The OTA - Hotel story

1 www.voyagersworld.in Voyager’s World l November 2012

CONTENTS

From the Editor’s Desk

Dear Reader,

I
ncredible India has launched a new advertising campaign at the
World Travel Market (WTM) London 2012. Launched by the new
tourism minister K Chiranjeevi, the campaign, under the tagline
‘Find What You Seek’, will have the UK as a target market.
It is a timely and apt marketing push for the Incredible India
campaign.
The new campaign creates an awareness of the destinations and
products available in India. The aim of the campaign is to increase
global visitor figures by 12% until 2016. As the name indicates, the
promotional campaign sends across a message that tourists world
over can find whatever they want to see while holidaying in India
This is a welcome development for the Indian inbound segment,
especially if we take into account the recent lifting of travel
advisory by the UK for Jammu and Kashmir. This surely is going to
give a boost to the tourism prospects of the scenic valley, better
known for its serene lakes and houseboats. Lately the valley
David Scowsill has seen the revival of tourism with foreign tourists flocking the
President-CEO – World destination. The industry is earnestly wishing that no untoward
Travel and Tourism incident that will mar the tourism hopes of the state will happen.
Council (WTTC) In this issue we have on the cover an analysis on the relationship
between OTAs and hotels. It seeks to give some insights for both
the hotels and the OTAs. After all, both need each other. Also on
the menu is a feature on the loyalty programmes of hotels and
The US lost their significance.
$600 billion
(in tourism) Warm regards,

in the last
FIROZ FAZIL
10 years Editor
due to visa
refusal. editor@voyagersworld.in
www.voyagersworld.in

OTA-hotels matrix 08 Filipino Fiesta 26

Hotel Loyalty 18 Festival Watch 42
Hospitality 24 Cruise Lounge 44
Destination 26 Incredible India 45
Flight Talk 33 Happenings 46
India Outbound 34 Top Appointments 49

COVERSTORY

CAN’T LIVE WITHOUT
EACH OTHER!
Are hotels and OTAs getting along nicely in matters like revenue-sharing? The
definitive mantra guiding both the players should be based on the edifice of a
marriage of convenience for mutual benefits, writes Firoz Fazil

C an hotels afford to ignore all
those Online Travel Agencies
(OTAs) out there? Obviously not!
and OTAs.
A strained relationship?
Hardly any hotels Voyager’s
online,” explained Manish.
He suggests that hotels can run
various promotional programmes
property’s gateway to the world,”
explained Jean Francois. Although
the average OTA commission rate
It is preposterous on their part to World spoke to admit that their to make it more attractive. “And might be double previous travel
remain OTA-agnostic in this dog- relationship with OTAs is a strained business from this source definitely agencies, the expense is worth it!
eat-dog marketplace, for, there’s no one when it comes to issues like improves RevPar, with most times Explaining further as to why
turning away from the fact that OTAs revenue sharing. But, a few OTAs distressed inventories getting sold OTAs are indispensable for hotels,
are here to stay. The percentage of admit that it is a problem area. at last minute or decent amount he said, “OTAs are working to
room bookings through OTAs at According to Manish Raj, Vice of inventory getting sold well in secure bookings for your property
present may not be so encouraging. President, Hotel Relationship – Via. advance.” 24/7. They provide travellers with
But hotels, faced with the double com, the hotel-OTA relationship is Jean Francois Mourier of a way to search the available
whammy of increasing competition a strained one ‘to a certain extent’. REVPAR GURU, an ardent properties in their destination, so
and the dwindling margins, are According to him, it is time for hotels advocate of ‘hotels-should-use-OTA’ if you aren’t online, you’re losing
realising that they have to make the to accept OTAs as an additional theory, asserts that it will be a great out on valuable visibility. Like with
best use of all the avenues at their continuous source of dependable mistake on the part of the hotels not every business, it costs money to
disposal. revenue, and an effective marketing to use OTAs to their advantage. make money. Consider this: using
And it is premature on their part tool. “Just like it would have been a the old business model (hard-copy
to get squeamish when it comes “OTAs and hotels should work mistake not to work with traditional brochures) hotels had to spend
to issues like commission sharing closely and have a better revenue travel agents in the past, today, it money on printing and distributing
with the OTAs. The best bet for sharing model, which I think should is a huge mistake not to use the the brochures. Today, that expense
them is to adopt an eclectic blend improve in times to come. With OTAs because the Internet is your is no longer necessary so hotels
of distribution channels which increase in room supply, OTAs
comprise, of course, the traditional can help in routing customers
travel agents, hotels’ own websites from undefined segments to book


