Several sources providing access to accommodation is problematic, says Sunvil chairman Noel Josephides
It’s true that advance bookings for 2017 during the latter part of last year were strong, and this trend continued after the first week in January, once people had surfaced from their Christmas and new year breaks.
However, there’s a long way to go and, at this time of the year, if there is any slowdown in bookings then performance increases already achieved can be eroded frighteningly quickly.
The real battle typically comes later, once regular clients with good budgets who know what they want have booked; we then enter a more opportunistic stage of the booking process.
I sense that the no-frills carriers are holding their flight prices quite high to maximise yield. We also know that there is considerable overcapacity in the market.
Does this mean that sooner or later, flight prices will begin to fall, as departure dates loom? Is the original no-frills model of giveaway prices at the beginning, followed by increasingly higher prices as departure dates draw near, beginning to break down?
For what we now call generalist tour operators or agents – those basically putting together a hotel and a flight – one challenge is how to compete with large booking platforms and metasearch sites.
Customers can book the room and simply add a flight at the same price at which the operator or online agent buys the seat.
Just key a hotel name into Google and, right at the top of the search results, you’ll see the large online travel agents, booking platforms and metasearch sites; the hotel’s own website is sometimes not even on the first page.
In fact, the first page on Google looks particularly boring – much the same whatever property you are looking for – featuring the same intermediary names with their star rating systems.
More ‘stop sales’ notifications
Hoteliers are taking a greater and greater proportion of their reservations via these platforms, resulting in an increased number of ‘stop sales’ notifications for those with room allocations.
Like airlines, hoteliers are now increasingly using yield reservations systems to determine their prices, raising or lowering them through automatic computer processes according to demand.
With the ongoing problems in Egypt, Turkey and Tunisia, and the resultant increasing demand for the western Mediterranean, hoteliers in the west are becoming increasingly confident of managing their bed capacity themselves.
The resulting battle between hoteliers and intermediaries will be interesting. Currently, even the largest hotel chains cannot match the advertising buying power on Google of the major online players.
How can smaller players compete on search-engine optimisation with companies that have seemingly unlimited cash?
Perhaps the answer, in addition to Abta’s ‘Travel With Confidence’ campaign, designed to give members a trading advantage, is to return to old-fashioned, yet dreaded, commitments, providing exclusivity of product.
It is by no means risk free, as payment has to be made whether beds are filled or not. But it does mean there is only one source providing access to the accommodation.