Friday, 11 February 2011

Internet retailer ran off with my hotel !

Internet retailer ran off with my hotel !
Accommodation providers have been asleep on the job and are beginning to realise whilst they have been busy undercutting each other, online retailers are making a killing through selling their inventory. Can a social media strategy linked to quality provide a commission free route to market ?
Retailers are canny people and the internet has provided smart operators with opportunities to sell product they have never owned or paid for. If you stop and think; it beggars belief we have sleepwalked into this situation. Some retailers are ruthless in guarding “their” customers from providers and even keep providers out of the loop during rate and volume negotiations. How many beds have you got on allocation with onerous terms and conditions prohibiting you from offering deals direct to customers? How many customers realise just how much we are paying for their business?
When you set up your enterprise did you ever envisage selling your wares through the shop window of an internet retailer who pays you nothing for your product and then charges you levered commission? Far too many accommodation providers have failed to recognise their websites have become a commodity seeing their use simply as an online brochure and using websites purely as a route to market for distressed stock. Third party agents need content to drive traffic and we have failed to extract any value for this.
As the genie is out of the bottle it is difficult to imagine a time when we will be able to extract any value for content to third parties unless of course history is overturned and accommodation providers actually work together and compete with agents so that customers are the main beneficiaries from discounts.
Hoteliers, B&B and accommodation providers naturally relish and thrive on the contact with customers, tailoring services and facilities to their individual needs and wants. During 2010 it has been estimated third party agents took something in the region of $5 Billion out of American hotels in commissions, monies that could have gone direct to customers, training, upgrading and shareholders. In the past 6 years commission as a percentage of total revenue has leaped from around 2% to in some cases over 10%! When you factor in inflationary pressures on other cost centres such as salaries, food and energy this trend is unsustainable. More difficult to quantify is the lost opportunity to create relationship with guests at time of booking especially when controlled by “brand to brand” agreements.
There could however be some light at the end of the tunnel and intelligent use of social media may just be illuminating the way forward. Successful social media campaigns have on the whole been reliant on communicating with zeal and passion the qualities that make your business stand out from the crowd; what you do, how you do it and what you stand for. This information and sense of commitment to customers, suppliers, employees and the wider environment goes straight to the (“end user / decision maker”) customer. Getting your message aligned with your enterprise and your guests expectations allows for an environment of mutual trust to develop this of course demands honesty from providers and only those committed to constant improvement will stand any chance of forging long term relationships. Social media as part of a clear communication strategy aligned to your business ethos will no doubt invite public feedback from customers and if you deliver your promises you will grow the number of recommendations, reputation of your enterprise and of course repeat DIRECT business.
So by all means follow the herd and start Twittering etc but don’t be surprised if your real commitment to customers is quickly outed, a real bonus for those with quality management procedures underpinned by a reinvestment programme and true real ethos whilst a real risk for those who are just looking for quick customers at any price.
Perhaps this is how we can begin the fight back and regain direct access to and form a meaningful relationship with customers. Only those who are in this for the long haul, are truly ethical and committed to quality will benefit which has good feel to it, acting as a kind of natural selection rewarding the best with stronger loyalty from customers, increased profitability for reinvestment thus creating a virtuous cycle.