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Revenue and Tour Operators: the wedding has to happen…

Talking about Revenue Management and Tour Operators is like talking about the devil and the holy water. The truth is another: the two things are perfectly compatible and the reasons why this “wedding” hasn’t been celebrated yet are the well-known resistance to changes and the insufficient knowledge of the subject.

For 10 years now I have been preaching the “recipe” to all the TO’s (and I know many) who show interest and amazement. However, everybody does nothing but getting angry with the OTA’s (on line travel agencies) and myself, who is too often defined as an anti-TO. Nothing is more untrue!

So, what does it need to be done to revive the TO’s and lead them to the Revenue ideas in the best way possible? It’s really easy! Follow me…

By analyzing the historical data of the hotel facility, one may realize what the selling rates are and how many rooms remain (alas!) empty. We will take a look at a rather extended time frame – in order to select the periods to put on the catalogues – when we can find similar productive characteristics and set a rate that can cover what has not been sold and go along the lines of some of the sales of the previous year.

At this point, the selected rate will be gross… I repeat gross, and not net as we do now and have always done, because it’s important to set the market price of the room. This is something the hotel, through the Revenue action, knows well how to do.

Providing the TO with the net rate means cutting ourselves off from the market. Moreover, the TO is certainly not the strongest channel, as he counts on a smaller community compared to the on line market’s one. For this reason, he needs to offer his community competitive prices.

The allotment will be established depending on the rooms to be sold. The visibility of the rates on other channels will be equal to or greater than the one of the TO’s. However, whereas the latter obviously have static rates, the former, that are dynamic by definition, can clearly raise their prices guided by the expert Revenue manager.

During high season, we will follow the same procedure, yet giving a different measure of selling rates (always gross, don’t forget it!) and rooms allotments.

This way, the hotel will be more certain to sell the rooms committed to the TO’s, since they will be sold at the right price, and the TO’s – Hear ye! – not only will sell definitely more but will also never sell the rooms at lower prices than the other channels’… Except for the hotel’s last minutes, obviously.

In your opinion, what would it happen to the demand if the TO’s were applying the best prices on the market? I leave the answer to you…

Happy Revenue to everybody!