The mobile channel is growing in popularity but pushing discounted, mobile-only rates on a daily basis makes ‘no sense’

In just three to four years mobile-only booking specialists have carved a niche in travel distribution. Successful players in this space not only know what travellers are looking for when shopping via mobile, they are also in tune with their hotel partners’ needs. After all, many have a good understanding of how the mobile booking window works and how best to present a ‘moment-in-time’ offer. However, while mobile-only experts may have a valuable role to play, it is essential that hotels also clearly define their goals from this channel to understand exactly what it can and should deliver. So mobile may be powering the last-minute channel, but that doesn’t automatically mean that daily discounts are the best approach.

To find out more, Ritesh Gupta talks to Heather Leisman, managing director, Europe at HotelTonight, who sheds light on how to drive value from this particular mobile platform.

EFT: Not so long ago, travel brands may have felt that that mobile-only platforms posed a threat to, say, price integrity. Has this changed and if so why?

HL: If done correctly, mobile platforms create a new source of demand for the hotel industry. For example, for hoteliers, the advantages of working with HotelTonight are two-fold.  

1.     From a distribution standpoint, HotelTonight is a flexible, targeted, efficient way to sell rooms that would otherwise remain  empty. We work closely with our hotel partners to understand their needs and pride ourselves on being supplier-friendly. We do not require or demand any minimum discount from our partners. We also don’t require that a set number of rooms are loaded each day. In fact we leave rate strategy entirely in their hands so they can preserve their price integrity and only discount rooms when it makes sense for them.  

2.     From a marketing perspective, HotelTonight is a low-cost way to gain exposure to a highly desirable customer demographic. With a worldwide audience of over 9 million users, HotelTonight is a great way to introduce your hotel to new, tech-savvy customers without cannibalising business from your loyal guests.

EFT: HotelTonight has indicated that it’s not in the business of driving a last-minute deal on every hotel; rather it’s is a platform to promote a limited number of deals each day. What’s the thinking behind this?

HL: We have placed several safeguards in place to protect our hotel partners. We’ve done this by displaying a very limited selection of hotels on any given day; so it is impossible for consumers to predict, ahead of time, what hotels will be on sale the day they book.

Customers that want to stay at a specific hotel will always book it ahead of time, hopefully directly, with the hotel, since there is no guarantee that the hotel they want will be displayed on the app the day they want to book. Moreover, we are creating a new source of demand -  approximately 60% of our customers tell us that they didn’t need a hotel room when they woke up that morning, but were swayed to book a room because of what they found at the last-minute on HotelTonight.  

EFT: In your view, do mobile-only, same-day rates, that appear daily, work?

HL: In short, no. We have seen hotels (and OTAs) react to the mobile opportunity by creating a new mobile rate that is some set percentage off their web rate and offered every day, but this makes little sense. By offering a consistently low rate on mobile devices, hotels are simply guaranteeing that all guests skip their web rate and wait to book for less on mobile. By contrast, if HotelTonight is used correctly, their availability remains unpredictable, creating a built-in fence that keeps loyal customers booking directly and creates an opportunity for hotels to attract new non-loyal bookers through our mobile-only, same-day channel.  

EFT: Can hotel partners offer so-called ‘impulse rates’ on HotelTonight and still preserve the integrity of full rates on other channels?

HL: HotelTonight’s business is built on a very small niche of the hotel marketplace and we require our customers to sacrifice choices that they are afforded on other channels. Not only do HotelTonight bookers have no guidance as to which hotels in which locations will be available, but we also don’t let them pick their check-in date, the number of guests or the room category.  

HotelTonight appeals to a non-loyal, flexible traveller who is willing to make these sacrifices because he/she understands that in exchange we will deliver great value at top rated hotels. In this way, we are a great way for hotels to encourage new customers to trial their service, in the hopes that these guests will book directly in the future..  

In contrast, full price channels are more appropriate for guests who have a specific hotel in mind, aren’t comfortable waiting untilthe last minute and/or have particular needs such as triple room or family suite.

EFT: Should revenue managers see HotelTonight as friend for foe?

HL: Unlike the OTAs, HotelTonight is not intended to be a core part of a hotel’s distribution strategy, but rather we are the partner that hotels turn to when other distribution partners have failed. We focus exclusively on unsold rooms and help our partners improve their RevPAR by delivering incremental bookings at the very last minute. Additionally, HotelTonight also helps drive overall revenue for partners by delivering high value guests. In a recent survey, our hotel partners indicated that the on-property spend of a HotelTonight guest is 17% higher than average.

Heather Leisman, managing director, Europe at HotelTonight is scheduled to speak at the upcoming  Travel Distribution Summit Europe 2014 in London May 22-23, 2014