The Parity Paradigm
We’re in full blown RFP season for the 2013 consortia/TMC hotel programs. It is an odd ritual that has been going on for more than a few decades. While the paper directories and response forms have given way to digital ones, sadly one relic still remains – the requirement to offer rate parity to all these companies, or risk not being accepted in their programs.
In an environment where hotels are practicing revenue management and analyzing each and every channel to ensure we offer not only the most effective pricing scenario for the best ROI for each, why are these relationships an exception? In some cases, chains blindly sign up all or most of their properties, and pay for the privilege, without even verifying whether these relationships are benefiting them. Some of the larger chains, however, have discontinued all participation figuring they’ll get the business anyway since their brands are so pervasive and iconic.
It may be time for companies to begin reviewing these relationships with a more critical eye. Before paying for inclusion in these programs – validate that the company offers real value and can indeed shift share to your property in order to benefit from the reduced rate and enhanced amenities.
Then, there is the issue of the production data … some agency groups provide information that includes thousands of IATA numbers in their membership roles. Doing a comparison, you’ll very likely find a large percentage of the same IATA numbers on multiple agencies’ lists. So are they all claiming credit for the same business to your property? How can this be? How can you make an informed decision about who DESERVES to get your best reduced rate because they not only produce your fair market share but can indeed shift business your way? Most hoteliers I know would be willing to reduce the price a little more or pay a bit more commission for this sort of performance.
Pay-for-Performance is a standard practice in most other areas of our business, why not for this?
A few key questions to ask when next meeting with these groups may include:
How many room-nights are they putting into your city? How much of that are you getting?
What can you do to increase production to your property besides reducing the rate?
How can they validate their production reports when many agencies are on others’ lists too? What are they doing to police agency allegiances?
What is the success rate for advertising and sponsorship opportunities offered? Do they have any case studies to prove they work?
What opportunities are there for collaborating with member agencies to ensure you meet their clients’ needs?
I submit that this segment is long overdue for a paradigm shift … Improving these relationships will help not only hotels, but also agencies and guests to increase satisfaction.
Please join us in this dialog as we examine this with industry partners. Tell us how your hotel or company is addressing this issue.