The multiple (and often overlooked) advantages of separating out add-ons as part of the booking process

Bookassist has allowed hoteliers to offer additional services as part of the booking engine for many years. For example, hoteliers can offer spa treatments, room services, transport to and from the airport as additions during online booking. Hotels can group similar add-ons into categories and add photographs to make the whole offer more appealing. The obvious advantage here is that it allows hoteliers to upsell and generate additional revenue from the online booking process. Our figures show that add-ons are a significant ongoing earner for hotels.


But there are additional advantages to the use of add-ons other than the straightforward upsell advantage.

#1 Dynamic Packaging
Add-ons give the guest the freedom to dynamically package their stay, to pick and choose what they want. This freedom is something the guest welcomes online. But the success of this requires that the hotel is clever about what they are offering in their add-ons list compared to the basic room offer so that proper dynamic packaging is possible. Your account manager can help to adjust your online offering in terms of rooms and add-ons to make the total offering more easily packagable and attractive to the online customer.

#2 Promoting Competitive Rates
By smart use of add-ons, you can split out extra services and keep basic packages and room types listed at the lowest possible online rate, thus gaining a competitive advantage online. A room-only rate can be listed in the booking engine, keeping the initial offering clean, simple and uncluttered which reduces confusion and increases the conversion rate. Simple room rates then allow the upsell of add-ons to deal with any required extras. It keeps your room rates stripped back to a low entry cost and helps build more direct business rather than losing it to third parties or competitors who are adept at advertising low rates.

#3 Strong Advertising Value
A comprehensive and attractive list of add-ons in the booking engine also advertises what your hotel is capable of providing. Even if they are not purchased by a customer immediately as part of the booking process, the customer now knows the kind of service levels that are possible and forms a higher opinion of the hotel before they even arrive. A good add-ons list may be the very factor that convinces an undecided online booker to actually book. Furthermore, it sticks in the customer's mind what this hotel can now offer, and the next time they are looking for something like spa treatments, or that perfect gift for someone, they may remember what they saw detailed on the hotel's booking engine, giving you another competitive advantage in future sales.

For more details on optimising add-ons in your booking engine set-up, contact your Bookassist account manager.

Dr Des O’Mahony is CEO and Founder of Bookassist, the leading online strategy and technology partner for the hotel industry. Follow Bookassist on Twitter at twitter.com/bookassist

Interview: Bookassist bucks the trend with continued growth in revenue and staff

Bookassist CEO Dr Des O’Mahony in conversation with the Hotel & Restaurant Times, June 2009.

Bookassist is in an unusual situation compared to most firms in the current downturn. Bucking the trend, the Dublin-headquartered online marketing strategy and reservations technology company continues to grow its revenues. It has even embarked on another recruitment drive for its offices in Ireland and abroad, targeting skilled senior managers and employees in business development, search engine marketing and sales.

“We’re not entirely insulated from the economic situation, we do see significant changes across all our markets”, says Dr Des O’Mahony, Bookassist CEO and co-founder. “Ireland has certainly seen pressure on rates and on occupancy, but those issues also make hoteliers more aware of the value of the services being offered, so delivering on your promises is more important than ever, and Bookassist works hard on that.”

Bookassist has expanded its staff not just in Ireland, but has recruited a new team for Central Europe based at its Prague office and has begun to build significant business in Spain, Austria, Italy and France. “What we learn in one market, we can apply in another, so having a broad view of the industry and how it reacts in different ways in different countries is a great advantage that we can bring to our hotel clients”, says O’Mahony.

The optimistic view

Having recently given a presentation on the optimistic side of the fence at the Smile conference on May 21st in Dublin, O’Mahony plays down the doom and gloom that much of the industry is dwelling on at the moment and insists that there are opportunities to be tapped into right now.

“There is a big focus on the trends downwards, the averages in rates and occupancy looking bad compared to previous years etc. There’s a lot of negativity and some is undoubtedly justified. But there are two sides to this. Firstly, averages mean nothing to an individual hotel – the beauty of averages is that for every piece of data that’s below the line there’s one above the line, outperforming the average. This is where you want to be. Secondly, looking at rates only hides the fact that if the cost per acquisition can be reduced, lowering of rates is far less painful.”

The discussion on strategy is one that Bookassist staff increasingly try to have with hotels, insisting that despite the software products on offer, no piece of code is going to increase a hotel’s revenue without the hotel changing how they view the marketplace. Bookassist is about “providing strategic solutions to the hotel industry, not just software”, according to O’Mahony.

