GETTING THE BALANCE RIGHT- MAXIMISING YIELD THROUGH CHANNEL MANAGEMENT ROBERT HENKE OPERATIONS MANAGER YHA LTD
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1 GETTING THE BALANCE RIGHT- MAXIMISING YIELD THROUGH CHANNEL MANAGEMENT ROBERT HENKE OPERATIONS MANAGER YHA LTD
2 OVERVIEW The Backpacker Industry Relationship between OTAs and Operators How YHA Manages Distribution Channels
3 BACKPACKERS: WHO ARE THEY?
4 WHY DO THEY COME? WORK! Every year more than 200,000 young travelers come to Australia on a Working Holiday Visa Stay longer, spend more money, & help our farmers in process!
5 WHERE DO THEY STAY? Hostels form core of backpacking experience Low-cost accommodation & communal facilities Australia has a network of about 450 backpacker hostels Alternative accommodation styles They like to get around!
6 HOSTEL INDUSTRY Many small independents Lifestyle choice for some owners Fractured industry No recent industry data on occupancy, revenue etc available
7 BUSINESS MAINLY B2C Guide Books Walk-Ins Own Website Word of Mouth Online Travel Agents HOSTEL
8 GROWTH OF YHA.COM.AU $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0
9 THE RISE OF OTAS
10 CONTROVERSIAL TERMS CLICK TO ACCEPT
11 WHAT DID THEY SAY? Toughening up on rate parity Availability parity INCLUDING last bed availability on own website Authorise brand pay-per-click (PPC) advertising Indemnification from responsibility of taxes
12 INTERNET FORUMS AUSTRALIAN TOURISM EXPORT COUNCIL LONDON VICTORIAN TOURISM INDUSTRY COUNCIL ARGENTINA CHAMBER OF HOSTELS CHILE HOSTELMANAGEMENT.COM BACKPACKER TRADE NEWS INDEPENDENT HOLIDAY HOSTELS OF IRELAND BERLIN BACKPACKER NETWORK GERMANY ROME YHA NEW TRAVELTRENDS ZEALAND
13 WHAT WAS THE RESULT? Completely removed rate parity Availability parity only required where operationally practical and does not apply to accommodation only available on Licensee s own website PPC advertising OTA will not do brand advertising if the operator notifies OTA in writing not to do so Indemnification for the responsibility of OTA for all taxes was removed (but liability for GST or similar still with the operator)
14 A CHALLENGING RELATIONSHIP Business Partner & Competitor at the same time
15 WORLD YOUTH TRAVEL CONFERENCE (WYSTC) IN SEPTEMBER 2013 IN SYDNEY Reset the relationship between operators and OTAs which over time has become less and less commercially balanced Operators need to reclaim their products and customers, and effectively manage relationship with all OTAs OTAs and accommodation operators are mutually dependent but operators are the ultimate providers of the product; they alone should determine where it is sold and at what price Adoption of Sydney Declaration
16 SYDNEY DECLARATION Agreements between OTAs and youth travel accommodation operators should not contain clauses that: 1. Allow the use of property or brand names in online advertising, unless specifically authorised; 2. Require rate parity; 3. Enforce mandatory availability parity (either via last room availability or minimum allocations); 4. Allow for agreements to be terminated at short notice (without a compelling cause); with no consultation and without being signed by both parties; 5. Are not written in plain English (and are not translated into the main official language of the operator);
17 SYDNEY DECLARATION 6. Conflict with national or international trade, competition, or consumer laws; 7. Require operators to indemnify OTAs for tax obligations on commissions; 8. Allow the OTAs to be opaque in how they display default search results (including the use of spurious recommended terms that are designed to mislead consumers, when the basis of the recommendation is the % commission paid or the availability given to the OTA); 9. Result in commissions being paid on no shows or any other unrealised turnover; and 10.Discriminate against an operator based on size or location. The code of practice represents a constructive and balanced approach to resetting the relationship between OTAs and youth accommodation operators. Its adoption will result in a better deal for consumers and will promote genuine competition.
18 YHA S DISTRIBUTION STRATEGY In its most recent Strategic Plan, YHA set itself a clear goal: No more than 20% of internet bookings to come from OTAs At least 80% of internet bookings to come from yha.com.au
19 MANAGING DISTRIBUTION Ongoing investment in yha.com.au Absolute best rate guarantee for direct bookings Channel management training for the managers of our hostels Improve the channel management tools at the disposal of local managers
20 CHANNEL MANAGEMENT TOOLS enights system - Fully automated direct hostel-to-hostel booking tool, including automated weekly funds settlement PMS Channel Manager Manages all internal channels and allows Managers to manipulate rates and change availability to OTAs by controlling what is passed to Siteminder Siteminder - Manages OTA rates and availability and is interfaced with the property management system through the PMS Channel Manager.
21 % OF ONLINE REVENUE GENERATED THROUGH OTAS 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% (projected)
22 PARTNER COMPETITION
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