If you follow all recommendations about how to do properly your job as a Hotel Manager, you need to take a deep breath, take two weeks’ holidays very far from here and brainstorm about how you will be able to survive. Hoteliers are expected to be 100% digitalized, mobile-oriented, be able to propose a differentiated and consistent offer, and get the right product at the right price at the right moment to the right guest (just after being at the right place). What a program!
Hotels are currently using different sales channels as well as their own booking engine. The common point between all these tools is that the hotelier sets the price and hopes to reach the right guests with the right price at the right moment.
Bidding is all about offering the right price at the right moment to the right guest.
Let us see a few systems currently available on the market. You will see that each of them is answering different needs.
1. Target 1: Boost your occupancy rate and early bookings
The original bidding model is the auction model, where a hotel sets a minimum price, which is the starting price for the auction. During the auction period (a few hours/ a few days), different auctioneers bid against each other and the best offer wins at the auction term.
An example of this solution is bidtotrip.com or loisirsencheres.com. This type of system is especially suitable for leisure hotels nearby touristic destinations for advance bookings. On the counterparty, you must be ready to be very flexible in terms of pricing, and your guests must be patient and wait till the end of the auction.
2. Target 2: Boost your last minute sales
On the North American Market, Priceline (NYOP) rules the market, composed at +70% of branded chains, with their reverse-bidding model. In this model, you are not bidding against others but you are bidding among a range of hotels corresponding (more of less) to your specifications in a given geographical area. This model does not apply in Europe, where the market is composed of +70% independent hotels.
Priceline’s policy of allows bidders on NYOP to specify their exact arrival and departure dates before bidding, along with its price match guarantee, but they do not have access to the hotel’s name and a detailed list of amenities until the transaction is complete. Unlike Priceline, by clicking on the various offers of Hotwire, customer will access a list of amenities. In Asia, some similar systems exist, like travelspice.com in India and a few others.
Apart from the high commissions charged, which refrains a lot of hotels to apply to these services, guest’s expectations have changed over years and the volume of bookings are decreasing year after year. Guests expect to choose their hotel and do not accept anymore to go anywhere for a lower budget without a guarantee on the final product they are buying.
3. Target 3: Lower your OTA commissions
You can choose new OTA generations applying semi-bidding, semi-discount models.
On bidroom.com, travelers pay an annual fee to book directly at discounted prices and be able to replace their booking done on Booking.com, ExpediaÉby a booking at a lower price in direct. Hotels are not charged with any commission.
Registering your hotel on this platform means you are ready to give up part of your margin (min 5%) to Bidroom guests, and if a guest would like to replace an existing Booking.com or Expedia booking by a better one, they can send the booking to Bidroom and the company negotiates a better price with you, with no commission, in under 48:00 hours. This is the bidding side of the system.
Given the commissions OTAs are charging, it can be an option to sell a few rooms along the year, provided that the OTA invests a lot in marketing, which is a real challenge.
4. Boost your direct sales and cover target 1+2+3
The above-mentioned models are all OTA solutions. But you know it, the trend in 2018 is to go back to direct booking.
Therefore, if you would like to boost your direct bookings, a solution is to choose a direct bidding engine where guests bid their own price directly, without intermediary and without commissions, on your website. If the solution allows in addition to sell in Night & Day-use, it is even better, as the same room can be sold twice in 24 hours! This is the type of solution provided by privatedeal.com.
Guests’ data is collected during the offer process, meaning that hotels collect data for accepted AND rejected offers, which improves significantly the size of your database. And as everyone knows, data is power.
This solution gives hotels the opportunity to sell at the right guest a room at the right price and the right moment, without involving long studies about how to set a hypothetical ideal price. Moreover, the system calculates in real time the price guests are ready to pay to come in your hotel, which helps you refine your yield management.
About the author
Isabelle Jan is co-founder and manager of PrivateDeal SA, a Swiss company specialized in night & day-use bidding solutions for hospitality businesses. After several years of experience in hotel management and an entrepreneurship background, she is now focused on helping hotels to find new ways of attracting their Millennial guests while improving their direct bookings and simplifying yield management.