COVERSTORY

question of bookings through OTA need to share it with OTAs to get
being increased,” she added. more transactions and room nights.
Abhyuday Prashad, Co- The margins for OTAs are going
Founder of CheckInTonight agrees to shrink with more OTAs coming
that there will always be a constant up. Most of the branded hotels like
tussle between OTAs and hotels for Marriott, Accor are spending more
revenue sharing. It is important for money on in-house IT to reduce
both sides to appreciate the benefit business on OTAs,” added Anil.
that the other is providing. According to him, OTAs are
“Going forward, as online hotel looking at strong growth on non-air
bookings increase as a share of total segment and the most important
hotel bookings, and it will, coupled revenue and business growth is
with the increase in inventory due to looked upon online hotel bookings.
new hotel constructions which will He says that only people who find it
drive down occupancy levels, OTAs hard to share higher commissions
may have more leverage than they are small boutique hotels, home
do now. Having said that, hotels stays, serviced apartments and
are brands in themselves and are also the high-end luxury hotels.
ultimately the service provider “Rooms distribution and
for the customer (OTAs are just inventory management on OTAs is a
should be taking that same more room bookings. “OTAs are intermediaries), so they inherently must to promote the sales of distress
money, and investing it in OTA medium to generate incremental have certain advantages vis-à-vis inventory or unsold inventory and
commissions,” he further said. revenue and increase online OTAs,” he said. OTAs also provide the platform for
In short, he points out, hotels visibility. It is a source which should “Having said that, the number hotels to market themselves to the
must not fear technology. They be used by the hotels as and when of traditional agents will reduce unknown customers.”
should embrace these changes needed.” over time as we will certainly see He said AxisRooms’ offering has
and make sure they have the best “With YoY increase in supply a greater number of hotel bookings just become better this year with the
connections with OTA market and demand being not increased being made online due to various launch of two way channel manager,
managers, to ensure that the proportionately, going forward all reasons such as greater population new version of online booking
online channel is as profitable as hotels will endeavor to secure having online access, etc.” engine and corporate / SME tool
possible. business through low cost for hotels to manage their corporate
Komal Kapoor, Asst. Revenue channels. More than focusing on Share the revenue business. “We will be launching our
Manager, Holiday Inn Mumbai occupancy or rate individually, in AxisRooms CEO Anil Kumar next product which caters to the
International Airport, has a different times to come hotels will be after Prasanna feels that the current offline travel industry; they will get
take on this. She does not consider GOPAR. Profitability will be the OTA-hotel relationship is going well, the same access of inventory like
OTAs as a crucial medium to drive key. In such scenario, there is no except a few issues on rate parity OTAs and at their own contracted
and the fact that sold out updates rates with minimal technology cost.
are not instant. We hope this will do well in the
“On the revenue front hotels will leisure hotels segment.”


COVERSTORY

The highest AxisRooms has According to Travelchacha.com
seen is approx 30% of available CEO Sanjay Bhasin, even though
inventory sold online and lowest there’s a strained OTA-hotels
change due to changing consumer OTAs they don't have to be overly
being 4%. He said that online relationship, the fact is that they
behaviour. Today’s consumer is concerned.
business is still at nascent stage can’t live without each other! As
buying actively on mobile phones According to him, the OTA
in India. “At present on an average for now, it’s not possible to predict
and that platform is still open for the market will continue to expand in
we can see just 10% of total sales anything about the future of the
taking. The next wave is going to be the world. They have the resource to
and we expect it to grow up to 30- relationship between the two. “We
smart TVs which will add another continually invest, evolve, iterate and
40% by 2015-end. There is a huge should concentrate on building
distribution channel.” provide the best user experience. In
opportunity and have seen new a stable long-term partnership
Rajesh affirms that hotels that the Indian market it will be the same
OTAs like HotelTravel.com and between us,” he adds.
find it hard to use OTAs have to as it is a big market and there are
Splendia showing interest in India According to him, either
have a way of filling the rooms left number of independent hotels who
Hotel Contracting.” hoteliers or OTAs or both have to
empty. They must have a strong need distribution and exposure. The
Agoda CEO Robert Rosenstein focus on building a stable long-term
base business, group business, branded hotels have the resources
feels that both hotels and OTAs partnership. “These are just small
great rate strategy and effective and devote time to develop their
recognize the shared value in crisis that come and go as soon as,
online presence to drive bookings. direct booking channels. They will
partnerships. “It takes time to the climate changes. As for now,
If they are strategic with their use of have to continue to invest to keep
develop these relationships, and we don’t need to worry much about
much like anything else, the more them irrespective of this situation,”
effort you can put in, the more he concludes.
you stand to get out of it. We are According to Rajesh Rajan,
committed to adding value to our Revenue Management Consultant
hotel partners and we think this with Rethinkhotels, the hotel-OTA
shows in the support we get from relationship is always strained as
hotels.” the commission percentage paid
Pratik Mazumder, Head of out by the hotels is ‘really high’.
Marketing & Strategic Alliance, Rethinkhotels is focused on
Yatra.com, also vouches for a very educating hoteliers in revenue
healthy relationship between yatra. management, Internet marketing,
com and hoteliers. He feels the reputation management and hotel
relationship is getting stronger with technology.
larger volumes coming from OTAs The dynamics between OTAs
in the future. and hotels are changing and, Rajesh
He reveals that Yatra.com’s adds, it has changed to some extent.
hotel bookings domain is booming “If you look at Booking.com they
since its acquisition of Travelguru: are growing really fast; they have
“We do over 1000 room nights a a flexible commission structure and
day.” treat the hotels fairly. It will further


