by Neil Salerno

In many Florida coastal cities, and cities across the country, smaller independent hotels struggle with the daily task of selling rooms along-side franchised brands.

Most Independent hotels have to contend with relative obscurity in the marketplace, limited marketing funds, and sometimes a need to rely on overflow from their larger franchised neighbors. But, what happens when there is no overflow?

 
Consolidated marketing and the synergy of chain branding threaten the future existence of many independent hotels, but now there are some solutions on the horizon.
Thanks to the Internet and other forms of electronic sales tools, independent hotels have their best shot at playing on a more level playing field, but they may need to borrow some techniques from the playbook of the chains.

Reservations Contribution
Reservations contribution has been the bastion of hotel franchises for many years. Central reservations offices, participation in the Global Distribution System, instant electronic access to rates and inventory, and brand advertising are formidable franchise assets. The promise of 25%, 30%, 35%, or more in reservations contribution to total sales is the strongest reason to buy a franchise.
The sheer nature of the Internet and the popularity of online third party aggregators are changing the playing field itself. It’s now possible for Independent hotels to get 30% or more reservations contribution directly from the Internet; without a franchise. The fact that most franchise fees are upwards of 5% or 6% of total room sales, while Internet sales costs are so low, is causing some consternation among many franchisees.
The franchises’ self-imposed war against third-party aggregators was caused, at least in part, by their fear that the success of third party bookers could threaten their reservations base and their very way of life by also eroding brand loyalty. In part, their fears are warranted. Third-party suppliers are developing their own brand loyalty. Independent hotels can play the third-party game.
The proliferation of specialized brand types, created by the franchises, has caused some confusion in the marketplace. In their effort to fill niche markets, some franchises have diluted their branding effort by creating too many brands and confusing at least some of the traveling public. Frankly, I know many knowledgeable hotel people who can’t define or describe all the latest products in the marketplace; imagine the plight of the average traveler.

Now, don’t get me wrong, I certainly don’t predict the doom of hotel franchising. For the most part, they employ brilliant people and do a great job for their franchisees. I do, however, feel that smaller independent hotels, for the first time, have a wonderful opportunity to compete.
Many franchised hotels are now taking a second look at their franchise’s reservations contribution to their properties.

The Importance of Electronic Sales
The most obvious lesson to be learned from franchised hotels is the value of the Internet. As experts have said for quite some time, the Internet is still the most effective and value-packed sales tool ever devised. Yet, it’s hard to believe that there are still many independent hotels which have not yet discovered the many benefits of the net.
There are now many independent hotels receiving upwards of 30-35% of their total sales online, just like their bigger franchise brothers. The Internet has raised independent hotels from relative obscurity in the marketplace to global players in the world-market.
Through third-party players like GenaRes in Texas, independent hotels have access to the valuable Global Distribution System which enables travel agents, airlines and car rental companies to book their hotels. Fees are reasonable and it squares them with the franchises. Travel agent reservations are on the rise again.
Expert Hotel Business Advice
Another strong advantage enjoyed by franchisees has always been the expert knowledge base provided by the franchise itself. Good business advice from knowledgeable and talented franchise people helps their members set the right course in marketing and operating their hotels.
They assist with rate and market positioning, valuable market data collection, data analysis, and provide sales techniques to franchisees, which, in turn, help them to develop successful operational strategies. Many independent hotels are still flying by the seat of their pants, often without a good strategic plan.
The entrepreneurial spirit of many independent hotel operators, in some respects, has hindered many of them from seeking outside expert advice and assistance. In some cases, it’s that inside-the-box thinking which has limited their growth. In addition, most of the membership affiliations, available to smaller independent hotels, have neither the budget nor the expertise to help their members in the same ways in which franchises offer their franchisees.
There are resources available to independent hoteliers, but unlike franchises, they need to reach-out to find them. There are many experienced hoteliers who can provide guidance, sound solutions, and technical expertise for modest fees. Sometimes just a little advice will do the trick. It doesn’t have to be costly nor a permanent situation. .
The biggest difference between large hotels and smaller independent hotels are the numbers, themselves. Many smaller hotels would do well to utilize some of the techniques used in franchised properties to position and market their hotels.
Although jobs are more consolidated in smaller hotels, they can still deal with the same sales and data collection issues as their big brothers by hiring an experienced coach for their business; someone to temporally guide their hotel’s growth in the market. The rewards can be enormous.
Copying someone is the sincerest form of flattery; it could be the key to success. Most franchises have healthy budgets for research and development; they can afford the very best people available; and have their finger on the pulse of the market. Independent hotels would do well do study and emulate some of those resources.

