In our latest episode of the Hospitality Review Show, we explore the current issues impacting the hospitality industry. Our panel of experts talks about the European Commission's decision on hotel rate parity, the changing marketing trends, and the strategies hotels need to use to stay competitive.
Thibault Catala, CEO of Catala Consulting, joins us to talk about the European Commission's recent ruling on hotel rate parity. Thibault shares his knowledge on how this decision might affect revenue management for hotels in Europe. His insights help clarify the implications for the industry.
We talk about marketing trends and authenticity with Sam Weston from 80 Days. Sam's knowledge in these areas provides a new understanding of consumer behaviour. His input highlights the importance for hotels to develop marketing and creative strategies that appeal to modern travellers.
Sam talks about how factors like purchasing confidence, disposable income, and currency fluctuations impact hotel performance. The need for authenticity in marketing and the guest experience is a key point in our conversation.
Our host Ryan leads a discussion on "vibing" and its effect on the guest experience. With changing expectations, guests look for environments that reflect their lifestyle and values, prompting hotels to reconsider their food and beverage offerings.
Johnny Siberry, Group Revenue Manager at Sarova Hotel Group, emphasises the importance of honest marketing. Accurate representation of hotel offerings is crucial to meet guest expectations and make a positive first impression, especially with food and beverage options.
Thibault underscores the importance of authenticity in all aspects of the guest experience, from the online presence to staff interactions. For guest attraction and retention, it's essential for hotels to ensure their brand positioning reflects genuine experiences.
We interview Richard Collie, a consumer law expert, who talks about the issue of drip pricing. Richard provides an in-depth look at the regulatory landscape and the potential responses to this practice, which affects both consumers and the hospitality industry.
Thibault shares his perspective on value-based pricing versus drip pricing. He stresses the importance of aligning price with value. Johnny Siberry also addresses consumer frustrations with drip pricing and deceptive marketing, advocating for transparency in the booking process.
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Programme Notes
This episode has been automatically transcribed by AI, please excuse any typos or grammatical errors
Ryan Haynes (00:00:05) - Hello and welcome to the Hospitality Review Show June 2024 edition with our panel Johnny Siberry Group Revenue Manager, Sarova Hotel Group, Thibault Catala, CEO Catala Consulting. In our Review Shows, we look at pressing issues in the industry as well as the landscape in front of us, getting insider knowledge from our expert panel and guest interviewees. In this episode, we'll look at the European Commission's decision on hotel rate parity and Booking.com Airbnb ditching experiences, an interview with Richard Collie on what is drip pricing, and an interview with Sam Weston on marketing trends, authenticity, vibing, food and beverage. Then I'll put my panelists through their paces as we dive into the quick quiz. Don't forget, please rate us or subscribe on your podcast platform. And why not join our mailing list through Travel Market Life? If you feel you have a story to share. Want to be a guest and have something to say? Email us at team@travelmarket.life. Let's get on with the show.
Ryan Haynes (00:01:34) - Hello, hello, hello, hello. Hello, guys. It's lovely to see you back again. We're nearly in the middle of summer. Hey presto, the travel world is getting going. how are things? How's bookings looking Thibault on your side of the world?
Thibault Catala (00:01:47) - Hi, guys. But the bookings are pretty much okay. Very last minute. That's something which we have noticed. The weather has been good and bad at the same time, so people are waiting a bit more last minute before booking the summer holidays. So, yeah. Visibility. We are a bit like this right now, but hopefully it will be. It will get it will get better soon. But I'm quite convinced that, on the very short booking window will get some, some good bookings. So. Yeah. All good. Quite positive. I know.
Ryan Haynes (00:02:13) - I mean, I know you're looking after a lot of European hotels as well as UK properties, so, you know, there's this thing that we're going to have this soggy winter, soggy summer here in the UK yet is going to be one another hot summer in Europe.
Ryan Haynes (00:02:27) - So is this what you're gearing up for?
Thibault Catala (00:02:30) - I'm gearing up for the UK market, travelling abroad and going into my French or Swiss or any other properties, with a bit more sun. I hope so, but it's not only the UK which is a bit wet, so that's unfortunately the thing, but we are gearing up for quite the last minute. Plus we have the Olympic Games, disrupting everything in the next few weeks. So we just need to, we just need to meet all of this. So yeah, a lot of things that play right now. So we just need to gear up properly.
Ryan Haynes (00:02:59) - Excellent. And Jonny, how are things going as you move into summer? Have we experienced the typical, you know, problem with the British weather?
Jonny Siberry (00:03:10) - yeah. I've always been an advocate of the belief that the weather has a direct correlation to the effect of booking volumes and we've had a few nice days recently, and we've seen a little pickup in booking volumes.
Jonny Siberry (00:03:25) - but at the moment, the weather forecast is not so good, so I'm expecting that to drop off. But looking further ahead June, July, and August are looking all right with on-the-books business. So we're happy enough so far.