COVERSTORY

on-the-go even easier.” with respect to hotel, usually work
with last room availability basis best
The hotel speak available rates- a boon for hotels
Prasad Iyer, Cluster Ecommerce looking to realize maximum revenue
- India, Malaysia & Maldives, for rooms, especially as last minute
up with OTAs, he concluded.
Marriott Int'l Inc, says that OTAs bookings,” he said.
Jean Francois complains that
are an integral part of Marriott’s Atul Lall believes that the hotel-
too many hoteliers focus only on 65% of the room rate (after paying
distribution strategy. “Our main focus OTA relationship is based on a clear
the commission and not the benefits commission).”
is to strengthen our direct channels understanding of what commission
of the online channel: the billboard He explains: “Almost 80% of the
but we also have to recognize that levels are expected and the hotel
effect (free marketing) and increase population in the US is using the
not all customers will think about objectives for maximizing revenues.
in bookings. This despite the fact that Internet every day. Online travel
Marriott in the first place. Marriott He is foreseeing an increase in
online is the most important source and tourism continues to experience
continues to be very selective and commissions but it is “always
of revenue and this will continue to solid growth and this is just the
its OTA engagement strategy in balanced out in terms with additional
be the case going forward. beginning of the Internet revolution.
order to protect our brand.” business commitments.”
“My message to hoteliers is That’s not even mentioning the
Regarding the revenue from Gaurav Aggarwal – Associate
that 100% of $0 is still zero, so it consumer craze for smartphones
OTAs, he said: “OTA contribution Director of Sales, Courtyard by
is better to list online and make and tablets, which make bookings
varies from markets to markets but Marriott, Gurgaon, feels that the
remains a very small percentage.” online segment has huge potential
According to him, OTAs will for a business hotel like theirs.
have to better explain what service “Marriott considers Commission as
they provide to hotels in order to a Cost of Doing business and hence
justify the cost. Hotels are the main to yield high rated business and it is
customers of every OTA. more profitable to the hotel.”
For Fairmont Jaipur about He informed that Marriott has
10% of its total room revenue is contracted globally with OTAs like
generated through OTAs. The Expedia, Travelocity and Agoda.
hotel has tied up with MakeMyTrip, “They have also been our largest
Agoda, Bookings.com, Expedia and supporters within the online space.
Cleartrip. There is also a constant endeavour
According to Atul Lall, GM, to increase the base of the OTA’s
Fairmont Jaipur, OTAs are across India and across the world.
becoming more influential in terms Marriott has a dedicated team,
of driving room revenue to hotels, based in regional offices that are
not just here in India, but worldwide gauging and contracting new
as well. accounts for a region/market.”
“OTA tie ups command a higher According to him, the OTA-Hotel
visibility amongst consumers and relationship is growing all across


COVERSTORY

the country. There is constant and international, such as Expedia,
education between the two parties Booking.com, Yatra, Makemytrip,
and both are working hand in hand etc.
to increase revenues for their According to him, the hotel
business. “Marriott has always been bookings will increase through
proactive in terms of commission OTAs in the times to come. “Online
sharing and has found ways in booking provides convenience and
using these funds for marketing.” power to the end user to pick and
Shaleen Mathur - GM sales and choose the hotel they want and
marketing - Citrus Hotels & Resorts they can also review various hotels,
doesn’t think that the OTA-hotel compare photos and rates, look
relationship is strained at present. for some deal which a traditional
“All OTAs work on different model; travel agent might not extend them
some deduct their commissions in order to increase their margin.
up-front and make payments to the The ultimate aim is to drive the
hotels and some prefers the hotel customers who have booked you
to process the commissions later. through various OTAs to your
Both hotels and OTAs should be website or to other channels which
pro-active on the commissions front saves you commission.”
and ensure that the money is paid He foresees a future wherein
to each other on time.” the majority of OTAs supporting strength of our OTAs to grow the bases that we can tap into and drive
According to him, OTAs are a ‘Direct Payment Model’ wherein the Macao market and therefore our our destination from guests around
very crucial medium for bookings guest just makes the booking online share of room nights.” the world. We have negotiated
as they have a good base of people without paying anything to the OTA While refusing to divulge the good term with our OTAs, so we
and a wide market. and pays directly to the hotel for revenue on room bookings through embrace the relationship. We are
“So by slicing the revenue all the services rendered and the OTAs as it is `internal’, he said that in an OTA early adopt phase in our
by a few percentages in terms commissions for the same is later the hotel’s major OTAs vary by hotel market and we work with the OTAs
of commission is always a better being processed by the hotel to the and brands. Some of the biggest help them develop their business
choice and a win-win situation for OTA. ones are Agoda, Ctrip, Makemytrip, and in turn our businesses.
both. We don’t work on allocation Brian Koroll, VP of Revenue Zuji, Elong, Orbitz, Rakuten and According to Aamod Director
basis with any of the OTA which Management, Venetian Macau Expedia. Gaurav Jain, the importance of OTAs
makes it easier for us to manage Limited, says: “OTAs are our He further added: “Our company is likely to increase in the future.
the inventory more dynamically and partners. We don’t find it difficult doesn’t have a strained relationship Various offers, deals from the OTAs
the risk of un-occupied rooms is to share a commission with any with the OTAs on revenue sharing. have made the market very lucrative
nullified,” added Shaleen. business that is able to drive OTAs are our partners and they for the end customers, resulting
Right now, the revenue room nights to our hotels. We have access to large customer in increased room bookings. “The
contribution through OTAs is very negotiate hard for the commission
less for Citrus: it is close to 6%. percentages but at the same time
However, the potential, added we recognise that OTAs help drive
Shaleen, is huge. Citrus is with all the customer decisions to visit
the major players, both domestic Macao. We try to leverage the


