How to Shift Market Share During Need Periods Using GDS

Follow these steps to grow market share without price erosion

As the hospitality landscape continues to evolve, hotels and their competitors are all vying for their piece of the market. As each competitor strives to maximize revenue share, it is important not to erode the property’s market/price position. A question often asked is how else can we grow market share without negatively impacting our competitive price position, especially during need periods?

A mistake many hotels make is chasing a discount strategy. Continuing to deploy discount-based tactics ultimately erodes the perceived value of the hotel product by moving a hotel out of its historical competitive positioning in the market. The challenge and reality is that it can take a property years and significant marketing funds to regain the price/value relationship with the consumer and to return it to its previous market position. So, what can a property do to grow market share without price erosion?

First, define and/or validate the property’s current position in the marketplace. Is the property the leader in price in the competitive set, the least expensive, or somewhere in the middle of the set? This decision is most critical and will impact long-term market share strategies. Tools such as Agency360 can help determine ADR and market share by each segment (GDS - Public, Consortia, and Corporate) and the property’s positioning versus the competitive set. 

Second, evaluate the Best Available Rate (BAR) public rate pricing program strategy and whether it is floating based on demand factors such as occupancy and market conditions. Rate360 may also be a good way to understand the pricing strategy for the property and competitive set.

Finally, use the following guidelines to develop a strategy to shift market share that potentially addresses all 3 market segments in the GDS - Public, Corporate, and Consortia.

GDS - Public Segment

The GDS - Public market segment audience is made up of the general consumer which may also include reach from onward distribution channels through OTAs and Metasearch Sites (YES, OTA can pull inventory from different GDS).

Where the need period becomes severe in its gap to forecast, a GDS - Public program offering to further add to the mitigation of the “need period” may need to be deployed focusing on adding/increasing value inclusions. Utilize GDS media to promote this value-add and drive performance towards the Public - GDS with the added benefit of lowering distribution costs such as commission payouts. 

Be sure to communicate a sense of urgency and a limited-time offer when possible. If left wide open, the “value” or inclusion becomes part of the standard offer. If discounting is warranted be sure to maintain parity by adjusting Consortia accordingly to remain in compliance.

Consortia Segment

Typically, traditional Consortia agreements suggest a discount of a defined percentage that is directly linked to a property’s BAR (Public Rate) pricing. When the system works, as it should, the entities (hotels, travel agencies, and clients) all remain in synchronicity and in compliance with the agreement requirements. Viewable by the participating member agencies only, the discounts provided do not affect the public perception of the property in the marketplace.

Many Consortias also require certain inclusions from the property to be engaged in their program. As with the Public Rate segment, determine what additional “added-value" would be included. In this case, limited-time offerings could be an option.

Where possible avoid further price discounting. While it may temporarily shift potential stays from the property’s competitive set; if not applied across all consortias, this tactic could negatively impact future positioning and engagement within the program. Also, as travel agencies are often affiliated with multiple Consortia programs, they are alerted to pricing disparities between Consortia potentially causing a further negative impact. During re-negotiations, this pricing adjustment could be used as an argument to negotiate down pricing.

Therefore, while many Consortia require certain inclusions to engage with their program, creating a limited-time added value offering would not result in a price parity conflict. To help drive a sense of urgency there must be defined or limited stay periods. Similar to the GDS - Public segment, if left wide open, the “value” or inclusion becomes part of the standard offer.

To be successful, any need period tactics taken should be supported by marketing and agency awareness, we'll address this shortly.

Corporate Negotiated Segment

This segment is protected from the general consumer by the defined or restricted viewership which allows the ability to deploy a behind-the-scenes negotiated rate strategy that will not erode the property’s price position or jeopardize its Public price strategy (BAR). Use of this defined viewership or restricted access to preferred pricing can also be used to drive volume by shifting share from competitors and enhancing the relationship with key clients and their intermediaries.

Within each market, a number of key accounts should be identified and established. In most cases however, agreements with these key accounts are not exclusive to a single property in the market. Once an agreement is negotiated and in place, in all likelihood, your property is sharing key account volume with members of your competitive set.

During a defined period of need, the shift can be achieved by providing a greater discount or special value-add. To do this, you can utilize Agency 360 to identify within your established key accounts how much volume is with your competitors. These are your targets for shifting share (volume) from your competitor to your property. Then you can evaluate the key accounts that are shared for the greatest impact in developing positive results. Keep the list within 2 or 3 high-volume key accounts. Next, develop a price plan and or added value that is customized for each key account and the travel agency that manages their volume. The exclusivity of the offer is important in developing a long-lasting relationship with both the agency and the end user. Again, keep in mind price adjustments can hurt future negotiations. And like the other segments, you can drive a sense of urgency with defined stay dates or limited-time stay options. Again, be sure not to leave open to all stay dates as this will then become your standard offer and not allow you to push the value for your hotel.

Furthermore, build awareness of the limited-time offer by augmenting with a digital agency and through GDS and/or Consortia advertising. In tandem with these efforts, agency visits and presentations will help further engage and deepen the relationships with key agencies. To build your rapport even more reach out to target travel planners to keep them apprised of the limited-time offers.

Whilst the often pursued tactic, especially in the GDS channel is to increase commission to gain the agents' attention, this pursuit is a fallacy for two main reasons:

1)  Travel Management advisors who work for a TMC are typically house employees and do not directly benefit from commission. Travel Advisors who are independent contractors working for retail agencies do receive a commission, but history has shown that increasing commission does not drive demand, especially in a down market.

2) While travel advisors do not make the final decision of where their guests will stay, they can influence the decision-making process. They will not however risk losing a client by shifting them to a property that does not meet their client’s needs for the sake of a few additional dollars.

As such the key to working with travel advisors is to build close professional relationships with them to ensure that they feel they have an advocate at the property, if needed. If you are looking for the most effective way to reward and recognize their support, consider incentives that benefit their customer (added-value amenities) that allow the advisor to reaffirm the value of booking through them. Most importantly, never underestimate the role of the travel advisor.

Finally, remember to measure performance against the goal of increasing market share. From each of your efforts be sure to identify successes and learn from the not-so-successful strategies to inform future engagements.

At Premiere Advisory Group, we specialize in helping hotels identify value-add strategies that best fit your hotel knowing that one size does not fit all. The goal is to identify the right tactic(s) to drive market share, increase revenue, and raise the bottom line. To learn more about how we can help, contact us or click here to learn about our services.

Please note that the above model is founded on the assumption that the subject property utilizes a floating BAR pricing strategy allowing public pricing to float on demand with competitive price adjustments. The following highlights a narrow tactic of a larger strategic “need period” plan and should be included as appropriate in the full plan of action.