Ryan Haynes (00:03:37) - That's good. That's good to hear. I mean, I was just reading an article yesterday, about the fact that, you know, a lot more hotels have been focusing on increasing their room rates, to improve revenue due to the cost of inflation, rather than increasing occupancy. I think is that something that you're seeing? all around, across the board, across your hotels and with your peers?
Jonny Siberry (00:03:58) - Actually, no, we're looking more at driving occupancy. You know, we pushed rates considerably in the last couple of years coming out of, the pandemic. And I think we've kind of reached a sort of a plateau where we're not able to increase the market, isn't allowing us to increase rates as much. So, increases in revenue, we've got to we've got to drive through occupancy.
Jonny Siberry (00:04:21) - Previous couple of years, our strategy was right over occupancy, but now it's kind of, driving the occupancy to catch up at that next year. Who knows?
Ryan Haynes (00:04:33) - Yeah. Let's get through this one first. And what's happening at Catala then? Is that a similar, approach that you're taking for your clients?
Thibault Catala (00:04:41) - It depends. And right now we have many discussions. So you have I've heard the same where hotels are pushing the ADR to compensate. the increase in the cost of living and the cost of everything. But I'm also presenting some data to convince you that we should look, always look at the bar and even look at, travel, because a point in occupancy for certain resorts is actually very important for your spa revenue, for your FMB revenue and so on. And so it depends on city hotels, ADR could drive more and more market share and more performance. But for some resorts, it's super duper important to drive volume and occupancy because you have all the other revenue which will be impacted so slowly but surely, surely, but.
Ryan Haynes (00:05:25) - Slowly but surely?
Thibault Catala (00:05:26) - Slowly. Exactly. We are getting into the holistic, holistic view of management and travel optimization much more than the only ADR or the occupancy, which is good.
Ryan Haynes (00:05:35) - Brilliant. So, we're going to be talking marketing today, and I know that you both are revenue experts. But it'd be great if you were able to get your perspective on some of the developments that we are seeing in the industry. So a number of interviews coming up on this episode. But to start with, let's look at what's in the news.
Ryan Haynes (00:05:56) - So in the news, just in May, was the fact that the European Commission has designated Booking.com as a gatekeeper. so really similar to how it previously branded Google, Facebook, Microsoft, Amazon, etc. and that means that hotels will no longer, have to abide by rate parity clauses in their agreements. in other words, hotels can now publish promotions and lower rates on their websites than they would need to on OTAs, offering that potential more flexibility there.
Ryan Haynes (00:06:28) - Now there was a world panel discussion on hospitality net. I saw a very familiar name as the first person, providing that commentary, and that was Mr. Thibault Catala. So, what were you saying regarding that? What's your view on the European Commission's, designation?
Thibault Catala (00:06:46) - Well, I believe, the one who knows what to do with this information will drive more market share and it will be a very beneficial benefit for them like the one which is quite savvy will have like a direct booking strategy in place and then investing into, a strong website, a strong Google ads and metasearch. Yes, they will drive more performance now for the majority of the hotels will have no clue and they don't do anything, so I don't that won't change much. I will recommend like for example, the rate parity issue, that we have been discussing for years now legally. As far as I understand, in the gatekeeper approach, you can drive and you can have a lower, cheaper rate on your website than anywhere else, or at least on Booking.com.
Thibault Catala (00:07:28) - So that's something I will play first to drive more traffic to your website. So, now I will even extend a step further because everyone was saying like, okay, now it's perfect. Booking.com is the gatekeeper. But keep in mind that sometimes your net worth bar coming from Booking.com is sometimes the highest one, even if you compare it to other channels indirectly. For example, if you add all your costs on marketing, your staff, your brand, your loyalty program and so on, and you remove all of this into your calculation for your net worth. But sometimes you realise that your direct bookings net worth is lower than Booking.com because all of this is including 50%. So I will suggest that we find the right balance, but we don't always throw the stone first at Booking.com. And I will suggest to piggyback on the marketing to continue to piggyback on marketing because they invest for you. So just do your calculation and then adjust your strategy accordingly. But yeah, that's I believe that's that's a good move.
Thibault Catala (00:08:21) - And we'll see a lot of different implications.
Ryan Haynes (00:08:23) - So Jonny I mean this is very much based on sort of Europe and, and the hotels in Europe. Do you think that this is something that's going to impact the UK, and what's your perspective on this, and how might it change your rate parity strategy?
Jonny Siberry (00:08:37) - I mean, look, rate parity has been a hot topic of debate for day one since it was put in an OTA contract. and it was outlawed many years ago by, European courts that OTAs couldn't insist on parity clauses in the contract and force hotels to give them the same rates that they give to the other OTAs. What it didn't do in the past was prevent the OTA from insisting that the hotel gave them the same direct rates. You could give an OTA a different OTA, a lower rate if you wanted to, but no sensible hotel is going to do that. And really, this new addition to that, legal or illegal aspect of rate parity, I think for the majority of hotels who have a revenue management practice in place or a sound revenue management practice in place, it's not going to make a massive impact.