COVERSTORY

Hoteliers have seen that they everyone is leveraging it.”
are much less profitable than the According to Anil Kumar
industry originally projected. Prasanna, recently there has
“Because of the increased been a great acceptance from
transparency of the online channel, independent hotels to get into
fixed rate channels are obsolete. Channel Manager to maximise the
The main advantages offered by inventory distribution and revenue
the OTAs are dynamic pricing, management. “I can see independent
yield ability, last-minute bookings, hotels spending time and money to
flexibility, real-time pricing updates, improve their websites, add online
allotment control, etc,” he further booking engine, work on corporate
said. distribution on a platform and also
Sanjay Bhasin says: “OTAs direct manage offline tour operators
a 25% increment in the bookings. business and we expect this trends
Moreover, OTAs are witnessing to grow in coming years.”
changes in their business model as, Manish Raj feels that the world
just being a standalone ticketing will see hotel bookings more through
agent to a full-service travel agent the OTAs in the times to come
offering hotels, visa assistance, for sure. “From 2% to 3% of hotel
surface transportation, packages, bookings generated through online
language support, corporate travel channels 10 years back, today
various mediums including social apps heavily promote last-minute automation system, Social media online booking accounts to almost
media interface adopted by OTAs bookings (i.e. Hotel Tonight). Most marketing, channel support: B2C 25% to 30% of sales, depending
to interact with the end customers of these apps are linked to existing as well as B2B.” on city to city, worldwide. There
actually helps the customers to gain OTAs; so it is becoming even Rajesh Rajan puts mobile at is no stopping in growth through
more information about hotels and more important to use real-time the centre of the latest trend as the this channel in future. It’s basically
their deals,” he added. As of now automated revenue management ‘biggest disruptor’. “It is platform convenience and wide options
the revenue from room bookings systems to be able to capitalize that will continue to change how available on one platter.”
is not much at this point of time for on this lucrative business. Finally, the industry functions. Apps like As regards to the trend in the
Aamod, but it’s increasing as new I see that there is an increase in Gogobot, Schemer, Trover are sector, he elaborated: “We see
players are entering the market. hotels using social media sites – focused on social discovery, which more interest from clientele as well
both for marketing and reservations is a big trend. The mobile platform as travel agents to book hotels from
Latest trends purposes.” allows anyone to record wherever OTA as they get complete travel
Jean Francois says there is a According to him, flash sale they are and share it with anyone.” solution on one platform. More
proliferation of new OTA apps both sites (i.e. Groupon) are losing their Emphasising the connection attractive packages, quality hotels,
for Apple and Android. “These new effectiveness in the hotel market. between personalisation and timely fulfillment and better service
social media, he said: “A hotel will ensure that this continues.
can leverage networks like Twitter Social media, like Facebook have
and Instagram to understand what also started diverting interested
the guest likes, what sport they buyers to OTAs/hotels. People want
watch, who they idolize, this is to see other’s experience with their
very powerful information but not stay and would like to try post that.


COVERSTORY

a hotel. The latest trends are the the coming years.
mobile bookings which deploy Shaleen Mathur says that online
‘Smartphones’. The advances in bookings have eaten major chunk of
mobile technology and availability business coming through traditional
of broadband have made it easier to booking channels. “Hotels prefer
search for a hotel and book through selling various packages to fence
an online reservation system. their rates and prefer to sell a Value
Consumers today opt for online Proposition to the consumer. People
bookings in order to save time and prefer booking a bundled package
avoid the hassle of unnecessary (flight + hotel) which gives them a
trips to travel agencies or phone price advantage. Majority of hotel
calls to the hotel.” chains want to charge a nominal fee
Pratik further says: “Online if booked through their Call Centre
bookings are far more convenient which will ultimately route the guest
and cost-effective to compare to book the stay online which incurs
room rates of different hotels online less cost to the hotel.”
and then choose the best option Rajiv Malhotra feels that
available. All this can be easily done creating effective process for refund
from the comfort of a home. Online is a challenging task for most new
hotel booking is beneficial not only OTAs. “Being in this business for
Trip Advisor has also become an a one-stop destination offering all for the customers but also for hotels, over 20 years we have been able
important reason to decide a hotel the services under one roof,” added as it helps them reduce operation to streamline most of our backend
as more and more people refer the Pratik. and infrastructure cost considerably. processes to ensure that we provide
rating before confirming a hotel. “Catching up with the pace of Online hotel reservations are also the best customer service to users,”
Important point for an OTA is to be the growing economy, by 2012 helpful for making last minute travel he added.
transparent in what it approximately arrangements as hotels sometimes Robert Rosenstein feels:
sells; there cannot be one-third bring down room tariff in the event “With the widespread use of
hidden cost or hidden of the that rooms are still available. It’s mobile devices, we are working
shocks.” been estimated that more than one hard to maintain a unified Agoda
Tracing the history third of global travel is likely to be product across different platforms.
of OTAs, Pratik booked online by the year 2013.” Consumers are constantly evolving,
Mazumder explained According to Atul Lall of Fairmont and we need to stay connected,
that the concept of Jaipur, developing trends show a listen and change our business to
OTAs was introduced leaning towards lower lead periods suit their changing needs. With so
to the Indian travel for bookings for both domestic many markets to cover, languages
industry in early 2000. Up and international clientele. Earlier to speak, there’s a lot of complexity
till the 90’s, Indians were people used to book their holidays in customisation and personalisation
completely dependent on six to eight months in advance. This that is needed in an e-commerce
travel agents. Gradually, the is no longer the current scenario. business of scale.”
online travel industry grew In addition, a new segment that Online is the way going forward,
as OTAs gave consumers is essentially B2B business is a says Komal Kapoor. There will
the complete autonomy rapidly growing segment and one be more mobile bookings and
of the entire booking that has huge potential to grow in research.
procedure market transactions are expected
in their to be transacted online courtesy a
hands. well-established air segment which
“With our back-to-back will continue to grow at a double
acquisitions of Magicrooms and digit growth rate and is estimated
Travelguru, we have emerged as to contribute nearly two-third of the
the premiere aggregator and seller
of domestic hotels and holidays
OTA market in 2012.”
According to him, the best is
Gaurav
in India. Now our customers can yet to come for the sector with Aggarwal
reach out to more number of hotels broadband penetration just starting
Courtyard by Marriott,
across the globe. MagicRooms to take off. Online travel industry is
Gurgaon
offers access to a live inventory certainly up for a radical progress in
of over 3,000 hotels across India coming years. With this, India is all
whereas Travelguru reaches out set to become the top three online The trends vary from city-to-city and market-to-
to over 6,500 hotels in India and travel markets in the world over the market. At Courtyard by Marriott Gurgaon, we have
72,000 hotels worldwide. As a part next decade.
seen growth of special corporate business from the
of our special offering, we provide “Gone are the days when it was
GDS perspective. As time is of the utmost essence,
our customers complete holiday conceptualized as an alternative to
solutions which include tickets to the bulky ledgers and reservation
corporates are preferring to tie up with TMCs and use
the hotel bookings, making Yatra book kept with the receptionist in their GDS tools to get hotel confirmations.


