Hotels: Increase consumer direct, to take control of cash flows.

Hotels are an “asset-heavy” business sector that has high fixed costs but makes substantial profits when they are full.

This makes them dependent on high room occupancies and often creates a competitive fight based primarily on price and strength of distribution, between similar hotels located on the same stretch of sandy beach in a holiday destination.

During the age of “vertically integrated,” tour operators and hotels often did “strategic” long-term deals, where tour operators in exchange for much lower room rates guaranteed the entire hotel.  Hotels that did not have guarantees, still relied on these tour operators to feature their hotels in their brochures and deliver customers to them.

Few beach hotels, ever invested in building their own “brands” or invested in direct marketing in major source markets like the UK. This left them at the mercy of their tour operator partners, who often paid them a massive 90 days after customers return home or not at all if they collapsed (Thomas Cook). How many other business sectors would accept these unfavorable payment terms?

The advent of the internet destroyed the stranglehold of access to holidaymakers that tour operators held via their 60% control of high street travel agency shops. This combined with the growth of low-cost carriers, allowed the “Dynamic Packaging” revolution to occur, which created today’s online travel agents (OTA’s) such as On the Beach and Love Holidays who between them carry 3.5m passengers. These businesses are “asset light” and rarely contract any hotels on a guaranteed basis, making hotels compete based on price.

The hotel-only giant operates on the same basis and pre-Covid 19 was used in conjunction with Skyscanner or google to access flights,  by millions of customers to DIY their own dynamic packages. This market is not measured by ATOL but probably accounts for 5m plus holidays.

Tui remains the largest UK ATOL Holder at 5.36m passengers, but the debt mountain it incurred during the Covid-19 crisis, has destroyed its ability to create “differentiated” and exclusive hotels by guaranteeing up to 80% of its hotel stock. This has left many beach hotels for the first time in generations without any guarantees and desperate for new routes to attract customers.

The rapidly expanding “in-house” tour operations of the low-cost carriers have been the clear market winners over the last 5 years, with Jet2 Holidays taking most of the collapsed Thomas Cook market share and being set to continue to eat into Tui share as it slowly declines, having lost its differentiated hotel stock.

Easyjet holidays also needs to expand rapidly to key city investors happy and will therefore need to take share from Tui or OTA’s, as it’s less likely to take share from the established Jet2 Holidays.

Currently, few of these players see the benefit of “guaranteeing” hotel stock, outweighing the increased commercial risk, whilst operating in a UK holiday market where demand remains uncertain due to the energy crisis, rampant inflation, and rapidly escalating mortgage costs.

Therefore, hotels need to take their destiny in their own hands and increase their consumer direct distribution, but many lack the required expertise.

Reviewing a range of hotel sites ahead of the upcoming World Travel Market gathering at the London Excel center, I found a common theme.

1.    No option to book in £’s sterling. This immediately loses 30% of sales to players like which are just one click away.

2.    No flights are offered. Customers can’t swim to a hotel and need flights. 40% of potential sales will be lost if a hotel site does not offer flights.

3.    UK phone numbers. The simplest way to offer “package holidays” including flights is to partner with a UK travel agency to use their ATOL licenses and staff to book packages. However, hardly any hotel sites offer this, and the only one that did have a UK telephone number answered it with a 5-minute pre-recorded message in Spanish!!

4.    Dominance of Google Brand terms. Hotels often secure the top spots for SEO-based google search’s for their brand name, but let competitors such as pinch high-quality leads by advertising above them.

Direct marketing in other countries, is not a key skill set of many hotels as historically they have never had to do it.  

Finding local source market partners willing to be paid on a booking-delivered basis needs to be a high priority.  These partners should understand how to market on Google, Instagram, or traditional media, to create strong above-the-line campaigns, that can be converted into bookings via the hotel’s own booking sites.

Direct bookings after advertising costs may or may not deliver higher prices for a hotel room, but they 100% deliver cash earlier and in the current economic environment “Cash in King”

ABBA Voyager: The future of music tourism?

As an investor in the UK’s largest music-based tour operator Sound Travel, which packages event tickets with hotel accommodation, I was invited this weekend to experience the ABBA Voyage virtual concert in London’s former Olympic Park in Stratford.

To say I was blown away, by the sophistication of this “virtual experience”, with completely life-like ABBA Avatars, interwoven with slick video production and a great sound system, would be an understatement.

 This was my first experience of “Crowd-based” virtual reality, where instead of being fitted via a virtual reality headset, that isolates you from the real world, you’re immersed into a concert crowd experiencing the same show. Like any “real” concert, the feel-good factor of the crowd around you, dancing and singing along, makes the experience magical and something well worthwhile travelling for.

 As a regular festival goer, I have often enjoyed seeing bands from my youth such as the Rolling Stones, New Order or even new romantic favourites like the Human League or Duran Duran. Often classic music stands the test of time, but do we really want to watch a bunch of decrepit 60-year-old rockers strutting their stuff? Often, this is a painful reminder of our own ageing process.

 How much better to see a live concert from their prime and dress up in those clothes of yesteryear!