“We are pushing the strategic opportunities for hotels right now, and are proving directly to our clients that there are real gains to be made despite the situation most hotels find themselves in. Getting your strategy right in terms of diverting as much business as possible to direct bookings means that your cost of acquisition has dropped considerably compared to other channels. And getting that strategy working means that you are far better positioned to build repeat custom online and take advantage of the inevitable upswing that will come.”

Traditional marketing has been rapidly overtaken

Despite the success of the company’s approach in the Irish marketplace over the past 10 years, where in excess of 35% of Irish hotels now use Bookassist technology, O’Mahony still thinks Irish hoteliers have a way to go when it comes to online strategy: “The Irish marketplace is quite advanced in how it embraces the internet, compared to many markets we operate in. But we still find many situations where hotels expect, or want, say 30% to 40% of their total business to be done online, but wouldn’t for a second consider spending 30% to 40% of their marketing budget on that area. This makes no sense at all – traditional marketing has rapidly been overtaken by new online thinking that hotels are simply nowhere near keeping up with. The work that we are doing with our Web 2.0 enabled booking service, customer reviews, blogs, YouTube, Twitter etc, all of these things are not only paying dividends in terms of increasing a hotel’s exposure in the search results, but they are building a hotel’s brand and increasing their online revenue too.”

O’Mahony recently took a team of Bookassist expert staff on the road to highlight the rapidly changing internet environment to the hotel industry, holding all day seminars in the Czech Republic, France and throughout Ireland for the hotel sector. The roadshow continues in Spain and in Austria shortly. “We still find hotels talking about the importance of hits on their websites without realizing that the key issue is conversion. All the traffic in the world is worth nothing if people aren’t booking. To achieve conversion, to grow conversion, is often about good old-fashioned service levels being transferred to the web environment. This is where we believe Bookassist technology has the edge”.

“The innovative approach in Bookassist’s technology is that it is customer-centric, always has been. The quality of service that a hotel expects to give to a guest at the check-in desk, that’s what we aim to achieve with the online booking experience. Anything less is erosion of the hotel’s service levels and of the hotel’s brand and would not be good enough. If you get that online service level right, then you not only increase your conversion, but you significantly increase your chances of getting that customer’s repeat business online also. Service, attention to detail, these things really matter in an environment like the internet where the competition is pretty much cut-throat.”

The company was the first in the industry to directly integrate their booking engine data with Google’s Analytics tracking tool. This allows participating hotels to see which bookings were generated by which online advertising campaigns and how much was spent to get each booking. This analysis in turn leads to fine-tuning of the online spend budget and a significant increase in the conversion rate for online advertising compared to standard tracking methods. “The beauty of integrating Bookassist with Analytics is that you no longer simply say ‘a hundred euros spent gave me 20 bookings’, which is a standard tracking analysis”, explains O’Mahony. “With our approach, you can say that this advert here, displayed online at this time, cost me this many cents, generated that booking right there, and made me that many euros margin. It’s taken all of the guesswork out of online advertising.”

Bookassist goes far beyond booking and online marketing technology, offering content management system web design, corporate booking facilities, loyalty and rewards systems, GDS management and PMS connectivity. The company is working on a number of new technologies that will reach the market place in the autumn. “We are constantly asking our online customers and our hotels what they want us to do next. Practically everything we develop is driven by feedback, not just by what we ourselves feel we should do”, says O’Mahony, adding: “although sometimes we do surprise them all with something completely new and unexpected, just to keep it more interesting for us and for them!”

Bookassist products and services are described on their corporate website bookassist.org. Bookassist also carries out and publishes market research articles and whitepapers on blogs.bookassist.com/blogs/industry/. To stay up to date, you can follow Bookassist on Twitter at twitter.com/bookassist.

©2009 Hotel & Restaurant Times

Booking buttons from the channels - proof of the power of direct booking

The big name third party accommodation channels have served an important role in the online travel arena. In the years when search engines were only beginning (Google started in late '98) and hotels did not have the knowledge to market themselves properly online, third party channels were the very necessary middle-man between the online booker and the accommodation provider, facilitating indirect booking. Their generally high commission charges were justified by the delivery of business that otherwise was lost to the hotel.

As direct search moved to dominance, as online bookers became more savvy and in particular as hotels embrace online marketing, the need for customers to use third parties is rapidly diminishing and the opportunity for direct booking between customer to hotel is rapidly rising. Not only can this direct booking model providing better value for the online customer, it is also helping hotels strongly reduce their commission charges while allowing them build their own brand allegiance online to capture repeat business.