Jonny Siberry (00:09:30) - It's it opens the playing field a little bit for the hotels. They've got a bit more opportunity to be a bit more creative. And I think the key strategy is going to be more around marketing than revenue. And if you want to drive your direct business, and if you got the balls to put out a lower rate than the OTAs, then, you know, put your marketing efforts behind it and make sure your bookers know and attract them to your website. The flip side of that is I'll put £0.50 on this or $0.50, whichever one you want. But if hotels start doing that, the OTAs are going to massively bias them ruin their listing position and drive them way down the search results. And so you're going to lose out on a lot more OTA business than you're going to get for direct until you go back to having the same rates. And I won't use the P word, but having the same rates and a level playing field and then your rankings will come back up again. So it's you know, it's a moot point.
Jonny Siberry (00:10:28) - It's you take the money you give to the other and things. So it's just jobs for the boys I think in the courtrooms to to discuss things that really have no impact at all.
Ryan Haynes (00:10:39) - I mean, I was reading and it was very interesting about France because apparently, this ruling came in in 2014. And if you look at all the numbers, you know, that Booking.com has massively increased the volume of bookings over the last ten years. direct bookings have dropped. But then underneath it all, it's because hotels have not invested in a direct channel. Go back to your point table. Is the fact that you need that user experience. I was only booking a hotel for Cambridge, and the fact that a new tab every time opened, every single time I clicked through to something else. And when I compared rates between this hotel and Booking.com, I actually ended up paying £30 less on Booking.com than on the hotel. And I'm always a direct booker, but because of the frustration of trying to book online and the booking, booking engine, really just being, you know, archaic to use, I gave up.
Ryan Haynes (00:11:36) - and if you're not investing in that channel, that direct channel and providing that seamless experience, I'm out of there.
Jonny Siberry (00:11:42) - Yeah. I mean, clearly, that hotel doesn't have the same revenue management policy or a marketing policy in place. and there's somebody. Feeding or powering the booking engine, but not paying any attention to it whatsoever. And the managing the OTAs or not, not managing the OTAs and they probably haven't got a clue what's out there and available to book rate-wise, so to their detriment.
Ryan Haynes (00:12:07) - So I'm just resting their laurels, don't they? And, you know, looking at actual marketing, there's been a little bit of development, particularly with Airbnb. yes. Okay. It's not hotels but hospitality. It's been coming across as a contender, disrupting the industry that much more. Airbnb is removing 5000 experiences and cancelling future reservations. So they opened the whole experiences platform. I think it's around 2020, in order to sort of, offer another way of generating revenue. and there were obviously operators across the world that were connected there, but they're removing these listings as of June 20th because it's just not profitable for them anymore.
Ryan Haynes (00:12:48) - And this was really driving this idea of, the experience economy, and this and the fact that hotels should be buying into the experience economy. So, was this a bit of a bit of sort of, red herring, do you think, for the industry, do you think it was just a marketing ploy by Airbnb? What's your take on this, and how might this benefit the hotel industry?
Thibault Catala (00:13:12) - I believe it wasn't. No, no, I think it's it's a real market. The market of experience is a market. I also believe it's, it was kind of, A big experiment from Airbnb to see if there was a market for this and if they could drive some good ROI on the investment behind the full experience platform. And and to be to be frank, I believe it's a good move and it's reflected highly on Airbnb to show that if they didn't get the ROI they were expecting from day one, they will cut the losses and say, okay, let's move on, I was wrong.
Thibault Catala (00:13:43) - That doesn't work. I move back and I move and let's do something else. So I believe this approach, speaks very highly of Airbnb because many companies, if something doesn't work, then they add more money, more energy, more team on this to make sure it works just to get them the point thing. Like I was right. I want to show the reward that I was right, and if Airbnb managed to cut the losses and move forward, I think that's good. Now for hotels, I believe that could be a good opportunity. Or at least I will experiment around this idea of proposing, and experiences as well as hotel stays. And now that's something you cannot find on any Airbnb. But if you want, you have to stay in a hotel in a group. So I will I will try to experiment to see how I can incorporate this experimental, approach and experiences as well, to the, to the public and see what type of ROI we can get. But oh yeah, I'm quite optimistic.
Ryan Haynes (00:14:32) - How about you Johnny experiences that Sarova?
Jonny Siberry (00:14:35) - Yeah, I mean, we've got a full concierge team that can book anything for you that you can't get anywhere else. They're, they're a well-connected bunch of people. but I think I think Airbnb missed a trick here. I'm not a big user of Airbnb. I've booked a couple of times on it. I certainly didn't know they had the experience as a platform as well. So clearly as we're talking about marketing today, they've not marketed it at all. And the biggest losers here are the experience. Vendors who got swept up by Airbnb probably promised the world, because that's generally how it goes. they had a lot of bookings on their diaries and, they've lost them all and they cancelled out a global platform on Airbnb presented to the world. They didn't have to do much other than, I imagine, probably pay a commission. And that was it. and, they've lost out hugely on that. So I suspect, sadly, a lot of those businesses are probably going to, fold up now because they just won't be able to sustain.
