A tried and tested 6-step strategy for building (or rebuilding) relationships.
This article is a follow-up from my previous blog How To Update Your Rate Plans And Cancellation Policy To Maximise Direct Bookings and is meant to form part of your hotel distribution strategy.
It is most relevant for small, independent, hotels and lodges who do (or would like to) work with tour operators and agencies.
The phrase “hotel distribution strategy” sounds awfully organised and complex. It is however just a posh phrase for an action plan.
A really good action plan that is, that sells your rooms profitably through a variety of channels.
These could be direct channels such as your hotel website, your Facebook page, via email or by phone; or indirect channels like Online Travel Agencies (OTAs) such as Booking.com, tour operators and travel agencies or Global Distribution Systems (GDS) – though the latter is usually only used by larger hotels.
I openly support and encourage owners and managers to actively employ strategies to increase their direct bookings, but at the same time I am a firm believer in a healthy balance of direct + OTAs + agencies/ops.
This is not a contradiction. It is smart.
By taking control of your partner relationships you generate deeper knowledge of your product and begin to better understand what works for you. This leads to increased confidence in your business decisions, which in turn allows you to take informed decisions about where best to invest your energy and time.
The pandemic has given us a chance to reassess where we are and where we want to go, so now is the perfect moment to assess these relationships.
Who doesn’t want to feel that kind of control over how and where you sell your rooms?
Please bear in mind that you will never please everyone 100% of the time. So is life, right?
Also, there are three overriding variables that will influence how you apply my strategy to your reality:
Analysis: an evaluation of what worked pre-Covid in your location and what the trends are pointing towards now in this recovery period.
Market: how strong your domestic market is and always has been, and how important your reliance on international inbound tourism is.
Priorities: you may be focussing on your domestic offer right now, but the re-set button we all have in front of us presents a perfect opportunity to redefine your relationship with your existing key industry partners, or to generate new ones. International travel will resume, so prioritising building collaboration and trust now will be the driving force behind those first reservations later.
Why listen to me? What do I know?
No one has lived through anything like the challenges that the pandemic has thrown at us, but I did develop these strategies for survival after the huge 8.8 earthquake hit southern Chile in 2010 and all the reservations for my hostel were cancelled.
Then in 2015 I was consulting for various hotels, lodges and hostels in the area when the Villarrica volcano erupted. Located just 19 km from the centre of town, the effect was devastating on tourism. International travel was completely disrupted, and all reservations dried up.
The following tour operator/travel agency strategy that I put into place for my clients not only cultivated better relationships, but also had the knock-on effect of generating improved customer satisfaction and increased positive online reviews.
Given that collaboration and trust have undeniably emerged as buzzwords of this recovery period, now is the time to face the challenge and get confident when dealing with your market partners.
A quick P.S before moving on. If you are an operator or work at an agency, please feel free to share your thoughts, ideas and points of view in the comments below or send me an email at sarah@sarahhabsburg.com
So, let’s get on with it.
A 6-step strategy for building (or rebuilding) relationships with operators and agencies that is designed to be a part of your larger plan of action to sell profitably via a healthy, balanced mix of channels.
1. Draw up a 24-month pre-pandemic sales source report.
I suggest 01 March 2018 to 01 March 2020 and detail the number of reservations that came from all the sources available to you during that period.
Example:
2. Compare the results according to these criteria:
Example:
Total number of reservations from each source (not number of nights sold)
Total number of nights sold
Total income from each source after commission (including any income from add- ons and upsells), and
Income per night after commission (total income / total nights sold)
3. Isolate your top 5 (or 3) tour operators or travel agencies*
The ones who have sold the most are arguably the ones that generate the most income for you, but also take a moment to ask if you are happy with the relationship that you have with them?
When was the last time they visited your property?
Do they really get your ethos?
Do they contact you periodically for updates, or to offer new ways to sell?
Do you know what they do as a company to stay relevant and up to date in their market?
Maybe new opportunities have evolved over the last year.
Have you been impressed by the work a certain op or agency is doing to stay relevant and top of mind to both clients and strategic partners?
In my opinion, innovation, perseverance and commitment should always be held in high regard.
Choose carefully and don’t be afraid to go with your gut.
*If you have never worked with tour operators and travel agencies before, this is the moment to do some research.
Are there any ops selling domestic travel within your country?
Which of the traditional overseas markets to your country/destination are moving the fastest with vaccination programmes?
Which airlines plan to reopen their traditional routes into your country?
Getting some intel on these kinds of questions will help you to gauge where to focus your efforts. Find just one or two ops or agencies that have strong presence in a market that makes sense to you and your business, then move onto step 4.
4. Give you top 3, 4 or 5 access to your base rates.
Contact your chosen 3, 4 or 5 and tell them you want to give them access to two of your three base rates - your Standard Fully Flexible and your Non-Refundable.
(See previous blog here for more detail).
5. Define your initial commission rate and set a target.
Before granting access to your rates, have a conversation about the commission rate.
In my experience and opinion, the 20 to 30% rate is acceptable. More is always well-received, but less can be considered offensive.
If you choose to collaborate with specific distribution partners, you should be happy to pay a commission to them. However, this does not mean you are forced to accept what they first ask for. As with everything, there is always room for respectful negotiation.
In my tried-and-tested strategy, I negotiated 20% with all, and set an informed and realistic total income target for the next 12 months. If the target was reached, commission went up by 5% for the whole of the following year.
Right now, 12 months is too long due to the fast-changing recovery environment. For that reason, a 6-month period is a fair option.
6. Review, analyse and repeat.
Create a new baseline report (as in Step 1) after every period you defined with your partners.
Set calendar alerts for the end of the defined period and contact your partners to check on how things are going. If they reached the target, their % increases for the next period, if not, the commission stays at whatever you decided, and you continue to support each other by sharing information on traveller sentiment to your destination.
There you go! A solid, easy-to-implement strategy that can be tailored to your business priorities and will grant you that all-important feeling of control.
Below I share some of the results:
Result 1: Better sales
After two years of managing a policy like this for one of my main clients, my pre-volcanic eruption list went from 129 operators and agencies, to just 5 who brought in 99% of all sales from the operator/agency source.
Result 2: Better relationships and less wasted time
I spent less time communicating with companies who were not a good fit for my product, all negotiations were more fluid, and when any problems arose, the solutions were more efficient and less fraught because the relationship was well-developed and respected.
Result 3: Better customer service and more positive reviews
The improvement in problem resolution ultimately translated into enhanced customer service and an increase in outstanding independent reviews which boosted brand visibility and perception.
Before we finish, one last big question….
Should I give operators access to my discounted packages or special deals such as my Early Booking or my Long Stay rate?
The short answer is yes, if you want to.
You accept your profit will be reduced by the commission paid, but you open up a channel that might not otherwise be available to you. By reducing your list to 3 to 5 operators, you always maintain control.
You can also choose to create a special operator/agency deal, maybe a package that you don’t already have published on your own site. It should be tailored to the main client of your partners.
It is probable that their target audiences are similar, so don’t complicate your operations and offer the same operator package to them all. If they want exclusivity, you can consider a special add-on.
So, that’s it. All my knowledge and experience on this topic shared with you on these pages 😊
I hope it has inspired you to take action that will grant you more confidence when dealing with your strategic partners.
Still have questions or want to share your thoughts?
Scroll right down and post a comment below or send me a mail at sarah@sarahhabsburg.com.
Meanwhile, if you missed the previous blog on updating your rate plans and cancellation policies, you can get it here, and come join my Building Tourism Resilience community over on Facebook to get in on the conversation.
Good luck!
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