qype/yelpHolidayCheckLately major discussions in Germany and online are the various public “rating” sites. Using Qype myself and HolidayCheck for the hotel ratings and reviews, I am a mature online user, able to read as well between lines as when I read the catalogue of a tour operator…

From many of my replies here the extract: It’s hyped. So to get the right perspective, sit back and think about it for some minutes. As you hopefully know Shift Happens, we are facing an information flooding. Where in the “good old days” it was necessary to know the restaurant and hotel critics, the authors of the major travel guides, it is now necessary to also know the major online portals. But it is not necessary to search and review all and any blog entries somewhere. That is “lost in the noise”, just as it was without Internet, where the noise existed (called “word-to-mouth-propaganda”).

Where in the good old days, the books and critics published in print had the main impact to day-to-day operations, the Internet offers another advantage. If you had a bad reputation in the past, it took you at least a year to get an update (new management, renovation, …) into the next edition. In the Internet, this can be promoted much faster.
But as fast, a bad rating can be outsmarted by good customers. If you have a problem with service, it is not the rating that sucks, but you better improve the service quality and proactively market it. Like the good old “We listen to our customers”…

Everything becomes public (and published) these days. But the users resort back to “trusted brands”, of which some (like HolidayCheck) are new, but don’t ignore the value of printed travel guides. It’s a shift from “search available information” to “select”. Where information was rare, it is now flooding us: “Select” means to be able to qualify the valuable information from the noise. And for the rated company to learn, what information has impact on the customers – and which are “just another one” with minor impact.

GartnerHypeCycleDo not ignore them. But don’t let the makers of these sites qualify their importance for you. The only ones who can are your customers and you. So if approached by another of these important experts telling you what you have to do: Don’t let them unsettle you. Sit back, think about it. But keep in mind: These tools do have their value and after a hype peak and a disillusionary phase, they’ll be here to stay…

[Update: I did not move from Qype to Yelp, there’s many other such “tools” meanwhile and I was unhappy with the user management of Yelp]

Winners and Loosers

RUTRRussians outnumber German visitors in Antalya. Russians invest in TUI, Air Berlin, Öger Tours and other travel companies being “unsexy” to “traditional”, “Western” investors… Oh god, the Russians are coming…

Eyes on Russia… Lately (as usual: Thanks to a beautiful woman) I learn a lot about Russia. The image shown mostly on TV is misleading. That is an emerging country! Do not look at the old Russians. Look at the young generation, the students! Oh yes, they have a long way to go. But they prosper, figures show a clear trend.

A luxury hotel chain did a check recently, their receptions noting down, which age group visitors mostly belong to. The boom market China was a niche… Germans and British were +90% in the age group 60+, where the Russians were 90% in the age group -40. And they spend four to five times as much “aside” than the good old Europeans.

Shift happens. Are we ready for it?

The Fairy Tale Of The Best Available Rate

This represents the core of a quite lengthy and detailed discussion.

A hotel manager regretted the change from the RAC-Rate to the BAR (Best Available Rate) and compared it to Yield Management in Aviation.
Three misinterpretations in one sentence…

The rack-rate (off the Rack) has always been – and is – the rate, anyone “selling” a room was allowed to book at. Unconditional. That rate – in that definition – exists until today and must exist.
Many hotels fixed a rate and called it “rack rate”, published on the indoor or in the locker… But the rack rate is as variable through the year(s) as is any other “rate”. So there seems to be a misinterpretation of a definition by some…

BARWhat is the Best Available Rate? It”s one of these meaningless phrases, these politicians manqué in Marketing love. See next.

Third misunderstanding: Yield Management.
I experienced the development of yield management in American Airlines, who made this an art first (late 1980s). And it is an art! The definition for yield management was explained to us at an employee conference with Bob Crandall himself (to date a model “airline manager” to me). In short: They are there to optimize the own pricing structure to achieve the “best available selling rate”. To do that, they got tools to monitor the prices of competition, they took into account long term developments, including public holidays, regional vacation periods, congresses, events, … And they talked to the local sales teams to assure to be aware of trends – something you cannot do to date with technology only! Within two years after launching the department, it employed more than 3.000 of the best people American could find or hire and had achieved a revenue increase making that effort very valuable. I do recommend to have a look at the Wikipedia article on Yield Management.
Today, most managers believe, Yield Management is purely technical. But it is a predictive art. Many managers only look at a single puzzle piece: A good yield manager can be worth an entire sales team. But that does not say you can replace it. In most airlines, the yield management rarely speaks to sales, they stick to the “electronic reports and figures”. Stupid, they miss an essential “early warning system”…

Best Available Rate… The boss of my business training (whole sale) emphasized two rules I found invaluable:

  1. Don”t bleed out your supplier. He has to live. If he lives safely, it”s also to your own benefit.
  2. Price dumping is a Pandora”s Box. They undermine the trust in your products.

And there was a joke that at the time was historic already: “You purchase a box of these screws for 1 Dollar, you sell them for 99 cent, how could you?!” Answer: “You stupid don”t understand that. It”s the quantity that counts!”

Our industry (aviation and hotels alike) have paniked themselfes into price dumping. To date, I question the competencies of any manager, blindly following that path. In 1997, a senior airline manager (unquestioned by his peers) alleged that brand has no value any more. Customers would only purchase by price. I did argue strongly against it. And today argue no less for brand. Everyone can sell cheap. But you get no cheap loyalty with customers, you need brand loyalty!

So what is the Best Available Rate? Can that be the dumped price? Is it the best selling rate? How does it link to the Rack Rate? I don”t blame the pricing managers, they only do what their senior managements ask them and express as expectations. But maybe you should reconsider your pricing “policy”? Create one…?

Food For Thought…
Your comments sure welcome!