Jonny Siberry (00:15:37) - They'll have invested heavily on the back of massive productions from Airbnb. And now that's just been cut off by that overnight. And, they're the ones that are going to suffer hotels-wise. And, and the Airbnb, accommodation listings, I don't see it's going to affect them massively, to be honest. You go on Airbnb to book accommodation and your experience secondarily, you don't go on there first for your bungee jumping and then find a hotel or an Airbnb near it. So I don't think the accommodation providers will suffer massively, but shame on Airbnb. I think they could have done a better job on it.
Ryan Haynes (00:16:14) - Right. So Airbnb, it's, you have, maybe given opportunity for hotels, but certainly a loss for tours and experience operators. Right. Coming up, let's delve into our lead topic today, marketing.
Ryan Haynes (00:16:32) - So guys, I've had a couple of interviews and we are going to listen to our experts to find out what's happening in the world of marketing. The first up is an interview with Sam Weston from 80 Days.
Ryan Haynes (00:16:43) - He's going to be looking at marketing trends, authenticity, vibing and food and beverage. So let's head over to the interview now. Hey, Sam, thanks ever so much for joining us today to look into some of these emerging trends that are really impacting how hotels should look at their marketing and strategies. So you've really been exploring, what's been happening with consumer behaviour and expectations. How is this informing you about how marketing and creative strategies should be adapted today?
Sam Weston (00:17:11) - I think what we're really seeing is actually quite a bit of variation, within the different markets, you know, first and foremost, and I think there's not really a universal pattern amongst travellers today, sort of globally. So some of the examples of some of the variations that we're kind of seeing, it's been a pretty flat start to the year, I would say, it's fair to say for, for UK hoteliers for four and five-star hoteliers, but globally it's a bit more of a positive picture. So we're seeing kind of revenue and transactions up for five stars.
Sam Weston (00:17:42) - Certainly. different levels of purchasing confidence coming into play, different levels of disposable income, and currency fluctuations, all of these things, having their impact. and we're seeing things like rural properties slightly outperforming urban properties. So quite possibly due to this, you know, the slight flattening of corporate travel versus leisure bookings, you know, being still sort of still being a relatively buoyant market.
Ryan Haynes (00:18:09) - Now, you've also identified a number of trends, that is impacting, you know, the way that hotels position themselves, how they connect with, with, with their audience and guests in quite a different way than we've had before. It's not just sort of like blanket mass marketing, with one message it seems to be tapping into very different nuances, of the business and, the audience that you're looking at catering to. So one of them, let's start off with the first one, authenticity. It's a big word there. Can you explain to me what this means for the industry?
Sam Weston (00:18:47) - But I think it's you know, for me, it's clear that guests are increasingly calling out this kind of inauthentic marketing.
Sam Weston (00:18:53) - And that's where I maybe is, you know, starting to play its part as well. So things like overly edited imagery, video, these sorts of things can actually be quite damaging for your brand. and, you know, the brand equity that you've built up over time, especially when you're trying to build that authenticity and that genuine kind of connection with your guests. So I think it's really treading that fine line at the end of the day, isn't it, because you want to make sure that you're selling your hotel as best you can, but if you kind of oversell it and, set the bar a little too high, then, you know, we've seen many studies that have said that, you know, if you, oversell it, then when a guest guest, your hotel, you're actually risking an increased chance of a negative review at the end of the day. So, yeah, fine line to tread.
Ryan Haynes (00:19:40) - Now, another one of your trends. And this is an interesting one because I must say, it's one that I hadn't really come across until I read your report, vibing.
Ryan Haynes (00:19:51) - Explain this for me.
Sam Weston (00:19:54) - So it's a yeah, I find this one probably the most interesting of all, to be honest, because again, I hadn't really considered it. I mean, it's probably a bit of an unwritten one. I would say that 78% of travellers now consider your hotel's atmosphere when making a booking and reviews that mention the word vibe. We're up by 1,000% on Hotels.com in 2023. So it's really about trying to kind of get across that feeling that your hotel evokes when a guest walks into the lobby, even that first impression, you know, that atmosphere in your restaurant, even just how the, how they're greeted by front of the house, you know, it's all helping to build that, that vibe. And actually, it's really a great opportunity, I think, to differentiate yourselves and achieve some of that distinctiveness within the marketplace as well.
Ryan Haynes (00:20:45) - So excellent. And now the third one I was particularly interested in, and you have tapped and tapped into this so far in our conversation, but it's, I guess, food and beverage.
Ryan Haynes (00:20:55) - What are the F&B expectations of guests today?