Bookassist was the first to push this direct booking model for hotels, since its foundation in 1999, constantly highlighting its growth and its importance as the key booking strategy for hotels. An average of 50% of hotel business is now generated online, and the more of this that comes direct, the better for the hotel.

In this changing environment, third party channels are beginning to recognise this shift in consumer habits which will begin to erode their indirect booking income stream. In recent months, two large third party accommodation channel sites have launched booking services of sorts to allow hotels capture bookings directly on their own websites, and others will surely follow. If anything proves the rising dominance of direct bookings on hotel websites versus indirect bookings on third party channels, it is the launch of these services by third parties. Hotels should recognise the reality in this move.

Typically, the third party offering has taken the form of a button or simple form which the hotel can embed on its website. The customer clicks to book and is taken back to the third party channel to complete the booking.

This is bad news for hotels, and here's why.

A booking button, form or link-off service to a third party channel is not a direct booking facility. It merely cannibalises the business that has already arrived directly at the hotel and which should be serviced by the hotel. The facility seriously devalues the service presented to the customer in the hotel's name, leaving the customer with a "passed over" feeling that the hotel would rather not deal with them. Usually, there is no way to continue navigating throughout the hotel website or returning to it with a single click. Customers can be re-directed to third party channel website where offers from other providers are displayed. Hotels will likely find it extremely difficult to request upgrades or new features and the technology will be limited, since this does not represent core business for the third party channel.

A booking button, form or link-off service to a third party channel is not a direct booking strategy. Direct booking is about more than a booking facility, it should be a key strategy to drive an increasing percentage of your online business to the hotel website and as such the booking facility chosen is only a small part of that. What a third party channel cannot and (for obvious reasons) will not do is aid the hotel in building a direct online marketing strategy and in reducing their reliance on high commission third party fees. This is where the long term damage can occur for hotels that do not adopt their own direct booking strategies.

We view this move by third party channels as a strategic move to increase control on the hotels as those hotels become more and more aware of the importance of direct distribution strategies and online marketing, and to placate hotels considering a direct strategy into thinking that their third party channel can provide one.

The fact is that while third parties can and do deliver valuable business to hotels, they are none the less in competition with the hotel website online. Using third party "direct" booking facilities can mean allowing those channels to have full information on the hotel's inventory, pricing strategies and yield strategies, as well as full access to the hotels customer's database. Such information could allow a third party channel to assess everything happening on a hotel website in comparison with a hotel's direct competitors.

Our advice for hotels is that they can still work with third parties on channel distribution, but when it comes to their direct distribution they should partner with a true technology company that understands their challenges and requirements, a company that shares the same goals as the hotels themselves: to build the hotel's own brand, to handle the customer online with the highest level of service and security, to make hotel websites the primary distribution channel with the lowest commission rate possible and the highest margin for the hotel.

Authors
Dr Des O'Mahony is co-founder & Managing Director of Bookassist, Yahya Fetchati is Head of Business and Operations at Bookassist.

What's your commission? The wrong question to focus on.

"What’s your commission rate?" is the wrong question to ask. "What value can you bring to my business?" is the question hoteliers need to be focusing on, in the current climate in particular.

If cost was the only consideration, everyone who travels would stay in hostels. Yet five star hotels do very well, and a whole spectrum of hospitality services is routinely bought into despite cheaper alternatives being available. Why is that? Because people rightly focus on value, not cost. An overall view of what is on offer is the intelligent approach to pricing because, despite possibly paying more, you stand to gain more. This is common sense.

Hoteliers are focused strongly on the bottom line at the best of times and in the current economic climate cost control is more important than ever. But often costs can be viewed too much in isolation by hoteliers or their financial advisors and, when considered out of context, can lead to very poor decisions being taken for the strategic strength of the business. There’s a reason why balance sheets have two sides.

As a company providing a booking engine capability to hotels, Bookassist operates on a commission-only basis. We feel this is the fairest and most equitable way to do business with hotels, since if we cannot generate revenue for the hotel, the hotel doesn’t pay. Thousands of clients agree. We don’t charge any other fees, like installation, monthly or annual fees, or upgrade fees, for the booking service.

Many other companies also operate on a commission-only basis, while others operate on what they may disingenuously refer to as a "no commission" basis, which means fees are payable whether the service delivers or not. In this latter case, the provider has no vested interest in growing your business at all so I won’t discuss that approach here.