The Indian travel sector is booming like never before. Low-fare airlines, improving infrastructure and higher disposable incomes are encouraging Indians to indulge their wanderlust.

Around the world, travel is one of the most surfed categories of information online. So popular has the concept become in the West that today most people use online travel sites. According to one estimate, two-thirds of travelers in the US who used the Internet used it to make travel plans. And some 32.1 million US households are expected to use it to book their vacations this year.

In India, too, the Internet is increasingly becoming a great resource for travel planning. In a recent survey by IOA, travel-related categories featured among the most popular. Consider these findings from the survey

39% of respondents had bought railway tickets online and 48% are likely to buy them in the near future.
29% had bought airline tickets online and 46% are likely to buy them in the near future.
20% had bought hotel rooms and 31% are likely to buy them in the near future.

Clearly people are ready to buy travel products online. This is surely a great opportunity for travel marketers as well as companies.

Says Sachin Bhatia of Makemytrip.com, “Travel selling is actually tailored for the Internet. In the bricks and mortar world one typically buys travel over the phone without actually touching or feeling a product. Internet offers the same selling process, but only better and faster without any human intervention. For example, the options that a flights search engine can throw up cannot be replicated by any agent or even a battery of them.”

Agrees Manish Vij of Quasar Media: “No medium can match the vast pool of information that Internet can deliver for researching a destination or planning before traveling. Travel companies can use this huge opportunity to catch the right person at the right time and convert an information seeker (who is likely to be inclined to travel or buy travel products) into a customer.”

The medium makes it easy for travel marketers to sell their products in a very cost effective manner. “The nature of travel products is such that there are new deals every day for the same flights, destinations etc and it is only on the internet that one can disseminate this information,” says Sachin. He believe that popular travel products like flights, car rentals, cruises and short vacations will move completely to the Internet in the next 3 to 4 years.

It is vital, therefore, that travel companies have an online presence. Don’t just put your company brochure online. Use the interactivity of the Internet to provide travel planners and information about destinations. Indian travelers love packaged travel, so companies with strategic tie-ups and those that provide end-to-end packaged solutions will have an edge.

Since an online presence allows companies to lower infrastructure and manpower costs, you can offer good bargains. Discounts are an integral part of the travel industry. Most potential travellers visit web sites to get the best deals possible. Another way to encourage users is by providing innovative pricing, through auctions etc.

Online travel sites must go beyond basic requirements to provide tangible benefits to buyers. One of the biggest drawbacks of online travel shopping is that a potential customer has no agent to talk to, discuss his plans and find out the best options. So great content, customer service and good interactivity is of paramount importance. Good images of destinations covered, user reviews, travelogues will help make the process an easier one for online users. Says Sachin: “As a category travel is sold a lot on word of mouth. This is where online reviews, resort ratings, travelogues help browsers narrow down their options and choose a vacation that suits them.”

Online advertising offers a great way for travel sites to attract visitors and for travel companies to build their brand. Says Manish: “Search engine marketing, affiliate marketing and contextually targeted pay-per-click advertising are some of the most cost effective ways of reaching out to customers.”

Search engine advertising allows travel companies to reach a global audience and target only those users who may be potential customers for their products. Contextual advertising makes it possible to target travelers at niche sites or when they are reading travel-related content. Many travel companies are using traditional forms of online advertising such as banners, contests etc at highly-trafficked sites during strategic periods to increase their brand’s presence.

The number of Internet users in India is expected to be 100 million by 2007. Going by trends around the world, a large number of these will be looking for travel-related information and products. The Internet has great potential to become a great travel bazaar.

Source: Internet & Online Association

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