PRIVATE JETS

Private jet segment is the
spark for stimulating tourism
India has 400 airports, but commercial airline connectivity is pathetically low.
How far developing the private jet segment will benefit the tourism industry?
Voyager’s World caught up with Vinit Phatak - Chairman of Invision Group and
Co-founder of the Invision Air – who is vouching for the importance of the private
jet in tourism development.

80 on weekly basis. Our private jets destination. The private jet segment millions of dollars and can have a
can fly to 200 Indian airports as of is the initial spark needed to start serious impact on the purchase
today. As the balance 200 airports up certain areas of India for tourism decision for a private individual as
get developed further, the number and business. well as an operator. There are no
reached by business jets will local manufacturers of business
increase. Commercial connectivity Industry challenges jets to protect; so this duty really
to these airports is still far away as There is globally a direct does not make any sense.
these small locations are not yet relationship between the GDP and Parking availability: In certain
developed enough to handle 70 or
130 passenger aircraft in terms of
passenger loads and infrastructure;
however four to 10 passenger
business jets can easily handle
How do you perceive the the needs of these locations. The
potential of private jet current needs being fulfilled are
segment in India? How can for speciality tourists (religious and
the segment be beneficial to wildlife) and top managements of the general aviation industry and airports there are difficulties in
the Indian tourism sector? corporates along with potential so if you look at the global figures parking aircraft for short and long
I perceive the potential for the investors. For these clients the they have been impacted by the term. Specifically airports like
private jet segment as similar to business jets are ideally suited. recession. For us the impact was Mumbai, Goa and Chandigarh with
that of the mobile communications When you have 200 airports more in terms of availability of no parking available increase the
segment in 1994. There is a large now accessible compared to 80, financing and investments than end user costs as the aircraft have
latent demand which will take a few you can clearly understand what in terms of reduction in demand. to be constantly repositioned to
years to actualise. And when it does, this can do for the Indian tourism. The current segment in India is still other airports.
it has the potential to be probably It begins with a few very high-end fairly price inelastic, so regardless
among the top five markets in the resorts in remote locations where of what is going on in the economy Any tie-up with the Indian
world. only a certain top level tourists they were still flying privately. There travel trade?
The latent demand comes can access and then gradually the was a slight dip but not a significant We have a limited relationship
from poor commercial airline number of resorts and tourists in one. We adjusted our plans due with some high-end specialised
connectivity to Tier 2 and 3 cities. these locations will start to increase. to the recession by reducing our travel agents, but we hope to reach
We have 400 airports in India and Eventually commercial connectivity overall fleet plan from 20 aircraft to out to more agencies in the travel
commercial connectivity exists to will come and then the location has 12 and charting out a more flexible trade. We believe that our service
only 38 cities on a daily basis and now sprung into a major tourist aircraft induction schedule. is a high value opportunity that the
Fuel Costs: For commercial travel agents can use to differentiate
aviation the fuel costs make up their offering to their clients. It is
40% of the overall cost of operation, true that in the past reliable charter
for general aviation this figure is partners were not available. This
closer to 25%. So, although the is primarily because most of the
impact is not as high, it still affects charter operators who actually
overall pricing. If we can have the own their aircraft have a priority
sales taxes, that can be up to 28%, for internal use. Charter is only a
reduced to reasonable levels this side revenue earner. Often when
will help ‘fuel’ the industry growth. an aircraft is booked by a charter
Customs duty: Nowhere else client it will get cancelled at the last
in the world is there a custom minute since the owner wishes to
duty on aircraft. In India the duty fly. This is not the case with us, as
ranges from 25% to 2.5% which is we are a pure charter operator with
extremely high for aircrafts that cost our own aircraft.


HOTEL LOYALTY

Your’s Loyally

How pertinent and relevant are loyalty programmes when it comes to
customer retention? Irene Susan Eapen analyses various loyalty programmes
of a few Indian hotels

