Spillage
Spillage means that we have sold our hotels’ rooms too fast and we are now forced to stop sales way before the date of interest.
Spoilage
Spoilage means that we aren’t selling our rooms quick enough and are now needing to either have empty rooms or offer steep discounts.
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