For some third party websites and channels, hotels pay high commissions at 15 to 20% or more and indeed some of these channels have actually been increasing their commissions lately. Yet hotels seem happy to pay these hefty fees, typically on lowest rate rooms that they must invariably supply. And in terms of the GDS and travel agency services, hotels have traditionally paid relatively high commissions. Often a hotel is prepared to pay more when times are tight and their occupancy is low and this can be exploited by resellers. Hotels weigh the revenue against the cost of sale here and consider it overall an advantage, despite the tight margin. For some reason however, hotels seem less likely to apply the same basic logic to booking engine services on their own website where they can potentially generate more bookings for a lower cost, especially when they have low occupancy. Perhaps this is because they feel it is their website, their business, and any booking engine will do to capture it since the business "will come anyway". This view is very wide of the mark and shows no long-term strategic thinking. The industry is fast moving towards the direct model and it is advantageous to be embracing it as much as possible now and partnering with the relevant expertise to ensure you stay ahead of the game.



The Value Proposition

With a booking engine on their own website, hotels can capitalise on their own brand online, grow their online presence and direct bookings, enhance return business and project a customer-centric focus and an image of technical competence to their clientele. A good booking engine will do this well, facilitating the customer professionally. A bad booking engine will turn customers off. The simple fact is that not all booking services are created equal, and not all can be compared on commission alone. Commission charge is a red herring when viewed in isolation - the comparison to make is the potential upside on revenue versus cost, not cost alone. This is too often overlooked by those focusing on the cost side of the balance sheet only.

Does the booking engine allow you to showcase your product properly, with photographs, customer reviews, multiple languages, multiple currencies and secure transactions? If it does, this speaks volumes for how your treat your increasingly worldwide base of customers. If it doesn’t, well then it also speaks volumes for how you treat them and you will pay the price. Does it allow you to upsell additional services, offer vouchers, offer instant confirmed reservations via SMS for convenience? Think about these things, because these are likely to increase customer confidence and satisfaction and lead to return custom, therefore lowering your overall cost of sale. These represent the true value proposition inherent in a good booking engine service for the hotel website.

But equally important is the information gathered by the booking process and how it can help you improve your business strategically. Does the booking engine allow you to monitor and analyse how your online business is doing, what is working and what is not, where your customers are coming from? Does it use intelligence to warn you when your availability is low, so that you don’t miss a sale? Does it genuinely inform your online strategy so that you can work with it to grow your on line business to its full potential? Does it allow you to e-market to a confirmed customer base?

From a technology perspective, does it continue to develop, adopting best practice in design and security, relieving you of any concern or worry about being left behind with old technology? Continued development costs money and takes expertise. All of these things are significant advantages that can drive your business more towards direct bookings and therefore lower your overall cost of sale across your business. These are the things that you are paying commission for ultimately, the whole value proposition.

With all these advantages in mind, driving your online strategy is what direct booking engines are about. As a hotel, don’t make the mistake of thinking that any old service on your website will do and compare on commission or price alone. The success of the online strategy and the increasing delivery of low cost-of-sale bookings to your hotel is the true value of the online service provided.

That said, our commission rate is pretty competitive :-)

Dr Des O'Mahony is co-founder and Managing Director of Bookassist

Multi-step booking approach proving superior to one-step single page versions

With the array of different booking engines in the marketplace constantly growing, technology heavy companies often allow new technology to overshadow the fundamental point of the booking process, which is to ease the path for the user to make a booking.

Bookassist has always adopted a customer-centric approach to the booking process, keeping the technology hidden from the customer, and uses a multi-step approach to online reservations which allows the customer to have more detail about what they are booking, more clarity in the process, more feedback on what they are doing while booking, and a far higher sense of security during the crucial credit card step than a single page on screen could possibly provide. A significant body of research, and the approach of the top booking engine systems in the world, vindicates this multi-step approach and shows it to be best practice and superior to the single page flash-style booking solution which, while promising to allow a booking in one step, often simply frustrates the user with a lack of information and leads to a lower faith in the system. This could potentially damage future business in the eyes of some customers for a hotel deploying a one-step approach.

See for example the opinion of Hospitality Net on the issue at: www.hospitalitynet.org. While tracking and optimisation issues have certainly improved recently, especially since the Hospitality Net article was published, the fundamental issues of utility for the customer addressed in that article, and other research remains. The key is to serve the customer and relegate the technology to the background.