B rand familiarity and positive
word-of-mouth referrals are
invaluable tools when it comes to
travel. We reward them with special
rates and unique benefits when
they book guests into our hotels
upgrades and other perks.”
According to Sajid Mahmood,
Vice President-Marketing, Sarovar
that service and use another one.
Hence, a bonding instrument like
a loyalty programme becomes
promoting your business and an and resorts. As a new benefit for hotels Private Ltd, with increasing critical,” he said.
opportunity no one wants to leave travel professionals in India, points competition, loyalty programmes Giving an outline of the direct
on the table. These days, it would earned through the Famous Agents are no longer a USP, they are a benefits, service level upgrades,
be difficult if not impossible to name programme can be redeemed for necessity. “In the hospitality sector, price advantages and privileges
an airline, hotel brand or restaurant Sodexo Gift Cards, for use towards the cost of switching over is zero. If of loyalty programmes, Kamal
that has not developed some type thousands of products and services a person is unhappy with a service, Deep Sharma – Head of Sales and
of programme to reward and retain across India,” she said. As for all he or she has to do is to stop Marketing, Hotel Ista, said, “While
its most loyal clients. business travel, Fairmont uses
Resplus, a programme designed
Relevance of Hotel Loyalty for corporate bookers, wherein
Programmes members can earn points towards
Sharon Cohen, Executive their own travel, gift certificates
Director, Loyalty Marketing from from top retailers and other exciting Sharon Cohen
Fairmont Hotels & Resorts asserts rewards every time they book one Fairmont Hotels
that reward programmes can be a of their colleagues into a Fairmont
& Resorts
valuable method to build and retain property on business travel.
customer loyalty. Seconding Sharon’s opinion,
“At Fairmont, in addition to our Rainer Stoll, Managing Director,
Fairmont President’s Club which Seasons Hotels, also feels that
rewards guest loyalty through besides being an effective retention

S
customised service levels and tool, loyalty points in hotels are
pecial loyalty programmes include deep-sea fishing
exclusive experiential opportunities, easy to redeem. “Hotel loyalty
at Fairmont Orchid in Hawaii, private lessons in
we also have our Famous Agents programmes are getting easier to
programme that acknowledges use and more generous, often with painting landscapes by reputed artists at The Fairmont
the travel agent as an important no blackout dates. Consumers are Jasper Park Lodge, one-on-one guided excursion
distribution channel for selling luxury signing upto earn free hotel rooms, through the art galleries near Fairmont Beijing.


HOTEL LOYALTY

CatherineMcNabb
Dusit International

T ransparency and simplicity are key trends.
Customers want recognition, flexibility and ease
when redeeming rewards, by phone, in person or via
the internet. Strategies to protect hard-earned brand
equity and revenues resulting from negative online
postings will continue to be important trends.
particular, value not only the points that are less transactional and
they earn when they stay, but more emotional through personal
also the recognition they receive recognition of their preferences,
as they move through the tiers of elite on-site benefits and engaging
the programme,” said Kadambini opportunities to explore their
Mittal, Director Commercial SWA, destinations.
InterContinental Hotels Group “Programmes like Subway’s
(IHG). Sub Club and a stamp-based loyalty
Having realised the role of programme, which customers
loyalty programmes in customer could earn by purchasing products
retention, hotels are going all out to and redeem for rewards, are now
stand apart in the market and offer far more advanced and can be
the best deals to their customers. tailored to suit individual customer’s
recognition appeals to most of us can be a very important decision- The Seasons Hotels, for instance, behaviour and preferences,” said
binding us in a relationship, reward maker, especially for frequent has launched the Seasons Elite Sunil.
acts like a positive reinforcement to travellers, who are often the hotels’ Privileged Programme for the Taking in to account the
repeat our action, which in this case, highest-earning customers. Seasons Hotel at Tarudhan Valley changing needs of members and
refers to repeat product usage. Many Citing the initial speculation and Living Room in Goa. the importance of social media
customers stick to evaluation based over airline loyalty programmes as In the same way, the Fairmont platforms, the InterContinental
on core benefits of a product. Under a comparison, Catherine McNabb, President’s Club, Sharon says, seeks Hotels Group has engaged in a
such circumstances, products of Vice President-Sales and Marketing, to offer its members experiences two-way communication process to
similar kind appear standardised Dusit International said, “There is
and factors like loyalty programmes little doubt that loyalty programmes
act to tilt balances, thus influencing strongly affect consumer behaviour
decisions.” – we only have to measure the
He also said that business exponential growth of Frequent
travellers mostly have basic boarding Flyer programmes (which many
SajidMahmood
and lodging expenses covered. believed was a passing trend Sarovar Hotels
Loyalty programme benefits, which in the 1980’s) to understand & Resorts
provide additional personal comfort the compelling attraction and
and convenience, during or after effectiveness of loyalty programmes
the product experience, become the as a key revenue driver.” The Dusit
favourites and can act very strongly Group generates millions of dollars
to influence usage decisions. in revenue for accommodation

I n the future, loyalty programmes will get increasingly
On the other hand, while most and food and beverage via our
hotels have loyalty programmes, loyalty programmes each year, she segmented to retain key market segments,
most place very little importance on added.
see innovative approach by providers; they will
them as a driving factor to increase In addition to allowing hotels
consumer bookings. However, to learn more about the needs of
get specialized, thereby increasing outsourcing
according to Sunil Kumar, Director their guests, loyalty points can opportunities and will become stronger as brands in
of Rooms, the Westin Mumbai be especially useful to frequent themselves besides representing parent branding for
Garden City, loyalty programmes travellers. “Frequent travellers, in the customer.”


