Hraba Hospitality Consulting

This is a really big question. I would love to see the industry really delve into this.  The transition from real world to online has been very fast, and a lot of the “infrastructure” is so much e-duct tape, putty, and last minute jury rigs – all of which should have meant to be temporary so that we can rebuild our online world of distribution based off tried and true methods, as they evolve.  I know our industry is never that pro-active, but maybe we have an opportunity to start learning from where we are losing the most money, and patch those leaks.

This Argophilia post by Phillip Butler starts the conversation: Who is the big bad wolf of hotel marketing?  Simply put, there isn’t just one –  OTA’s, Franchise Fees, Internet Marketing Fees, Booking Engine Fees.  This is one leaky ship.

Here is my response, but I am more interested in what all of you have to say?
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Great read. Thank you much. =)

I always thought of the OTA’s as something that filled the gap during the off line to online distribution evolution. They were a stopgap solution. They are now becoming unnecessary, and getting in the way of commerce because they are becoming obsolete, where they used to promote some level of commerce for our industry. Distribution has changed… and their role will phase out. It won’t be in the next 5, maybe 10…. but this will all change. I adore how people revile when you suggest the guy on top won’t be there forever.  The fact is, nothing is forever, and new paradigms unfold.

Another big bad wolf, on top of franchise fees? Ridiculous internet consulting firm charges by hourly consulting model.  Buuteeq is doing some good with simple pricing plans… it makes a lot more sense, and you aren’t nickel and dimed for the internet marketing group’s mistakes or on the job training.

Lastly…. commissions to booking engines. Including the franchise fees, as well… Engines like Synexis get promoted by franchise and flag brands, which then take a cut. It’s incredible how much money is lost to an engine that simply helps facilitate online booking. Eventually, the hotels will realize the money lost can be recouped quickly by building and designing a proprietary engine of your own, off a template, for the hotel to own, outright. That can save 20K – 100K+ a year.  I imagine a management group could justify the development fees to an owner group, based solely off the last 3 years of annual or commissionable fees that the property made to the booking engine company.

Would anyone have any idea how much it would cost for development of a competent template, and simple engine with solid UI – that includes a mobile component? Is that $100k or more?  I know… you can always spend more. =)

And here comes RoomKey… filling an empty space that the OTA’s have bungled.

Here’s an article on Room Key, the hotel brand search engine.

Upshot (summary via TNOOZ):

Choice Hotels International, Hilton Worldwide, Hyatt Hotels, InterContinental Hotels, Marriott International and Wyndham Hotel Group have combined to establish the joint venture under the leadership of CEO John Davis, founder of the Pegasus hotel distribution and technology service.”

And here is Barb Delollis from USA Today with a Facebook post that sparked some awesome conversation.

This is my commentary from that Facebook post (which, as it happens, is by far the most interesting post I have seen on Facebook in years, and no… not because of my response).

I am excited about Room Key for many reasons…. I hope the below is succinct but helpful in understanding why this is an exciting move forward…..

It’s not a better solution, but that’s okay. It’s a flawed solution that has monopolistic traction – and this entry from Room Key is simply the start of their traction. It’s like Google Plus vs Facebook….. just because Facebook has more traction doesn’t mean it’s a better option.

It’s all new tech, and layered diversification coupled with competition in the early decades of online travel distribution means that the booking process is exhausting and varied…. one site has not, and will not, *EVER* serve *every* single on of your needs.

If you can honestly say you book solely on one site, and one site alone… more power to you, and that’s a rare thing – a branded OTA travel consumer. Travelers that use OTA’s are deal shoppers, so the idea that they would use one site and stick with that due to loyalty is odd, when it’s myopic only to consider one site with the scores of other’s available. A real travel consumer isn’t going to stick to one OTA, and that process of shopping around has become somewhat of a liability…. and an exhausting one. In the last 5 years, the only thing that OTA’s have done is to train the smart revenue managers to yield such that the best available rate is *ALWAYS* directly on the brand website…. in this, you maintain as much rate integrity and control of inventory as possible. That being said, the gestapo like extortion and bullying from OTA’s like Expedia has backfired, and savvy travel consumers are starting to be trained that the best deal is ALWAYS on the hotel website. OTA’s know this, and they are losing consumers due to it.

Room Key is a brand new product that is put together by some of the biggest players in the hotel industry ( Hilton Hotels & Resorts, Wyndham Worldwide, Choice Hotels, Marriott Hotel, InterContinental, Hyatt Hotels as well as Pegasus), and it’s a new product that is *BRILLIANTLY* devised, the UI is quite easily the best online booking product that exists, currently (although KAYAK’s mobile app is stellar). It is filling a sorely needed gap in a crowded space – a simple, concise, uncluttered way to easily find hotel rates and book without the pain of being upsold on value ads and overwhelming options. The OTA’s like Expedia or Travelocity are dinosaurs, and this new option is filling the space that travelers are clamoring for.

I understand your comments about being a consumer, and wanting the simplest option – what you are forgetting is that OTA’s had a chance to offer the simplest options for booking, but have failed in an overarching attempt to increase revenues by destroying any functionality or user experience on their sites. This is all new technology, so the best travel experience hasn’t even been developed yet. Just because one of the OTA’s has a monopoly doesn’t mean it’s the best thing for the consumer. This is the first attempt at our hotel industry to create that experience.

Room Key is coming at the right time – it mimics Google in a light user interface that is concise, simple, and clean.

The other side of this is how Google will lay waste to the uneven and disjointed online travel world -

Google Search + Google Travel + Google Flight + Google Hotel + Google Plus (in searches) = dominance & sheer terror for the existing landscape of online distribution.