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ChannelManagerTraining
March 2004
Overview of the Product’s Vision & Value Proposition
3
Overview of the Merchant Model in the Industry
Points of Contention between Merchants and Hotels: Merchants getting stronger by the minute. Consolidation is enhancing
their strength
Leverage over contractual pricing and terms
Hotels lost control of pricing, merchandising and customer interaction
Brand equity and customer loyalty dilution
Competition for on-line buyers
Managing multiple Merchant Extranets is too time consuming
4
Hotels’ Reaction to the Merchant Model
Focus on their own site
Rate Parity
Enhance Loyalty Programs
Focus on Revenue Management
Smarter Contracts
Fixed margins
Key word control clauses
5
The Old Model
Last Minute
Hotel Property
Net Rates & Inventory
Expedia Opodo
ProprietaryExtranet
ProprietaryExtranet
ProprietaryExtranet
Net Rates & InventoryNet Rates & Inventory
Manual inputManual inputManual input
6
The New Model
Hotel Property
Net Rates & Inventory
ProprietaryExtranet
ProprietaryExtranet
ProprietaryExtranet
Manual input
EmulationEmulationEmulation
Channel ManagementPlatform
Retail.comRetail.com
Retail.com
Retail.comRetail.com
Retail.comRetail.com
Retail.comRetail.com
Retail.com
Retail.comRetail.com
Retail.comMerchant.com
Retail.comRetail.com
Retail.com
Retail.comRetail.com
Retail.comDestination.com
ReservationCount
ReservationCount
7
A few notes on our technology
Interfacing with the Extranets using a technology called “web emulation”
or “web wrapping”. Same technology used for RateView
Using XML language to export data with the Extranets and to get
information back from them (reservation counts)
8
Value Proposition
Cost Savings
Incremental Revenues
StrategicImplications
Different audiences and components of the Value Proposition
AudienceGMs
DOSs
DRMs
Owners
9
Value Proposition
Incremental Revenues:
Sell different rate and room types to tap into other segments with different
price sensitivities
Work with a greater number of on-line distributors
Avoid unwanted closures by using the auto-allotment feed (Allocation
Optimiser)
10
Value Proposition
Cost Savings:
Manage multiple sites by using one single interface
Reduce the DRM’s opportunity cost (salary and incremental revenues)
Avoid Rate Parity Penalties
Enhance the value of RateView by using it in conjunction with CHM
11
Value Proposition
Strategic Value:
Reduce Commercial risk by working with more sites. Don’t put all your
eggs in the same basket
Regain control of pricing by implementing Rate Parity
Avoid channel cannibalization by protecting your own site’s integrity
Increase the exposure of retail rates on the Web
Diminish the distributors’ leverage
Stimulate competition
Level the playing field
12
Value to TravelCLICK
Future integration of CHM with iHotelier
Establish a position between the merchants and the hotels
Position ourselves as the hotels’ agents
Leverage our position over the merchants
Better cooperation (direct links)
Synergies between CHM and other TC products will create competitive
barriers
Beta Test
14
Beta Update
Beta began early March and will run through April
Beta hotel responsibilities : testing functionality and providing
enhancement recommendations
Hotels in beta offered a complimentary 12 month subscription
Feedback from participating hotels has been positive – Channel Manager
is creating operational efficiencies in the process of managing merchant
extranet sites
“I love the fact that I put in the sell rate and the net rate is calculated”
Joel Lillegraven – Holiday Inn Harborview / Sunstone Hotels
15
Identify Targets
Internet Players
Hotels managing multiple sites or with the potential to do so
Hotels in markets where on-line distributors are generating significant traffic
RateView Subscribers
Weaker Brand Hotels
Stronger brands are building direct connects with Expedia or other merchant
Hotels needing to comply with Rate Parity strategies
Hotels that need to diversify their distribution portfolio
Clients using EZ Yield
Do not offer iHotelier and CHM within the same four month period
Pre-call Pre-call
16
Call Preparation, the Value
$50k salary x 20% of the RM’s time= $833
250 room hotel @ 70% occupancy @$175 ADR
generates $918,759 in revenue a 2% increase due to better
Revenue Management would yield incremental revenues of= $18,375
4 Suites per month (incremental) @$200 (2 night stays)= $1,600
3 new sites to the distribution portfolio
Four reservations from each site @ $150 (2 night stays)= $3,600
1
3
4
2
$24,408 * per month$292,896* incremental
revenues per year
+ Strategic Value
What’s the value of CHM to this hotel?
Pre-call Pre-call
17
Value Calculator Pre-call Pre-call
Functionality
19
Two Components to CHM
ChannelManager has two key features that enable hotels to regain control of pricing and inventory:
Price PointManager
Functionality provides hotels with the ability to: Easily maintain contracted allotments
Implement pricing across multiple websites with one click
Load multiple Room and Rate types
Functionality provides hotels with the ability to: Set thresholds to trigger additional inventory to maintain availability.