Sam Weston (00:20:59) - Well, I think it's I think ultimately they're not just looking for a standard hotel restaurant. I don't think it's a box check exercise anymore to say, you know, does my hotel have a restaurant? Yes. Then that's enough. You know, I think they're looking for more of an experiential, approach. You know, there I think they're looking for more thought being put into to the offering. and actually, you know, from the, from the studies that we did and from the report that we kind of created, we found that like 83% of travellers are now considering onsite dining options when choosing their hotel, according to a TripAdvisor study. So, you know, it's really starting to affect their travel planning and, what they're looking to book. and 50% of us apparently are planning trips around specific dishes, which I find particularly fascinating. Right. So will a traveller choose their hotel based on who has the best paella or the best haggis? Maybe not, but it's certainly, you know, starting to play into their decision-making kind of process.
Ryan Haynes (00:22:01) - So you can get the extended interview in a few weeks as we publish that on travel Market life, and Sam actually delves in a little bit more detail, some into some of this and provides some advice and tips on how you can bring out the best of your hotel within your marketing. So, in and around this, Johnny at Sarova Hotel's authenticity vibing F&B how does that play a part in your approach to your marketing and positioning?
Jonny Siberry (00:22:28) - Yeah, 100%. said a lot of points that we discuss internally as well when we're, we're working at a marketing strategy and a website, we're in the middle of, actually building a brand new website, which should be launching, over a period of time, one property at a time, but hopefully launching the first hotel quite soon. you have to be 100% honest these days. You can't get away with embellishing the truth anymore. putting up pictures that are slightly better than what the reality is. Because, you know, people pick it up straight away, or they'll come up to reception with the phone and go, look at this picture.
Jonny Siberry (00:23:03) - That's not what I got. You know? It just doesn't work anymore. You know, it reminds me of the old Basil Fawlty scene where the lady checks into the room and says, I wanted a sea view. And you said you can see the sea around the corner. It's between the sky and the land. but, you know, you could get away with that in those days, but not anymore. So, you know, you've got to be layer cards on the table. This is the product we've got. This is what we're offering. This is what you're going to get if you like it. If you're happy with that you know buy it. Come and stay. Have a good time. And if it's not what you're looking for, then you know we're not the right property for you. But you've got to be open and honest. And following on for the other two points of living in the FNB again, you know, first, contact when they walk in the door or even when they approach the outside and see the outside of the building.
Jonny Siberry (00:23:49) - It's got to be clean and tidy, bright, open and welcoming and then somebody with a smile when you walk in the door, that's it. You're, you know, your stay or your experience has got off on the right foot and it can only get better from there on. If you walk in somewhere dark and dingy or there's a bit of a mouldy smell, or the surly receptionist who doesn't look up when you walk up to the desk, you know it's never going to work out. So yeah, you've got to do it. And I mean, FNB, that's a difficult one because. One of our properties, the Rembrandt, central London. There are so many options for people to dine in the city that if you're on a multi-night stay, sure, maybe dine in the hotel one night, but you're going to go out. It's just the way it is and we accept it. we offer a nice menu. It's a good menu, I think, and it covers all genres of tastes and, dietary requirements.
Jonny Siberry (00:24:42) - But, you know, if people want to go out and go, don't waste your time. Try to drag them back in the door and force them to eat. But on the flip side, our hotel in Windsor, Sir Christopher Wren, they've got a brasserie right by the river and by the towpath and the River Thames, with massive big picture windows all across one side. And that's an experience that people come from far and wide to dine there for the location and the views and the service and everything else. So it's, you know, completely different ends of the spectrum for us. But yeah. So I agree with pretty much everything. Well, all those points really. Yeah. Good interview.
Ryan Haynes (00:25:21) - And table. How do these three sort of play into the conversations that you have with your customers and build those revenue and marketing strategies around?
Thibault Catala (00:25:30) - But first of all, I know if you have seen the report as it was on Booking.com, I don't recall they were saying like the keyword or vibe, the vibe of the, of the property, was going back into all the reviews.
Thibault Catala (00:25:43) - Post stay. So definitely something that you should look into because guests are rating your your property based on the vibe. So something which is very quantifiable. You cannot say exactly. You cannot. It's not tangible, but the vibe is super important. Maybe it's a buzzword. Yes, but the vibe is everything right now. Right now, authenticity, as you mentioned, goes from the full experience of the guests, from the moment you interact with a chatbot to the moment you interact on the phone, to the way people talk to the client. so the authenticity, you feel it from day one if you, if you have someone which is trying to fake it and you're like, okay, there's something wrong, there's I'm not going to book this hotel or even on the look and feel of the website, the pictures and so on. If there's something not authentic, you get smashed and people will feel it. It's something that you cannot touch, but you feel there's something wrong in your misalign.
Thibault Catala (00:26:34) - So authenticity are people. People and guests are not stupid. They feel it. And that's very important that you work on it from your guest experience, from the online, your online presence, your website, but as well your, your staff training, the way they interact. So I think this kind of work that that that you do Ryan, as well with your corporate identity to make sure you identify yourself. You have your your brand positioning. You have the tone of voice that you use or the angles of the pictures. All of this is to make sure there is this kind of alignment and authenticity to attract more and moe people and to drive more business. So yeah, very important. And I believe that's the root of everything else that we will do with marketing, sales and revenue management. But it's all start by understanding who you are and making sure you stick to it.