HOTEL LOYALTY

primarily on member feedback and for the service earn loyalty points
the necessity to leverage more every time they sign into major LBS
effectively on technology, for better apps at any of our 4,480 hotels.
and faster service to our guests and The IHG also launched an online
loyalty members.” gaming platform, when it awarded
Kamal Deep Sharma The IHG has also come up almost three million points a week
with a host of new rewarding ideas during a promotional period last
Ista Hotels
for its guests such as the Priority year to PCR members who took
Club Rewards® Sweepstakes, an part in a new game, called ‘Win it
industry-first redemption option in a Minute’.
that enables members to instantly
redeem their points for entries into a Trends
prize draw in the UK, USA, Canada, Loyalty programmes are

I n the future, loyalty programmes will get increasingly China and Japan. projected to be more flexible on

segmented to retain key market segments, “Our new Topguest service is rewards in the coming future, said
the first hotel scheme to reward Kamal. “The future trends will be
guests who use Location Based influenced as the market share
get specialized, thereby increasing outsourcing increasingly comes under pressure.
Service (LBS) technology, such as
opportunities and will become stronger as brands in FourSquare, Twitter and Google Loyalty programmes will carry more
themselves besides representing parent branding for Latitude, to check in at hotels,” said value to the customer and mean a
the customer.” Kadambini. Members who sign up higher payback by the provider and
will invite technological investments
serve its guests better. “Our Priority to become multi-utility,” he stated.
Club Rewards (PCR), with 67 Last year, the IHG undertook
million members worldwide, allows an extensive global research to
members to earn points when they better understand the attitudes and
stay at hotels from the IHG family habits of its guests. The findings
of brands. With the use of social provided an insight into the global
media, we now offer targeted rates travel loyalty marketplace and were
and promotions to our Priority Club used to develop a new positioning
members,” said Kadambini. “Every for Priority Club Rewards.
month, on an average, 600,000 It also identified that frequent
people sign up to PCR and, after travellers place a higher perceived
enrolling, we find that members value on hotel loyalty programme
shift over 40 per cent of their hotel currency over frequent flier miles
stays to our hotel brands so that and business travellers value loyalty
they benefit from the scheme.” more than price. “Hotels can also
add value within these programmes
New Loyalty Programmes by making reward redemption more
In addition to providing convenient,” Kadambini said.
access to exclusive member-only “The use of online customer
events and amazing experiential
opportunities, Fairmont Hotels & while they are travelling and staying
Resorts has taken customisation at Fairmont hotels worldwide,” she
one step further by introducing their added.
‘Passions Program’ this year. “The The Starwood, too, has
programme provides an array of incorporated some new loyalty
additional benefits that talk to the programmes. “Starwood Privilege Kadambini Mittal
travel-related interests and passions is now changed to Eat Drink & More InterContinental
that members have identified to and we have recently launched
Hotels Group
us in their profiles. From ‘Food SPG Restaurants & Bars,” stated
& Drink’, ‘Arts & Entertainment’, Sunil.
‘Leadership & Philanthropy’, ‘Spa Sajid said the current loyalty
& Fitness’, ‘Shopping & Style’ or base of Sarovar Hotels is about
‘Sports & Adventure’, a number of 8000 members. “Once we cross

I
special packages and opportunities the 20,000 mark we plan create
n the future, loyalty programmes will get increasingly
have been developed to appeal to different tiers of the programme
segmented to retain key market segments,
each category,” said Sharon. “We i.e., something like a Platinum
plan to continue building on this membership for high users, Gold,
platform through the addition of Silver etc,” he aded. get specialized, thereby increasing outsourcing
more passion related benefits like Catherine says, “We are in the opportunities and will become stronger as brands in
Fairmont Fit, allowing our members process of re-engineering all the themselves besides representing parent branding for
to enhance their lifestyle passions existing loyalty programmes based the customer.”

HOTEL LOYALTY

Hotels Loyalty Programmes
InterContinental Hotels Reward Nights: For a free night at any of our hotel
Group Travel: On airline, hotel and travel packages
Merchandise & Entertainment: On electronic items, magazines, accessories
Gift Cards: Wide selection of gift cards from leading retailers
Charitable donations: Donate points to select NGOs
Experience: Opportunities to enjoy vineyards, sports, food, etc
Other rewards like No Blackout Dates, Points & Cash, ‘Flights Anywhere, Hotels
Anywhere’, No Points Expiration
Westin Mumbai Garden Starwood Preferred Guest: Room Loyalty Programme across all Starwood Hotels
City With complimentary enrolment
Eat Drink & More: F& B discount programmes
Westin Retreat: Westin WorkOut Fitness Centre and Spa of The Westin Mumbai
Garden City
Dusit International Dusit Gold Program: For repeat guests and new customers
Dusit Stars Program: For individuals who book accommodation and meeting
facilities on behalf of their organisations.
Wine and Dine Program: To drive revenue in dining outlets and increase spend in
all areas of the hotel including accommodation

Fairmont Hotels & Resorts Club: For new members
Premier: For members with five stays or 10 room nights in a calendar year
Platinum: For members with 10 stays or 30 room nights in a calendar year
Great Rates-Great Dates: For members with significant savings at select Fairmont
properties over a range of dates
Fairmont Moments for President Club members: Bringing fantasy bucket list trips
Complimentary BMW chauffeured shuttle service and BMW bicycles to explore
places
Ista Hotels Ista Select: For guests using accommodation
Ista Hi Life: For diners
Namaskar: For bookers who are an integral part of the buying process.

