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Choice CEO urges hotels to win over OTA business

Choice Hotels Asia-Pac CEO Trent Fraser addressing delegates at the 2020 conference.

Choice Hotels Asia-Pac CEO, Trent Fraser, has encouraged the company’s franchisee members to treat online travel agents as “frenemies” and to encourage guests to book future stays directly in an effort to minimise commission bills.

Speaking at the company’s biennial franchisee conference in Melbourne last week, Fraser highlighted the strength of the growing Choice Privileges loyalty program as an ideal way to drive more direct and repeat business and to maximise yields from repeat guests.

Speaking exclusively to HM, Fraser said the company and its members were more than capable of competing with online travel agents.

“We’ve got to be able to learn how to work better with them (OTAs), closely with them, but also make sure we’re getting the balance right from those companies to our hotel,” he said.

Carl Oldsberg, Choice Hotels Vice President, International Operations, said it’s too early to tell in terms of the group-wide sustained success that may have come from the company’s decision last year to link its booking functionality with Google. He added that the company and its franchisees wanted to control its business directly but that larger players such as OTAs and Google were needed to bring that first guest in the front door.

Choice Hotels franchisees were ‘Empowered to Exceed’ at last week’s gathering in Melbourne.

“It’s all about taking advantage of the strengths of the different channels, and being very careful about the cost of acquisition to optimise the profitability on behalf of the hotels.”

Oldsberg advised franchisees to remain cautious on the potential reach of OTAs, which are now communicating with guests during a stay while at the same time, ingratiating themselves with hoteliers using technology which allows a property to cast a spotlight over the rates of others nearby in order to remain competitive.

“They are trying to grab onto that piece of the customer journey that is really on property. So they offer technology where they can communicate with the guests on property. That’s scary.

“That’s something that we are certainly not supporting but they need to grow as well and so that’s the way they are trying to. So it’s definitely a threat. And again, from a franchisor and global company, we can identify what they’re trying to do and stop it and educate our franchisees.”

As providers of high-quality accommodation and hospitality, Choice franchisees were more than capable of leveraging the Choice Privileges loyalty program to win over both corporate and leisure guests, but as Oldsberg added, the two markets were looking for different things. On that basis, the flexibility of the program was key to the conversation on securing a guest for future stays.

Online travel agencies were essential in getting guests “in the front door”, said Choice Hotels.

“We can offer [corporate customers] a loyalty programme where they can rack up the points and then redeem them somewhere else when they’re on vacation. Whereas leisure customers, they don’t have as much and they’re also a lot more price-sensitive.”

Another key point discussed at the conference was rate parity, with Fraser urging franchisees to carefully consider their operational balance between reviewing rates and delivering customer service. The Choice Hotels Asia-Pac CEO said the company was in a position where it could take this job off a franchisee’s hands through its revenue management strategies.

“We offer revenue management specialists that will take on a group of eight to 10 hotels and perform that task then right throughout the day.

“We’ll ask for responsibility to manage rates and inventory. Take that away from the hotel so that they can absolutely focus on the customer. And we do that from outside. We do it without any emotion. And I say that meaning that we can move rates up and down according to what the facts show us and what the numbers show us in terms of their competitors, without any preconceived ideas on what is a fair value for the price of that room. It’s totally driven by supply and demand.

“In the very near future we’ll be adding a rate shopping tool that will make it easier for the hotelier to see where the rates sit in terms of the other platforms,” Fraser added.

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