Mobile bookings are booming but are revenue managers keeping up?
Interview: When it comes to bookings mobile holds great promise but there are challenges for revenue management (RM) professionals. Chinmai Sharma, Vice President, RM at Wyndham Hotel Group lets EyeforTravel’s Ritesh Gupta in on what to beware of.
Sharma believes revenue management (RM) specialists have so far not observed material differences in booking patterns between the online channels - brand web, online travel agent and mobile. But since that mobile is still a nascent channel for booking rooms, differences could emerge over time and RM specialists should keep a close eye on trends.
EFT: Some argue that new mobile platforms promise to safeguard brands and price integrity. What do you make of this?
CS: In general, mobile platforms are a good investment from a revenue management perspective as they represent another consumer friendly channel where a company can distribute its rates and inventory.
That said, I would disagree with the idea that they safeguard brands and price integrity, the exception being if the hotels and brands in question are selling the same offers on their own channels including mobile.
An increasing trend has been to offer last-minute exclusive deals to third-party mobile platforms which undermine the value proposition of brand.com and other partner channels. That can never be a sustainable strategy. Just because a customer is booking last minute through a mobile device doesn’t mean that we give them exclusive deals.
EFT: How should one go about inventory management for mobile-related bookings?
CS: We need to make the process easy for mobile customers by using flexible rate policies that include benefits, such as allowing bookings without a mandatory credit card guarantee.
Similarly, there should be some mechanism in place to limit the number of rooms that can be booked at one time to avoid wastage. Revenue management professionals should also track no-shows, cancellations and early departures for mobile customers to ensure that these numbers are not too high compared to other channels. If they are, that might indicate a need to tweak the rate and guarantee policies. Test and learn is most likely the best approach.
EFT: There is a widely held view that mobile apps make it significantly easier to book last-minute travel. What are the dos and don’ts for mobile-related bookings for any RM executive?
CS: Revenue management executives should focus on forecasting accurately and building their base business well ahead of arrival dates to reduce dependency on last minute deals and price-cuts.
Also, look at offering rate and value parity across channels to ensure no bias due to method of booking. If you do want to try an exclusive mobile rate or offer, then it should be available simultaneously on the hotel or brand mobile platform and other partner mobile sites as well.
Lastly, make the mobile booking process as easy as possible by offering flexible policies (deposit and cancellation) but track behaviour and breakage. Then fine tune policies accordingly.
EFT: Mobile consumers are being targeted with so-called ‘impulse rates’. As you know these are periodic targeted promotional prices offered when a hotel has a significant same-day need to fill unsold inventory. What should one be wary of?
CS: I would be careful about cannibalising an existing loyal customer base, recognising that some of the new emerging channels don’t add any incremental demand into a destination.
If a hotel does decide to offer an exclusive mobile rate to a partner, then they should make sure that the same deal is available on their proprietary channels like brand.com, their brand mobile site and other important third party partners who bring business through the year.
EFT: What is the impact of mobile distribution on traditional demand forecasting and pricing?
CS: Mobile distribution is going to increase rapidly in the months to come, though I don’t see any significant changes in the traditional demand forecasting and pricing models. Traditional models will still work, there will just be a learning curve involved for all parties, just as there was when the industry starting seeing the impact of the Internet channel on their business.
Like all channels, mobile customers will have their own characteristics such as lead times, length of stay and average spend on property. Hoteliers will have to incorporate this mix into their existing revenue management and channel strategy.
EFT: Consumers want to know that they are getting the very best deal. Are we delivering?
CS: I think all consumers irrespective of industry want to ensure they are getting the best deal. As an industry, we can make it easier for the customer to buy with confidence across any channel by offering consistent pricing and deals. One should also make it easier to book through consumer friendly policies and use technology to develop user-friendly mobile interfaces.
EFT: Where do you see mobile distribution going in the next 12 months?
CS: According to industry data, consumers booked close to $3 billion in travel using mobile devices last year. This trend will most likely continue to grow exponentially as consumer behaviour continues to evolve and technology, data plans and mobile devices become more and more affordable.
Wyndham Hotel Group is also in the process of launching mobile sites and apps that will help to capture more same-day bookings while providing easy-to-use mobile interfaces to consumers. These mobile sites and apps will be built specifically for smartphone devices and designed to complement the unique look and feel of each brand while requiring less clicks.
In terms of trends, it will definitely keep the revenue managers on their toes as increased mobile bookings will usually mean shorter booking windows, which will make the forecasting and pricing process more difficult. Growth in mobile will also probably result in some share-shift in channels, which will impact the profitability of the hotels based on relative channel costs. Revenue management and distribution channel management will continue to be critical roles in such a scenario.