Sarovar Hotels & Resorts SarovarRewards: Loyalty points for the money spent
Restaurant Discount Card: These are managed by individual hotels to promote
food hotels.

feedback sites such as TripAdvisor, partners via loyalty programmes for
can damage your brand if not targeted marketing. “The information
managed properly, therefore if you on customer transactions, likes,
want to maximise guest retention it dislikes and preferences gives
is important to understand that your brands the deep level of customer
brand value goes hand in hand intelligence needed to deliver the
Sunil Kumar
with the success of your loyalty most relevant, highest-quality The Westin Mumbai
programmes,” said Catherine. customer experience and drive Garden City
Fairmont Hotels & Resorts long-term loyalty,” he said.
foresees more loyalty programmes “Customer engagement is the
wanting to gain the emotional loyalty journey, loyalty is the destination.
of their customers by attempting to Loyalty is no longer just about
better understand their customers . points, discounts, miles, and
“We are also seeing many smaller
independent brands / hotels joining
forces to create more powerful
rewards; it is about the way
processes, technologies, ideas, and
interactions engage individuals with
W hile most hotels have loyalty programmes, most
place little importance on loyalty programmes
as a driving factor to increase consumer bookings.
alliances through joint loyalty the brand and effectively render However, the truth is that loyalty programmes can
programmes,” Sharon said. a quality experience at all touch
be a very important decision-maker, especially for
Rainer foresees hotels use points at all stages of the customer
frequent travellers, who are often the hotel’s highest-
more of rich information on buying life cycle,” Rainer concluded.
earning customers.

TOP VIEW

Hotelier insights: Knowing a
guest’s true worth
Fabian Bartnick, Senior Hospitality Consultant for IDeaS, dwells at length on the
importance of sensing the true value of guests for increased guest satisfaction,
loyalty and profitability for Indian hotels

value considering all ancillary and valuable customers. Common solutions with predictive analytics
spend, from the time they make promotions include percentage and optimisation capabilities are
an online reservation to the time discounts, based on the length of a needed.
they check-out. This should include guest’s stay. While this has proven The next generation of revenue
everything from food service to the to be a useful strategy for retaining management systems will consider
day spa usage, guest rooms to gift existing customers, it is less not only the optimal set of prices
shop purchases and more. effective in attracting new business, to offer, but also who to offer those
In addition to making more and, as well as undermining the prices to, which guests are most
profitable decisions about which hotel’s perceived value, it can also valuable and which are most likely
guests’ reservation requests to sabotage potential revenue. to develop a long term relationship
accept, a deeper understanding Hoteliers should instead focus with the company.
of guest preferences leads to on strategies to attract specific This demand-centric view of
better decisions about promotions, markets, with targeted initiatives revenue management results in

I n today’s highly

have a heightened understanding
competitive
Indian hotel sector, it is vital to
service offerings, inventory levels
and F&B options. Furthermore, this
integrated customer behaviour data
that drive new customers into their
hotels and increase their share
in the market. This is achieved
long term, sustainable revenue
performance, but relies on
centralised credible and accurate
of a guest’s preferences and total supports wiser pricing decisions, by increasing the relevance of guest information, predictive
worth. This knowledge is becoming supplier choices and financial promotions to those customers who analytics and strong integration
even more vital due to the growing strategies. Forecasting and are most likely to have the greatest between customer intelligence and
presence of third party wholesalers optimisation then provide controls lifetime value. For example, instead revenue optimisation systems.
and OTAs. Local hoteliers need to ensure revenues are optimised of sending blanket marketing If the fundamentals of revenue
to gain a better understanding of and costs are minimised across the campaigns, your customer base management aren’t in place, Indian
their guests at a property level so entire operation. should only receive offers they are hotels face an uphill battle in first
they can offer a more personalised The path to sustained likely to be interested in, based identifying and then understanding
experience and maximise guest profitability and growth has taken on their product preferences and their market segments. This can
loyalty in the future. a turn for hotels across the country. previous purchases. Using this be a labour intensive process and
While there have been Room rates still bring in the highest approach will protect hoteliers from puts hoteliers at risk of throwing
countless advances within the portion of profit, but retail, food and cannibalising their products and will money at a marketing campaign
Indian hotel sector in recent years, beverage (including restaurants also attract the right customers to that is destined to produce a
many hoteliers (in particular – used by outside customers), spas the right products without a ‘free for negative return on investment.
smaller, locally owned hotel chains and entertainment are increasingly all’ scenario. Revenue management must take
or independent properties) are still important sources of income. Hoteliers should also aim a holistic view and be focused on
struggling to effectively target or With so many different business to achieve improved timing and driving value from targeted market
understand their market segments. arms and management systems targeting of campaigns, based segments instead of trying the ‘one
In many cases there is an overlap being used across hotels these days, on forecasted demand by market size fits all approach’.
between channels, sources, it is difficult to get a complete view segment and property, so demand The approach should instead
companies, agents and segments of total guest spend. A regular hotel is generated when and where it is integrate a complete customer
which makes it hard for hoteliers to guest may not be worth as much as needed and rates are protected revenue profile, including overall
drive specific, targeted promotions. a guest that stays infrequently, but during peak periods. Integrating ancillary spend and set hotel room
For the sake of ongoing revenue who spends freely on a variety of this marketing data with revenue control and pricing based on the
optimization and to enhance ancillary activities within the hotel. management data means both enterprise profit contribution of
customer loyalty, it is vital that local Importantly, by leveraging this departments have the information each customer. As those in the
hoteliers gain a holistic view of their holistic view of a customer, hoteliers they need to make the right industry are all too aware, informed
guests’ lifetime value, not just their can maximise their chances of not decisions about pricing and decisions can lead to increased
room rate spend. only winning, but keeping their best promotions placement. guest satisfaction, loyalty and
Data from all transaction customers. Often Indian hoteliers Today’s intelligent hotelier profitability, whereas assumptions,
systems needs to be integrated to use straight discounting as a is recognising that in order to or poorly planned decisions, can
provide a true picture of a guest’s promotional tool, without a clear stay ahead of the competition, mean sending your best guests to
preferred activities and their overall long-term strategy for attracting new more advanced decision support a competitor.


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