 This is what the virtual reality technology behind the ABBA Voyager experience, can deliver at a touch of a button, with no fear of artist wear and tear or illness. Shows can be scheduled every day of the week and twice a day on weekends, to sell-out crowds of 3,000 people, with no overcrowding or long queues at the tube station on the way home. At £85 per ticket, the shows are clearly a major money spinner at £250k per show or £115 million per year giving an estimated 2-year payback on the £140m production costs. This relatively high set-up cost is expected to fall dramatically for subsequent productions, as ABBA Voyage really was a groundbreaker using lots of new techniques.

 Next year the ABBA Voyage show will go to New York either as a new production on top of London or with the temporary stadium being lifted and shifted.

 I’m happy to say that this show has also been a big earner for Sound Travel, who package weekend breaks for both domestic and increasingly international source markets. However, I think this is just the tip of the iceberg, with destinations like Dubai, Qatar and Saudi Arabia likely to incorporate similar music-based events into their tourism armoury, to provide a much closer alternative to Las Vegas for many Europeans.

 Experiential travel has already enjoyed rapid growth with the UK public booking city breaks based on attending concerts by their favourite bands or travelling to an ever-expanding range of UK-based festivals. How many more would travel to see the Beatles reunited and playing concerts in their prime?

 Song royalties and artist participation are never a given and would come at a considerable cost, but just as Queen’s blockbuster “Bohemian Rhapsody” was quickly followed by Elton John’s “Rocket Man”, similar projects seem inevitable.

 Tourism chiefs need to take a good look at what is happening in the London streets of Strafford and consider using similar experiences as one of the foundations of modernising existing or developing new tourism destinations.

 Few holiday experiences can generate such a feel-good, wow factor, that a great concert can, so adding this to a holiday mix of sun, beach and fun could be a real winner.

 Forget virtual reality as a “singular” immersive experience and embrace an experience that can unite you with your family, friends and often strangers from the crowd around you.

Instagram Travel: Is it just a Dream?

Working with Trending Travel has opened my eyes to the promotional power of Instagram and influencers.

 Like most social media channels, Instagram is dominated by “individuals”, who have millions of followers interested in the posts they share. A few business-like Trending Travel (Trending), who currently have over 500,000 followers on Instagram and Tik Tok, are followed because their content “Inspires”, but it’s important not to be overly commercial, as this is likely to turn off its social media-centric audience.

 Trending Travel has already proven its power to partners as a “Brand Awareness” alternative to mainstream media such as TV. One example was the launch of Virgin Voyages, where Trending hosted 29 influencers who created posts and video reels, which generated a combined viewing of 16 million views within a 10-day period. At the same time, Trending Travel’s own film crew created a huge range of professional content to be used by both Trending and Virgin across all its media channels to create booking demand.

 Keith Herman the CEO of Trending compares his business to a fishing “Trawler” with “influencer nets” that massively expand its consumer reach to “Inspire” customers to travel to a destination, hotel, or cruise.

 Its Instagram age demographic is between 18-35, but with a surprisingly high holiday spending budget, with many travelling to long-haul destinations such as the Maldives and Dubai, as well as more traditional short-haul beach destinations.

 Trending’s position at the “Inspiration” top of the booking funnel carry’s both positives and negatives. The obvious proven positive is that its brand advertising model can easily be measured by the number of views it delivers. However, the negative is that the demand it generates spins off to multiple channels, from online to traditional high-street shops and now homeworkers.

 This is the next stage of the booking process is to “research and compare” prices for the hotel or destination promoted usually via google, rather than going directly to “book”. Hence, historically around 15% of traffic was captured by Trending Travels dynamic packaging site and converted into bookings, but 85% was lost to other travel providers.

 The obvious solution was to team up with a business operating in the stage of the booking funnel directly below inspiration, which is “Comparison”. Trending, therefore, selected the UK’s largest holiday comparison player Icelolly Travel Group, to team up with to create its new “Inspire and Compare” booking funnel.

 Trending will continue to take groups of influencers to destinations, such as Tenerife to create “Inspiration” to travel there, but each post will contain a “Compare prices” link, that goes directly to Icelolly’s Tenerife results page with the featured hotel at the top of the page. At this stage the customer can not only compare prices for that hotel from all the major travel business such as Easyjet Holidays, Jet2 holidays or On the Beach to name a few, for the dates they want to travel or explore cheaper hotel options in the same destination.

 If the customer does want to book, they are seamlessly handed off by Icelolly to the highly optimised “Booking” sites of its partners, therefore creating a full end-to-end route from “Inspiration” to “Booking”.

 This new booking funnel is exciting as it could offer customers a streamlined and quicker route to the best-priced holidays in a destination they have been inspired to travel to, but also deals with the large number of customers who are just inspired to go on holiday and are happy to go anywhere.

 From a travel company’s point of view, it’s a brand-new booking funnel outside of the control of Google that delivers highly qualified leads. Instagram is no longer a dream creator, it’s a booking delivery path.

 That’s something I think may get travel companies’ attention!