Ryan Haynes (00:27:20) - Lovely. Thank you guys. So moving on to our next interview. Then, we're going to be hearing from Richard Collie, the managing associate for TLT LLP, a consumer law expert, with a particular specialism in the leisure industry.
Ryan Haynes (00:27:34) - Now, with the growth of e-commerce, there are obviously issues around sort of how you market yourself, authentically and make sure that you are abiding by the rules and laws there. So we're going to look into drip pricing. I asked him what is drip pricing to start with.
Richard Collie (00:27:53) - I mean, the first thing to point out is that drip pricing doesn't carry any kind of legal definition. It essentially is a kind of informal description of a certain way of pricing products. And it's very common across a wide range of sectors. Essentially, it describes a situation where a consumer is searching for a product or service online, usually online. they see a headline price, they proceed through the checkout process, and by the time they get to the checkout, the price is increased from that headline price because of a range of different, add-ons, that have been dripped throughout the process. now, it's important to be kind of clear about what those additional elements of the price are. Some things may be optional.
Richard Collie (00:28:37) - extras that are kind of, the consumer can take it and leave it. Other aspects of it may be mandatory. So things that prices like, for example, a booking charge or administration charge that all consumers have to pay. it's that latter, element that regulators are increasingly concerned about, and they're referring to them, rightly or wrongly, as junk fees. and they believe they should be included in the headline price. But obviously, you know, as you know, Ryan, it doesn't it's really important to be kind of clear from the outset that here that a lot of products are, by their nature, bespoke and customized, may not take a package package holiday, for example. Consumers often want, options and choices and power to make that decision and to pay a price that reflects what they want. so yes, some prices may be dripped in those, those circumstances, but it's, you know, I think we just obviously need to get things in perspective here when we're talking about drip pricing because it captures some, some practices that are more harmful than others from a consumer law perspective.
Ryan Haynes (00:29:40) - I mean, it is fascinating, particularly with the way that e-commerce has evolved over the last few years and particular competition between securing that direct booking, and going through third-party providers. And I guess you see that much more when there's that, highly competitive market environment. And we particularly see that obviously within travel, specifically across both flights and hotels. And it's certainly the role of metasearch, and I guess is that as well, where you're starting to see it becoming more glaringly obvious because you see a price at one point, maybe £79, and then you see, another price from another provider at like £24. But then I guess when you get to the end of the bucket, that is the cart. then actually they could be very similar or identical prices.
Richard Collie (00:30:29) - Yeah. I mean, that's a really good way of looking at it because actually, when you look at this from the perspective of the Competition and Markets Authority, which is both the consumer protection regulator and a competition regulator, price is and always has been, the main driver of competition and particularly when price comparison websites metasearch providers as you say are enabling consumers to shop around easier more easily.
Richard Collie (00:30:58) - it's that's one of the reasons why regulators are so keen to ensure that there's, there's good competition, healthy competition for that headline price. And one of the things that's really interesting is that most of the, well, the two main investigations by the CMA to date that sort of touch upon drip pricing have both been in relation to sort of intermediaries. So, Booking.com, Expedia, Trivago, I think there were eight different, hotel booking websites that were subject to their investigation, which I think was 2019. but one of the issues there, they were saying what the CMA said is, look, you're not including mandatory charges. The headline prices that consumers are searching for don't include things like booking fees, resort fees, and taxes that all, you know, any consumer is going to have to pay. So if it's if it's mandatory, it's got to be in that headline price.
Ryan Haynes (00:31:46) - And are we at risk of there being more regulatory regulation here? Is the government planning to bring in any sort of new policies? Will there be a ban?
Ryan Haynes (00:31:55) - And you know, what might this look like?
Richard Collie (00:32:00) - Yes. So, with regards to drip pricing, the government has announced that it will introduce legislation to ban again, as I said, what they see as junk fees, mandatory fees that consumers, are always going to pay, which could be sort of fixed booking charges, administration charges, service charges, those sorts of things. If whatever happens, the consumer's going to have to pay for it. It needs to be the legislation will state that it must be included in the headline price.
Ryan Haynes (00:32:42) - So that was Richard Collie, the managing associate at TLT LLP, a consumer law expert. And that full interview is actually available already on a travel market life. So do look back on a couple of episodes and maybe listen to the whole thing. so guys, what are your thoughts here? is it a practice that you engage with? Is it one that you ask your customers to stay well clear of? Have you had an experience at this table?
Thibault Catala (00:33:09) - I hate it.
Jonny Siberry (00:33:10) - We agree on something, yay.