Establish cross-channel selling limits
AllocationOptimiser
20
Logging-in to Channel Manager
Clients access Channel
Manager by logging in
to the EMC on
www.travelclick.net
21
Channel Manager on the EMC
22
Room Manager Enables Hotels to Sell Multiple Room Types on the Extranet Sites
23
CHM Provides Hotels With The Ability to Easily Sign Up for New Sites
24
Allotment Characteristics Alert Users if Changes Violate Merchant Contract Rules
25
Pricing Characteristics Calculate Net Rates & Review Pricing Adjustments
26
Contracted Cutoff Dates are Setup by Channel as a Default Setting
Users can modify these settings by day in the Room Allotment Calendar
27
Extranet Access Info Required to Implement Pricing and Allotment Changes
Booking Updates pull in data from the extranet sites
28
Validation Rules is a Mechanism to Guard Against Data Entry Errors
29
Pricing Control Provide Hotels With Two Rate Parity Options
•Consumer Rate Parity•Net Rate Parity
30
Create Multiple Rate Categories to YieldHigher Net Rates
31
Offers Users Date Range and Calendar View
Date Range View is an efficient way for a hotel to enter consistent
pricing over an extended period of time
32
Calendar View
Net Rate Calculator
Easy access
to
RateView
Efficient way to change
rates on individual days
33
Net Rate Calculator
Hotels employing a consumer rate parity strategy can easily change rates
by entering one rate. CHM will calculate the appropriate net rates and load
them into the extranets.
34
Managing Room Allotments in Channel Manager
Displays
Availability on each
channel
Modify
channel
availability
Modify
channel
restrictions
35
Avoids sellouts by allocating inventory to sites based on Sales performance
Contract: Contracted allotment.
Above: Maintain availability
in sites by distributing
additional inventory
Threshold: Determine when to distribute inventory to merchant sites.
Creates efficiencies in managing extranet availability
Allocation Optimiser
36
Sales Limits – Force Web Distributors to Compete for Availability
Allocation Optimiser
37
Inventory Monitor – Provides Hotel With Snapshot of Bookings
38
Inventory Monitor Booking Totals
39
Inventory Monitor Booking Pace
Internet Coverage
41
Strategy
Provide Hotels with wide Internet distribution capabilities Help hotels to diversify their distribution portfolio and to level the playing
field Intelligent addition of sites to provide coverage across:
Merchant Sites Retail Sites Destination Portals CVB Sites
We want to work with smaller sites, but many of them don’t drive significant business Why? How can ChannelManager help them?
42
The Affiliate Program Concept
Affiliate Program: Allows any site to co-brand or private label a booking engine from one supplier or from a network All reservations generated through the site are tracked, reported and commissions paid for them
43
Affiliate Programs
Largest Affiliate programpart of IAN.com (thousands)
Frommers, Amtrak, America West, etc
Not a very strong programstarting to put focus on it
EarthLink, Knight-Ridder.com, Fodors.com, JetBlue, etc
A lot of emphasis in theaffiliate program -WWTE-
Doesn’t have an Affiliate program
Fairly strong Program
44
Current CHM Coverage
The top sites cover close to ¾ of the total on-line activity
45
Share of Web Visits (traffic)ate
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
Expedia /
TravelN
ow
Travelocity/Y
ahooT
ravel
Orbitz
Cheap T
ickets/Lodging
Hotw
ire
VIP
fares
Priceline.com
ITN
.net
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
72%
46
Bottom Line……
As shown in the previous graph, if a hotel plays with IAC, Travelocity (via Saber,
the merchant model is still small), Orbitz and Cendant (Lodgning / Cheap tickets) it
covers 72% of the web’s exposure window
Because the on-line travel industry is highly concentrated (80% of the business is
generated by 20% of the sites) the Web coverage we can provide is as good as EZ
Yield’s
Getting incremental coverage requires the addition of a significant number of sites
47
Our Premium
Based on:
Local Support (DOSs)
HOU/BCN product-specific Support
HOU/BCN Revenue Management Consultative Support
Scalability of our system (integration with RV, iH, etc), EZY is a dead end
Sound development process translates into a more reliable product
Working with a sound and reputable company? Priceless!!
Sweeteners (media credit and ITHT one-year subscription)
48
Packages
Price Point Manager:
1. Price Point Functionality
2. Unlimited technical Support
3. ITHT or $500 media Credit on next marketing Campaign
4. Set-up and training
5. Does not include any Revenue Management Support
$2998 for 12-month subscription plus $750 set up fee
$3.28 daily premium over EZY,,, express the premiums as a per day figure
49
Packages
Price Point Plus: Same as above plus Revenue Management Support 50% discount for the Allocation Optimiser Add-on
$3,396 for 12-month subscription plus a $750 setup fee
$4.37 daily premium over EZY,,, express the premiums as a per day figure
Our consultative services at a $1.09 per day!!!
50
Revenue Management Support
Advise on issues such as: MLOS, CTA, CTD, Rate Selling Strategy vs Competition Packages Price Point Use different Rate and Room Categories to tap into new segments Selling Rate vs Net Rate Parity Which channels should a hotel work with Proactive approach giving them specific recommendations on the basis of
an assessment Sell them other TC products Strategic advise for managing cross-channel selling limits How to negotiate better contracts
51
We will get a premium over because of our superior technology, proven ability to increase revenues, ability to bundle related marketing products and services, our local (consultative) and Product-specific support
Our Pricing Philosophy
52
Next Steps & Enhancements
Gradual addition of five more sites by the end of June Channel News On-line Community Space Further integration of RV with CHM
Even further into the future: More sites added (leisure wholesalers, Tour Operators and Activity Sites) Integration with iHotelier