A lot of marketing effort and money has been put into getting the hotel industry and travelers to think of discount sites such as Expedia when it is time to book a room. From the hotel perspective, this option is typically seen as a way to book leftover rooms, especially during a slow period.
For travelers, these discount websites often advertise substantial savings over the regular rate. However, there are many travel experts who question whether or not these savings are as big as advertised, and some frequent travelers suggest calling each hotel directly to get the best deal. When you combine this with the fact that sites such as Travelocity and Priceline cut into each hotel’s bottom line, it is no wonder that an innovative company named Duetto has stepped up in an attempt to change everything.
How Popular Are Online Booking Sites?
More than 148 billion travel bookings are made online each year, and this accounts for 57 percent of the total global bookings that occur annually. Although 65.4 percent of hotel customers choose to book a reservation directly through their preferred hotel’s website, discount sites have captured almost 31 percent of the market. This means that people are booking rooms, but it also has the added consequence of driving customer acquisition fees through the roof. In fact, hotels lose up to 25 percent of their revenue through these fees, and this is more than triple than losses that are suffered by the car rental and airline industries.
Increasing Hotel Revenue
The issues that plague the hotel industry are easy to understand when you learn that Priceline alone has an annual revenue of $4.4 billion. After all, this money comes from the fee that they charge for each hotel room booking they successfully acquire. In essence, this is very similar to the Groupon effect in that hotels are forced to offer a discount on top of the percentage fee in order to be featured on a discount site. This means that a hotel room that is 30 percent discounted for consumers could end up costing the hotel half of its typical revenue. According to these sites, they are still providing a service because the hotel rooms in question would not have been booked anyway, but is this really accurate?
The Impact of Hotel Revenue Management Software
Priceline and similar sites utilize algorithms to help them offer attractive discounts based on a wide variety of factors, including the time of year and the number of people who are looking at rooms for the same date. Duetto’s revenue management solutions enable hotels to do the same type of comprehensive tracking on a daily basis so that they can get the most out of each room. In other words, hotels can easily make their own pricing adjustments based on the amount of demand that is anticipated on a daily basis. The previously listed statistics prove that consumers still prefer booking through a hotel’s website, so it makes much more sense from a financial standpoint to make this the most affordable option.
Ultimately, the intelligent pricing tool that is offered by Duetto will give hotels the ability to remain competitive and achieve the highest possible occupancy without paying a fee to another booking site. This will make it easier to operate with a high enough profit margin to be able to pay for necessary maintenance and upgrades, which will in turn result in happier customers.