Driving GDS, How to Shift Market Share during Need Periods

By Deborah MacDonald

As the accommodation landscape continually evolves during the COVID 19 pandemic, hotels are finding previous competitors may no longer be in existence and new competitors have come into the market space all vying for a share of the market. As each competitor strives to maximize revenue share, and while discounting of GDS public rate strategies may influence conversion, it is important not to erode your property’s market / price position. A question often asked is how else then can we grow market share without negatively impacting our competitive price position, especially during need periods?

A mistake many hotels make is to chase a discount strategy. This is basically a downward spiral. Continuing to deploy discount pricing-based tactics ultimately erodes the perceived value of the hotel product by moving a property out of its historical competitive positioning in the market. The challenge is that it can take a property many years and significant marketing funds to regain the price / value relationship with the consumer and to return it to its previous market position.  So, what can a property do to grow market share without price erosion?

First step is to define and/or validate the property’s current position in the marketplace. Is the property the leader in price in the competitive set, the least expensive, or somewhere in the middle of the set? This decision is most critical and will impact long-term market share strategies.

Tools such as Agency360 can help determine ADR and market share by each segment (public, consortia and corporate) and the property’s positioning versus the competitive set. Secondly evaluate the Best Available Rate (BAR) public rate pricing program strategy and whether it is floating based on demand factors such as occupancy and market conditions.  Rate360 may also be a good way to understand the pricing strategy for the property and competitive set.

Finally, use the following guidelines to develop a strategy to shift market share that potentially addresses all 3 market segments in the GDS - Public, Corporate and Consortia:

Public Segment,

The public market segment audience is made up of the general consumer which may also include the reach from the onward distribution channels through OTAs and Metasearch Sites (YES, OTA can pull inventory from the different GDS).

Where the need period becomes severe in its gap to forecast, a GDS Public Program Offering to further add to the mitigation of the “Need Period” may need to be deployed focusing on adding/increasing value inclusions.  Utilize GDS media to promote this value add and drive performance towards the Public GDS with the added benefit of lowering distribution costs, e.g. commission payouts. 

Be sure to communicate a sense of urgency and limited time offer. If left wide open, the “value” or inclusion becomes part of the standard offer. If pricing discounting is deemed warranted be sure to maintain parity by adjusting the consortia accordingly to remain in compliance.

Consortia Segment,

Typically, traditional Consortia agreements suggest a discount of a defined percentage that is directly linked to a property’s BAR (Public Rates) pricing. When the system works, as it should, the entities (hotels, travel agencies, and clients) all remain in synchronicity and in compliance with the agreement requirements. Viewable by the participating member agencies only, the discounts provided do not affect the public perception of the property in the marketplace.

Many consortias also require certain inclusions as a program engagement requirement.  As with the public rate segment though during need periods, determine what additional “added” value, limited time inclusion could be offered.

Where possible avoid further price discounting.   While it may temporarily shift potential stays from the property’s competitive set; if not applied across all consortias, this tactic could negatively impact future positioning and engagement within the program.  Also, as travel agencies are often affiliated to multiple consortia programs, they are alerted to pricing disparities between consortia potentially causing further negative impact. During re-negotiations, this pricing adjustment could be used as an argument to negotiate down pricing.

Therefore, while many consortia require certain inclusions as a program engagement requirement, creating a further added value, limited time inclusion would not result in a price parity conflict.  To help drive a sense of urgency there must be defined or limited stay periods. If left wide open, the “value” or inclusion becomes part of the standard offer.

To be successful, any need period tactics taken should be supported by marketing and agency awareness, to be addressed shortly.

Corporate Negotiated Segment,

This segment is  protected from the general consumer by the defined or restricted viewership which allows the ability to deploy a behind the scenes negotiated rate strategy that will not erode the property’s price position or jeopardize its Public Price (BAR) strategy.   Use of this defined viewership or restricted access to preferred pricing can also be used to drive volume by shifting share from competitors and enhancing the relationship with key clients and their intermediaries.

Within each market, a number of key accounts should be identified and established.  In most cases however agreements with these key accounts are not exclusive to a single property in the market.  Once an agreement is in negotiated and in place, in all likelihood, your property is sharing Key Account volume with members of your competitive set.

During defined period of need, shift can be achieved as a result of providing a greater discount or special value add element for stays. The basics are:

Utilize Agency 360 to identify within your established key accounts those that the property shares volume with its competitors. These are your targets for shifting share (volume) from your competitor to your property.

Evaluate the Key Accounts that are shared for greatest impact in developing positive results. Keep the list to 2 or 3 high volume Key Accounts.

Develop a price plan and or added value that is customized for each Key Account and the travel agency that manages their volume. The exclusivity of the offer is important in developing a long-lasting relationship with both the agency and the end user.   Again, keep in mind price adjustment can have negative impact on future negotiations.

To help drive a sense of urgency there must be defined or limited stay periods. If left wide open, the “value” or inclusion becomes part of the standard offer.

Build not only the awareness of the limited time offer by augmenting with an agency awareness campaigns driven through both GDS and/or consortia advertising. Agency visits and presentations as well as, interacting with the key agencies on property, when possible will also help deepen the partnership.   Also, build your rapport by reaching out to target travel planners to keep them apprised of the limited time offers. Ultimately, gain from this effort added insight to strengthen future offers.

Whilst often pursued tactic especially in the GDS channel is to increase commission to gain the agents attention, this pursuit is a fallacy for two main reasons:

1)  Travel Management advisors that work for a TMC are typically house employees and do not directly benefit from commission. Travel Advisors who are independent contractors working for retail agencies do receive commission, but history has shown that increasing commission does not drive demand especially in a down market.

2) While travel advisors do not make the final decision of where their guests will stay, they can influence the decision-making process.  They will not however risk losing a client by shifting them to a property that does not meet their client’s needs for the sake of a few additional dollars.

As such the key to working with travel advisors is to build close professional relationships with them to ensure that they feel they have an advocate at the property, if needed. If you are looking for the most effective way to reward and recognize their support, consider incentives that benefit their customer (added value amenities) that allow the advisor to reaffirm the value of booking through them. Most importantly, never underestimate the role of the travel advisor.

Finally remember to measure performance against the goal of increasing market share. Take from each effort and identify successes and learn from the not so successful strategies to identify how future engagements can be improved upon.

At Premiere Advisory Group, we specialize in helping hotels identify value add strategies that best fit your hotel knowing that one size does not fit all.  The goal is to identify the right tactic(s) to drive market share, increase revenue and raise the bottom line.

The above model is founded on the assumption that the subject property utilizes a floating BAR pricing strategy allowing public pricing to float on demand with competitive price adjustments. The following highlights a narrow tactic of a larger strategic “need period” plan and should be included as appropriate in the full plan of actions.

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