The Internet has taken over the hotel industry. Most booking decisions made today are based on information found on the Internet. Of course, not every reservation is made over the Internet. Tourists often use the web to search for information on hotels and then do the booking by telephone. One thing is for certain: a 21st century hotel does not exist if it does not make its presence known on the Internet. What is it then that tourists look for when searching for a suitable place to stay? 

The answer seems to be simple: they wish to stay at hotels that have many favourable reviews. They do not want to buy the cat in a bag, but would rather see how the rooms look before making a decision. And, finally, they want to find the best deal. There is a plethora of OTA websites on the Internet that allow hotels to reach prospective guests. However, one must keep in mind that the competition between hotels listed on the websites is fierce, each OTA charges a commission fee and each one has a different interface for managing the hotel’s account. Selling through numerous online channels requires not only the hotel’s ‘presence’ on the web, but also a sound price and brand policy.  

Why choose OTA websites? Some hotels love them, others hate them, and the truth is that their policies sometimes border on the controversial. However, they do enable hotels to reach new markets and bring in new bookings. OTAs often take on the duty of advertising their hotels as they have access to enormous budgets meant for online advertising, mailing, Google Ad-Words, etc.  What is more, their websites are responsive, i.e. compatible with small smartphone displays: a study carried out by HRS demonstrated that almost 20% of hotel reservations are made through the mobile channel. 

How should one go about using different distribution channels to achieve tangible benefits in the form of increased occupancy rates, revenue and profit? Here are the 5 steps to achieving success in the hotel business with online distribution channels.  

1. Collect positive reviews 

Maintaining a good reputation of your hotel is more important the even the best rate plans! As we all know, the Internet is a means through which dissatisfied customers may ruthlessly complain about the hotel, its standard of service, nasty foot, dirty bathtubs and crumpled sheets. OTA websites have their own grading systems that allow users to sort hotels by their overall rating. This is why the standard of service provided by your hotel should be impeccable! Therefore, remember to encourage your guests to post positive opinions on TripAdvisor or similar websites.   

1. Content marketing 

Build your brand using content! OTA websites give you the opportunity to create a rich hotel profile with numerous pictures, a long description, a list of hotel attractions and nearby landmarks. Some websites even allow you to post an advertising video. Remember to follow the ‘content is king’ principle and only add pictures of the highest quality to your profile. Do not hesitate to spend some cash on a professional photo session of your hotel – it will surely pay off in the future!   

1. Choose distribution channels and plan a rate policy 

There are hundreds of partners operating in the market – OTAs, wholesalers, global distributions systems (GDS), etc. Which ones and how many to choose? It all depends on the profile of your hotel and the market segments that it is meant for. You should certainly strike a balance between global and local distribution. Looking into specialised websites (SPA, conferences, wedding receptions, etc.) may be worthwhile if they fit the profile of your establishment. If you offer room packages or have special deals for corporate clients, finding a suitable partner will be necessary. How many channels should your hotel be included in? Our experience proves that hotels sell their services through an average of 5-10 distribution channels.  

Once you have chosen a pool of OTAs suited for your hotel, you must adopt a correct sales strategy. Thus far, many OTAs have included rate parity clauses in their contracts to prevent hotels from offering lower rates on competing websites. However, this year a breakthrough was made when the French National Assembly forbade using the rate parity clause which allows hoteliers to set their rates in all online and offline channels independently.   

1. Choose sales management tools 

Managing multichannel distribution, especially when each channel has its own rate strategy, is time consuming. Analysing total sales is another challenge you will have to face. Tools which centralise distribution, for example YieldPlanet’s Channel Manager, may prove helpful in this regard. The system makes it possible to centralise, automatise and optimise all internet sales. This includes dynamic enabling/disabling of specific rate plans or creating formulas for automatic rate changes and availability within individual channels, but also changing rates across all channels. The statistics module lets you carry out an in-depth sales analysis and generate occupancy, booking and revenue reports. Channel Manager also has a competition monitoring module: you only have to choose the competing hotels that interest you to receive information about their rates in selected OTA websites. Therefore, you will always be one step ahead of the competition!  

1. Your website also generates sales! 

Remember that your hotel’s website is the best, least expensive and most effective online sales channel. First, because it is controlled solely by you, and second, it does not limit the number of photos, descriptions, etc. that you may post. Third, according to research carried out by the HSMAI foundation, one in four online reservations in non-chain hotels was made through its website. If you decide to integrate the website with a booking engine, you may sell your services without paying commission fees to OTAs.  

