It has taken almost twenty years, but through brand consolidation and a total system-wide transformation into a Revenue Management based pricing model, the hotel business has been transformed and the OTAs are being aggressively challenged for dominance. Hotel rooms, instead of being unique destinations became interchangeable commodities. Customers could scroll through pages of prices, often for the exact same room in the same hotel, searching for the cheapest rate. Hotels, relying on the old pricing models were caught competing “with themselves” and watched as formerly loyal customers switched their buying habits and loyalties to the OTA that gave them the best rate. Occupancies rose, but Average Daily Rates plummeted, and profits quickly diminished. Hotel companies willingly gave open access to all of their unsold room inventory to the OTAs (Expedia, Travelocity, Priceline,, Kayak, Trivago, etc.) to sell directly at deep discounts, often between 25 and 30% off posted Rack Rates. Then, as the Internet expanded, and the travel market imploded after the 9-11 tragedy, a new and exciting model emerged – the On-Line Travel Agent (OTA) acting as a third party aggregator appeared. In a galaxy far, far away, the Lodging industry managed revenues by using simple seasonal or attribute pricing models (On-, Shoulder- and Off-Peak rates, or premiums for “A Room With A View”) and sold some limited excess inventory through a network of independent Travel Agents (at an onerous 10% commission!). In two complimentary BHR articles here, we present a look at the 8 different models of restaurant delivery and how they are affecting both senior management and customer choices.įor observers of the global Hospitality Industry this should send up warning flags. We have entered into the time of the restaurant On-Line Delivery Provider (ODP) which mirrors in many ways the On-Line Travel Agent (OTA) which has so disrupted the lodging industry. It may be, unfortunately, a very risky path to travel for the uninitiated restaurant operation, but delivery is driving the investment community to a fever pitch. The entire restaurant industry, from the simplest quick service joint to the most complex fine dining jewel, is caught in a veritable frenzy of delivery. Restaurant Delivery: Are the “ODP” the Industry’s “OTA”? Part I
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