Apr
5
Now that I've had a chance to think about the idea, I've decided I really like what Google are planning.
It's a pity that it's going to be price led, but then the industry has made its bed in that regard and must now learn to lie in it.
And that's what I want to talk to you about today. This innovation from Google may well prove to be revolutionary. The hotel industry in general doesn't cope too well with revolutions and innovations - preferring, as it does, to stick to polishing teaspoons (if I'm preaching to the converted here I apologise, but you know who I'm talking about).
Hoteliers, if you thought the online world moved fast you'd better prepare yourself for this - because it's going to get a whole lot faster.
It's a pity that it's going to be price led, but then the industry has made its bed in that regard and must now learn to lie in it.
And that's what I want to talk to you about today. This innovation from Google may well prove to be revolutionary. The hotel industry in general doesn't cope too well with revolutions and innovations - preferring, as it does, to stick to polishing teaspoons (if I'm preaching to the converted here I apologise, but you know who I'm talking about).
Hoteliers, if you thought the online world moved fast you'd better prepare yourself for this - because it's going to get a whole lot faster.
Under this new promotional system being rolled out by Google, it will be "live" pricing that shows on the adword/maps combination.
Now that presents a few issues that I can think of. Not the least of which is how Google defines what the "live" price is for a particular hotel or location? Is it the price on offer today? Is it the price on offer at the height of the season? Or is it the price on offer for the dates you actually want to visit? If it's the latter, how does Google know?
It calls into question how Google will define prices and maintain the "relevancy" which it chants as a mantra every time you do a search. In other words, if Google displays "live" prices as the prices available today, but you want to book a room for six months' hence, it's quite likely that there will be a difference. Which one will be relevant? Which one will be booked?
But that's their problem.
Your problem as a hotelier, is going to be about deploying your promotion prices so you can take advantage of this business.
You won't be able to lounge about quoting rack rate until you find somebody daft enough to pay it. You'll need to deploy special offers on every date you know (from your experience and research) there's a risk your hotel won't fill.
You will be up against some pretty serious competition. I don't see many hotels being able to compete against the big online travel agents in this new world. They have all the power. They have better enquiry conversion capabilities, they own the customers and most of you have already guaranteed to give them your best prices. So the one tool you could have used to combat their power you've given to them on a plate.
You won't be able to beat them. So why not join them? Your competitor isn't going to be the online travel agent, oh no. Your true competitor is going to be the other hotels in your area - just the same as it is today.
This new promotional world is going to benefit the fleet of foot. Hotels which can make intelligent price and inventory decisions, then deploy them quickly through as many online travel agent channels as possible, will win.
At times of low occupancy (I'm defining this as "all those dates in the year when there is insufficient demand to guarantee you're going to fill your hotel") you are going to be playing the game of denying your competitors those sales opportunities. You need to deny them the business - and still make a profit.
It brings new hope to people who worship at the altar of dynamic pricing. But it won't matter whether you're a high priest of revenue management or simply offer the occasional prayer - what will matter is your ability to deploy meaningful prices and promotions quickly and across a wide front.
At the moment dynamic prices are deployed using a reasonably static system. Very soon, price changes are going to be deployed by a dynamic system - the accelleration is going to be eye-popping.
Train key people how to make decisions and train them how to deploy those decisions quickly. You will need to monitor and respond perhaps several times a day. Is your reservations or room sales function capable of doing that?
You'll need channel management software. Your people aren't going to cope without it.
It's going to take a little planning. Because you are still going to have to make sure your offers match what people want to buy.
Conclusion
This will be no place for the passive. If your offers don't reflect good value, people won't buy them. If you want business from this route to market, you're going to have to be in there, actively working it, analysing it and responding to it, every single day of the week.
The OTA's and major hotel chains will own this territory. It will be their battlefield so let them do the hard yards. With the right preparation and the right channel management software in your hotel, it won't matter to you who's winning the war on Google maps/adwords. The point is that those who choose to move quickly - and build that into their business as a core capability - can be on all sides at the same time.
And I can't think of a better place to be.
Now that presents a few issues that I can think of. Not the least of which is how Google defines what the "live" price is for a particular hotel or location? Is it the price on offer today? Is it the price on offer at the height of the season? Or is it the price on offer for the dates you actually want to visit? If it's the latter, how does Google know?
It calls into question how Google will define prices and maintain the "relevancy" which it chants as a mantra every time you do a search. In other words, if Google displays "live" prices as the prices available today, but you want to book a room for six months' hence, it's quite likely that there will be a difference. Which one will be relevant? Which one will be booked?
But that's their problem.
Your problem as a hotelier, is going to be about deploying your promotion prices so you can take advantage of this business.
You won't be able to lounge about quoting rack rate until you find somebody daft enough to pay it. You'll need to deploy special offers on every date you know (from your experience and research) there's a risk your hotel won't fill.
You will be up against some pretty serious competition. I don't see many hotels being able to compete against the big online travel agents in this new world. They have all the power. They have better enquiry conversion capabilities, they own the customers and most of you have already guaranteed to give them your best prices. So the one tool you could have used to combat their power you've given to them on a plate.
You won't be able to beat them. So why not join them? Your competitor isn't going to be the online travel agent, oh no. Your true competitor is going to be the other hotels in your area - just the same as it is today.
This new promotional world is going to benefit the fleet of foot. Hotels which can make intelligent price and inventory decisions, then deploy them quickly through as many online travel agent channels as possible, will win.
At times of low occupancy (I'm defining this as "all those dates in the year when there is insufficient demand to guarantee you're going to fill your hotel") you are going to be playing the game of denying your competitors those sales opportunities. You need to deny them the business - and still make a profit.
It brings new hope to people who worship at the altar of dynamic pricing. But it won't matter whether you're a high priest of revenue management or simply offer the occasional prayer - what will matter is your ability to deploy meaningful prices and promotions quickly and across a wide front.
At the moment dynamic prices are deployed using a reasonably static system. Very soon, price changes are going to be deployed by a dynamic system - the accelleration is going to be eye-popping.
Train key people how to make decisions and train them how to deploy those decisions quickly. You will need to monitor and respond perhaps several times a day. Is your reservations or room sales function capable of doing that?
You'll need channel management software. Your people aren't going to cope without it.
It's going to take a little planning. Because you are still going to have to make sure your offers match what people want to buy.
Conclusion
This will be no place for the passive. If your offers don't reflect good value, people won't buy them. If you want business from this route to market, you're going to have to be in there, actively working it, analysing it and responding to it, every single day of the week.
The OTA's and major hotel chains will own this territory. It will be their battlefield so let them do the hard yards. With the right preparation and the right channel management software in your hotel, it won't matter to you who's winning the war on Google maps/adwords. The point is that those who choose to move quickly - and build that into their business as a core capability - can be on all sides at the same time.
And I can't think of a better place to be.
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