YieldPlanet has released a new feature in the Booking Engine. It allows the hotel to set up packages in one simple screen.

On a single screen, the hotel can enter the following parameters:

• minimum stay
• price for the package
• description of the package e.g: weekend with tour of the city
• valid dates for the package

and then the package can be shown in the Booking Engine.

The whole operation to set up a new package takes only a few minutes.

Brazilian are slightly different from other tourists. Having good weather all year round and fabulous beaches in their home country, they are rather interested in shopping, glamour and prestige  gastronomy, sports, historical and cultural attractions. In this context, hotels should gain a deep understanding of their behaviour, likes and dislikes in order to develop effective marketing strategies to target Brazilian travelers. 

7 things you should know about Brazilian travellers: 

1. They love shopping, To cater to the Brazilian traveler who is looking to buy consumer goods you can create exclusive shopping tourist packages. Many Brazilian guests rent cars to facilitate their shopping trips, so one of these packages may include valet parking; 
2. Numerous international flights, especially inter-continental, are overnight. Thus, guests from Brazil are early morning or late evening. Givingtchemthe possibility of early morning check-in or late night check-out will give your hotel an added-value; 
3. Complimentary breakfast is considered a staple in Brazilian culture, A complimentary continental breakfast will give you some extra points;
4. Brazilians take cleanliness seriously: ultra clean rooms are crucial to guest satisfaction;
5. Cheerfulness is Brazilian’s middle name:  Staff interactions will be appreciated. Having a Staff member to greet the group or individual in their language will be extremely well received; 
6. As Portuguese speakers on a Spanish continent, not all Brazilians speak English: localise your hotel website into Portuguese. Additionally, you can have Staff members having a working knowledge of Portuguese to cater to Brazilian guests;
7. Social media have  become a very influential channel. Blogs, forums, and social networks have become important platforms for sharing thoughts and opinions about travel destinations and hotel experiences. Make sure you don’t miss social media channels in your marketing strategy.

Airlines make over 1M fare changes per day to maximize revenue. YieldPlanet wants to bring this discipline to the hotel world, with the assistant of a newly revealed research project called Hotel Management Optimizer.

The HMO is a global product category innovation, allowing hoteliers for the first time to profit from advanced learning algorithms and artificial intelligence to optimize their revenue and profitability with an integrated tool.

YieldPlanet says: “The researchers will develop self-learning algorithms that adapt to changes in the environment which integrated with large numbers of external data sources and Big Data analysis will allow us to measure items that might influence hotel room pricing”.

This research offers a unique opportunity to optimize revenue management systems over thousands of hotels, which introduces some exciting challenges: handling differences in behaviors between different countries, cultures and climates; managing the uncertainty of competitive behavior; blending the sparsity of the data from a single hotel with the richness of a dataset that spans many hotels; and modeling the different ways that markets response to prices.

The YieldPlanet product development team plans to show off their early results mid 2017. The ultimate goal is to release HMO as a cloud software for hotels, in early 2018.

We believe that this form of artificial intelligence will prove especially useful for pricing recommendations. We are confident that we will be delivering results that have practical value to hotels and can improve their revenue and profitability within a 3-4 year time horizon.

The National Centre for Research and Development (NCBiR) has granted 5 MPLN from the European Union National Strategic Reference Framework to cover the HMO research. The project will be carried out under the Innovative Economy Operational Programme, priority axis 1. With the EU’s funding, YieldPlanet and its academic partners can research and develop a solution that will be more innovative and superior to what is currently available, putting YieldPlanet in the forefront of research and innovation.

Recent decisions made by the governments of several European countries may have a significant impact on the online hotel distribution system. Hotels will be able to introduce more flexible and independent rate policies. Who wins and who loses on abolishing the parities?

The French administration body that oversees competition on the Internet received a complaint from French hotel operators’ associations and the Accor group which resulted in Booking.com being forced to introduce a number of changes that allow hotels to introduce more flexible, fully independent – at least in theory – rate policies.

Europe leads the changes

Recent decisions made by the governments of several European countries may have a significant impact on the online hotel distribution system. The French administration body that oversees competition on the Internet received a complaint from French hotel operators’ associations and the Accor group which resulted in Booking.com being forced to introduce a number of changes that allow hotels to introduce more flexible, fully independent – at least in theory – rate policies. These changes mean that hoteliers no longer have to abide by the rate parity when dealing with partners, both online booking platforms and traditional sales channels. Hotels will also be able to offer more convenient terms of sale than those of Booking.com, both in their own and their partners’ distribution channels. The freedom to make independent business decisions also applies to allocating the numbers of available rooms to individual sales channels.