Thibault Catala (00:33:17) - No, but it's super misleading, you know like we discussed it, but it's very similar to Reiner. You're like, okay, 20 bucks on my flight to Rome. Yeah. Let's go. And then you end up at the 400 bucks tickets. Okay. There's something wrong between the beginning and the end. So we go back to this kind of authenticity. And I believe by having this kind of drip pricing, it could be misleading, to make and that could, that could actually fire back to, to the brand and to the hotel that is doing this kind of practice. I know that a lot of online channels. I won't name anyone, but they do this kind of drip pricing by removing or not the VAT or the city taxes and so on by having cheaper rates online. And then when you end up you have a different price. So that's also a marketing technique to increase conversion. But I believe it's also misleading.
Thibault Catala (00:34:02) - And I won't recommend anyone to go into drip pricing now that something else which is directly or indirectly linked to the drip pricing, it's, value-based pricing, where you, you start with, with a naked room and then you add what you want on top of the room. It's a bit different from drip pricing if I'm not mistaken. and from the value perspective what we expect from the price and the value that may be a bit different. Similar but different. but the approach would be better in my opinion.
Ryan Haynes (00:34:30) - Oh, dear. Similar but different. Yes. I mean, there are always different ways to be able to address these pricing techniques, isn't there, Jonny? I mean, your your thoughts here. I think, you know, you were quite strong on, on on the, your opposition to this.
Jonny Siberry (00:34:43) - Yeah, it's hugely frustrating from a personal point of view as a consumer when you're looking at things and to diverse points, Ryanair and other airlines are available.
Jonny Siberry (00:34:54) - please choose them. But yeah the drip pricing they're it's they have the lead in price which you could purchase and pay and do your typical example that trip to Rome for 20 bucks. But you can't bring anything with you. You can't other than your passport and the clothes you're wearing. So it's it's pointless, but, you know, it's consumable. We get it quite often. and Richard referred to the meta sites. we often get calls into our central office where we've quoted somebody a price for a hotel, and then the reply comes back, oh, well, I saw it on TripAdvisor or Trivago or a MoMA for this price or that price, and it's much cheaper than yours. And then we challenge them to go ahead and try and book at that price. We say that it doesn't include VAT, or once you go through and click on it, that price won't be available. It's the leading price on the you know, on the first screen. Click through to try and book it and you'll get a message.
Jonny Siberry (00:35:54) - Oh, you just missed the last room. And now the price is this and those sorts of things. So it's that's kind of drip pricing. It's also misleading marketing as well. But it's that sort of thing where they then add in the VAT and the booking fee and the this and the that and the other, and then you come to the end of and actually it works out more than what they'd read, quoted them direct. So, we spend a lot of time battling against it, trying to convince the customer that either book directly or stick with the big two that we know and trust.
Jonny Siberry (00:36:24) - So yeah, The other area we followed, which isn't really drip pricing as such, but it's the same sort of concept as in the US market. We unfortunately can't, with our technology and our booking agent display our rates. net of tax on Google, even just on the Google search page. But the likes of Hotels.com and beauty Booking.com can. So we always appear more expensive in the first search because we include tax data.
Jonny Siberry (00:36:53) - But of course when you click through to make the booking, the tax gets added on, which is typical in the States. I just came back from New York at the weekend and in the shops a couple of times. You buy stuff and I don't know why it works. Oh bloody tax, I forgot about that, you know. So that's the way they do it. And they used to in this day. So that's fine. That's how it works. But for us, we can't compete against that. So it's frustrating. But there's there is a lot of laws and regulations certainly in the UK about you must I mean even B2C pricing. You can't offer prices ex VAT, you have to include the VAT for that very reason. B2B of course everything's quoted exFAT, but when you go and direct to the consumer it's got to be included. So but a bit tightening of the rules and of course you get suppliers outside of the EU who are a bit more unscrupulous with their practices and you can't catch them, you can't find them and they just don't care.
Jonny Siberry (00:37:46) - They'll throw it out there and try and clean up. So but it's very, very frustrating.
Jonny Siberry (00:37:52) - Yeah. Because I was.
Ryan Haynes (00:37:52) - I was saying to Richard, during the interview we cover, you know, the fact of subscription services because you look for a particular travel product or hotel and you might see it available on one website at £11 and then everything else, every other website, every other sort of channel is 150. but the £11 is because if you're a subscriber to that site, you will benefit from that rate of some kind. And there's a lot more, particularly in the US, sort of businesses that are allowing access to the, say, GDS rates. and you just pay an annual subscription for that privilege. And usually, obviously, that's just open to travel agents. So I find that particularly misleading. But he does cover that off. And as to why that's legal. Because obviously, you need to become a member in order to benefit from that price.
Jonny Siberry (00:38:40) - Yeah.
Ryan Haynes (00:38:41) - Right. Then guys, so, that rounds off our conversation on marketing.
Ryan Haynes (00:38:46) - For those of you listening, please check out our Hoteliers' Voice episode with Sophia Muntener from Melia, where we delve into marketing strategies and how activities and tactics have changed as a result of changing consumer behaviours. That'll be out in a few weeks, so look out for that in your inbox coming up next. Are you ready guys? It's a quick quiz.
