Paul Anthony is the Commercial Excellence and Global Partnerships Sourcing Director at Hotelbeds, the world’s leading bedbank. With a Masters Degree in Economics from the Edinburgh University, Paul began his professional career with Trinitour, a family-based business that was acquired by Hotelbeds 16 years ago. Since then, he has been a part of Hotelbeds. Paul is not only a member of the board of directors at Hotelbeds, but also has been responsible for handling many of the acquisitions done by Hotelbeds over the years.
Piece of advice for young entrepreneurs
Many young entrepreneurs are faced with a dilemma while going through a shift from a smaller company integrating into a larger one. In such situations, the spirit of entrepreneurship and the ingenuity that comes with it only leaves if you let it. If one continuously challenges the status quo and questions the inefficiencies in a company, then one can always keep their entrepreneurial ways intact. It may not be easy, but it is indeed possible. In moments of confusion, one should remain true to their convictions but should not turn a blind eye to the views of others. One might think that they are on the right path, based on metrics, their beliefs, their calculated efforts, but it is critical to listen to others and the market. Identifying potential areas where one can pivot without straying away from the original path is also crucial. Currently, it is all about surviving. The travel industry will be back. The only uncertainty that remains is when. Shedding old beliefs at this time can be crucial as much of it may no longer apply to the changing scenario.
Insights into new-age travel
Whenever a source market opens, there is always a rapid growth of demand flowing from it. In the Travel and Hospitality industry, one must look at two aspects. From where are the people flying? From where is the demand pouring? Once lockdowns are lifted and eased, the pick up after that is immediate, so one must prepare to capture that. Most of the business that is picking up now is arising from the domestic market. Hotelbeds cater to several local markets as it has established itself as an international operation. There has been a surge in last-minute business occurring on the same day. It is necessary to have the right operational, logistical, and technical set up to capitalize on such opportunities. Inter-regional travel is also expected to increase but is dependent on airlines. Long haul travel remains non-existent and will take the longest to recover. Hotelbeds has always prided itself in bringing in high valued customers to their suppliers. That too has become a slow burn now. The focus is mostly on meaningful participation in the interregional and domestic markets. When COVID cases spike in a region, a lockdown is immediate, and business seems to dissipate quickly. One must also be mindful that much of the business in transit is also lost.
Regional potential and performance
The USA market has been a pleasant surprise. Though extended stay is dormant, one and two night trips are performing well. China is another player that has pulled off well. It is witnessing new types of customers engaging in domestic business. An amusing scene emerges in Germany as well. Germany has responded well to the crisis. Domestic travel has been healthy, and there is also travel to Europe that is on the rise. As for the UK, it has only recently opened up for which the domestic business has been slow. With the turn this year has taken, many people are now finding themselves booking for next year and re-protecting their holidays for next year. Each region has been reacting differently. When Beijing saw a spike in cases, business from China remained stable. However, when the same happened in Melbourne, much of the business from Australia started retracting.
Setting up the right pricing strategy in challenging times can make or break a business. The entire industry needs to tread carefully and not go too low on pricing. Once hotels start taking reductions of 40-50%, it becomes highly challenging to cover their costs. One must evaluate if it is worth chasing business at throwaway prices or stick to your guns. For intermediaries like Hotelbeds that take a cut of whatever rate is in the market, a reduction in rate causes a drop in their cut too. As some competitors price themselves very low, it is critical to ensure pricing strategy is effective. How much margin is worth sacrificing for the subsequent business that gets generated is a crucial decision to make. One must take into consideration the additional costs as well as that has a way of creeping in too. As for the hotels that are playing the pricing game, there is a point for intermediaries like Hotelbeds where they must stand their ground and ask for what is fair. The moment one drops their ADR, the cost of distribution becomes complex. As every business is in survival mode, asking for appropriate compensation is justified, and it should not be confused with greed. Hotels must see the value for money in their distribution partners and act accordingly. Ultimately, the victims of a falling ADR will be the hotels themselves as intermediaries have the luxury to shift gears to higher value hotels that give them their original cut. There is still a need for static rates that remain well protected. A new trend of couponing systems is emerging too.
Efforts towards rate integrity
Rate integrity is complicated and available in real-time. With the price compressions and complications emerging, many suppliers are choosing to ignore it. However, rate integrity remains an inevitable part of our reality, even if someone turns a blind eye to it in the short term. Hotelbeds has been a leading player in initiating a conversation around this topic. As intermediaries try to survive and find whatever ways to bring in business, such discussions become even more pertinent.
OTAs take some advantage of the circumstances that prevail. But many have worked so hard and long at obtaining parity that it will be something that will continue to stand. Hotelbeds, being a B2B player in the leisure segment, has been in good health. It is the business travel that is going to take much longer to recover and might change its definition in the future. Global chains have already set out a strategy for themselves that they’re going to follow. The entire industry operates on assumptions about what the others will do. If one starts working on a new distribution channel, then they might not even realize the effect on the whole value chain.
The tech team at Hotelbeds has done a phenomenal job of identifying and rectifying inefficiencies in their system. Their cost per room night now is equivalent to the pre COVID cost. Going further, as things normalize, this cost will go down even more. When you build a system to handle 10-20 times more traffic, it is easy to scale up but not to scale down. Hotelbeds is exploring and implementing measures to allow as much self-service as possible. Chatbots installation makes customer interaction seamless and swift. Honing in on their technical abilities and making use of robots has been their priority. With the new measures adopted now, the cost to serve business will be even lower once situations normalize.
Health and Safety Protocols
While addressing safety concerns, the question that arises is whether one should roll out protocols in addition to government guidelines or accept what is already in place. Hotelbeds have rolled out the Save to Save Program. They act as consultants for those hotels that don’t have any protocols. Burdening suppliers with layers of measures should be avoided if there is a sound and insulating code of conduct in place already that is recognized as COVID safe. It helps with the avoidance of unnecessary documentation at each intermediary level. Creating safety without compromising the experience of the customer is vital.
Hotelbeds being such a large company also has a substantial footprint of teams. They have introduced volunteer programs for their employees that give them the ability to help the elderly and the unfortunate during this crisis. They also address their internal responsibility by looking after their employees as well. Layoffs have been inevitable, but at Hotelbeds, they remain responsible to them and help them during these times of abrupt changes.
Watch the full conversation here: https://www.youtube.com/watch?v=wlxzM8ka2rU
About the Author
Harmeet Singh is the Chief Executive Officer at RateGain. He is a highly motivated, passionate, and gritty global executive who has a demonstrated track record of delivering financial and operational results. He has extensive experience in mergers, acquisitions, divestitures, and integrations that includes working in over 10+ countries throughout Europe, Asia, and Australia.