Similar decisions were made around the same time by competition monitoring bodies of Italy and Sweden. Legal procedures questioning the rate parity are currently underway in Germany and Great Britain. The European Commission is also looking into online hotel distribution as part of a broader electronic trade investigation. As we can clearly see, the rules of the game in Europe are bound to change soon, however the same cannot be said about the United States. Not too long ago, the rate parity practice was deemed to be compliant with US competition regulations. Last year, a Dallas court ruled that setting uniform rates for the biggest OTAs (Online Travel Agent) by hotel groups is a ‘rational business practice’ that does not go against the interests of consumers and does not hinder competition.

Who wins, who loses?

A new deal is approaching in the rate game between hotels and online partners in the European market (including Poland) and, perhaps in the future, the global market as well.

Who may benefit and who may lose from this turn of events?
Abolishing the parity seems to benefit hotels, especially those that are not part of a chain and, thus, not required to implement a corporate rate policy. Hotels will be able to vary the services that they offer through individual distribution channels in line with their own criteria, for example depending on the commission fee charged by the partners or the segment of the market that the partner specialises in. As regards hotel chains, they are certainly more attached to the rate parity as it allows them to position their brand and maintain uniform prices across all of their hotels. In this case all decisions concerning differentiating prices across distribution channels will most likely be made at the central level, which will allow hotel chains to maintain a coherent rate strategy.

Regardless of the rate parity, hotels will still be able to utilise such rate mechanisms as promotional or corporate codes and package offers which, even now, give them a certain degree of freedom when negotiating with OTA partners. Abolishing the rate, availability and terms of sale parities will obviously not be well received by the biggest OTAs, such as Booking,com and Expedia. They draw in large revenues, mainly due to their 15%-25% commission fees, but at the same time incur heavy expenses mainly tied with advertising and positioning on the Internet (in 2014, over 30% of revenue generated by Priceline, the parent company of Booking.com, was spent on advertising and positioning). The struggle over advertising space and customer attention causes a constant increase of expenses. In these conditions the competing rates of smaller partners, who have less expenses, would put additional pressure on leading OTAs which could lead to them lowering their commission fees.

The pressure would be increased by the fact that diverse rates in the market would be made more evident by rate comparison websites, such as Kayak and Trivago. Rate diversification would probably make these websites the go-to tool for prospective hotel guests, making them leaders in the hotel distribution ecosystem.

Equilibrium returns

Rate diversification will greatly benefit customers – following the decision of the French authorities, even Booking.com issued a press release stating that it will allow for: ‘greater transparency and increased competition between online booking agents. Removing the rate parity will not bring an immediate increase of hotel revenues. Hotel operators should take into account a number of interdependent factors when adopting a diversified rate strategy. Is a partner who charges lower commission fees able to promote the hotel’s services as successfully and bring in a comparable number of bookings as a more expensive partner? How does promoting the hotel through its own website, which is potentially the most financially feasible solution as it does not involve paying commission fees, compare against selling the services through individual distribution channels? How many bookings does the hotel website bring in compared to OTAs? Does selling through a channel with lower rates increase the total number of bookings or does it cannibalise the bookings of another channel?

Abolishing the rate parity will require hotel operators to seek answers to these and many more questions. Finding an optimal solution for your hotel will require adopting a proactive approach to managing your portfolio of sales channels and a gradual modification of parameters meant to maximise revenue and profit. This will require using the right tools, which will aid in making decisions and streamline their implementation.

Flexible strategies and effective management

One of the most notable advantages of tools that automatise online hotel distribution is increasing the control that the hotelier has over the rate policy of his establishment while minimising the effort that rate management would otherwise require. For most hotels, which adhere to the soon-to-be-gone rules of the game, one of the most important functions offered by the tool is controlling the rate parity. Once the rate parity is abandoned, other functions that allow to coherently conduct a diverse rate policy in all of the hotel’s sales channels will gain importance. Tools such as YieldPlanet’s Channel Manager give hoteliers full control over the parity as well as flexibility when setting rates for individual partners. When the rate parity is no longer in force, tools which make it possible to follow the rate strategies of competitors, such as YieldPlanet’s Price Shooper, will grow in importance.