Jonny Siberry (00:39:12) - Should we disgrace ourselves again? Thibault, what do you say we usually do with this?
Ryan Haynes (00:39:18) - I have tried to simplify the question somewhat. This time it's a best-of-five where our panelists are challenged to their industry knowledge. They have a buzzer, a bell, and a horn to make an instant noise so we can hear them ready to make an answer. So if you're ready, let's get ourselves into the first question. Right, lovers' Deep Luxury Submarine Hotel in Saint Lucia is regarded as the world's most expensive hotel room per night. How much is it?
Jonny Siberry (00:39:52) - Blimey!
Thibault Catala (00:39:53) - The idea was a public rate?.
Jonny Siberry (00:39:58) - The sale price Thibault.
Ryan Haynes (00:40:00) - U.S. dollars per night on average.
Jonny Siberry (00:40:03) - Including or excluding tax?
Thibault Catala (00:40:04) - Oh, good pricing or drip pricing?
Jonny Siberry (00:40:12) - I go to submit a guess. I mean, I know.
Jonny Siberry (00:40:14) - There's. Expensive hotels in the world, so it's got to be. I'm going to say $30,000, and I don't even think that's enough.
Ryan Haynes (00:40:24) - You're going 30,000, Thibault’s going?
Thibault Catala (00:40:27) - 40,000.
Ryan Haynes (00:40:30) - Because it is going to be more, isn't it? 150,000 USD per night. It includes a private captain, chef, butler, helicopter transfers, beach landings and champagne breakfast.
Jonny Siberry (00:40:44) - You didn't say what was included.
Ryan Haynes (00:40:47) - Oh. I'm sorry.
Ryan Haynes (00:40:51) - All right. Question number two. It's a movie question. Name the movie where Hugh Grant heads to the Savoy before posing as a journalist with Horse Hound magazine to declare his love for Julia Roberts.
Jonny Siberry (00:41:07) - Notting Hill.
Ryan Haynes (00:41:08) - Yes. Well done. One point, Johnny, one point to Thibault.
Jonny Siberry (00:41:14) - Okay. Question three.
Ryan Haynes (00:41:16) - Some hotels have what may seem like odd rules. Licking the walls is strictly forbidden in one Bolivian hotel. Completely made out of what ionic compound?
Ryan Haynes (00:41:30) - What is the hotel room made out of? Johnny?
Ryan Haynes (00:41:35) - Salt?
Ryan Haynes (00:41:36) - Yes. Well done!
Thibault Catala (00:41:38) - I'm going to select something sugary like candy or something.
Jonny Siberry (00:41:42) - Are you going to go to Willy Wonka? Until you said Bolivia in any way. No cocoa producers in Bolivia.
Thibault Catala (00:41:48) - A coconut could be a good one.
Ryan Haynes (00:41:50) - Oh, yeah, but I couldn't imagine myself licking a salt wall. Can you?
Thibault Catala (00:41:55) - Yeah. well, that's not an idea.
Jonny Siberry (00:41:57) - Well, you come out looking like a prune if you stayed there. Have you ever seen those salt-drying, things where they store meat?
Jonny Siberry (00:42:05) - Oh, yes. You'd be well cured, wouldn't you?
Jonny Siberry (00:42:09) - It would. Blimey!
Ryan Haynes (00:42:09) -. Anyway, move on quickly question for you. That's a quick quiz. How many hotels are at Walt Disney World in Florida? Yes. Thibault?
Thibault Catala (00:42:24) - A hundreds.
Ryan Haynes (00:42:26) - You're going for 100, Johnny. You're going to punt a guess?
Jonny Siberry (00:42:29) - I'm going to go 99, I think it’s less.
Ryan Haynes (00:42:36) - Yeah. Much less.32.
Jonny Siberry (00:42:41) - Okay. Hey, that's a point for me.
Ryan Haynes (00:42:45) - Okay. That's 3 to 1. so, we'll just see if we can get some sort of balancing out here. Which famous cocktail originated in the Raffles Hotel Singapore? Yes. Thibault.
Thibault Catala (00:42:58) - The Singapore's, the sling, the Singapore sling.
Ryan Haynes (00:43:00) - Yes, yes. Well done, the Singapore Sling. But Johnny still wins with one extra point 3 to 2. So well done. Good effort. Thank you very much. congratulations. well, guys, we're going to be taking a bit of a break for the summer, July and August so that we can double down with our guests and what's happening in the industry and return, hopefully back in September. But thank you for joining us on our panel and contributing, for these last six months. Really appreciate it. And, I guess I hope everything goes well for the businesses.
Jonny Siberry (00:43:33) - Likewise. It's your own. It's been a good six months and looking forward to the next ones and catching up again.
Thibault Catala (00:43:39) - Absolutely. Lots of fun.
Ryan Haynes (00:43:41) - All right, guys, thank you. Catch you again soon. This is Travel Market Life, the Hospitality Review Show.
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