11 years
So what do you think of tripconnect.
In my area I am the highest rated on tripadvisor.
So should I pay to compete with the OTAs
At the moment my prices are lower than the OTAs so when listed on tripadvisor wont the customer book direct.
How HostelOffice makes hostels more profitable
Hostel Reviews, Booking Engines, and Directories
We usually communicate the following to our most proactive users.
As more agents are added then commission rates increase and average length of stay decreases and income drops 50%
The blue rows represent the situation for most hostels.
The above image charts how a hostel can make wrong decisions and move upward in the spreadsheet, thus losing more income. Conversely, a hostel can make smarter decisions and move down the rows and gain more profit.
The more agents that are integrated then the average commission rate moves higher than 12% and have a higher total percentage of bookings originated from an agent. Then in direct correlation there is a decline in the average length of stay.
Hostels on upper rows have more inelastic prices because their customers are highly price sensitive. This is a characteristic or aggregation sites as they attract the most price sensitive people in the market. Hostels that think listing with aggregation sites (agents) is the only way to gain bookings then become trapped in a process where they think that to gain more profit they have to fill every single bed every night to pursue economies of scale as their method for achieving profit.
Hostels that enable more direct bookings then experience more elastic prices which enables them to down the rows to experience longer duration bookings at lower commission rates. The PMS supplier should be providing tools to enable this to happen.
The black rows represents hostels that are usually in end-of-the-line or seasonal locations and as a result are less courageous and cling on to higher commission retaining agents. These hostels need to use their PMS more to leverage existing relationships rather than to link with more than 5 agents to gain more relationships. Through improved relationships then even agent delivered bookings can become more elastic (profitable) and is more probable in seasonal and end-of-the-line locations with fewer competitors.
Chain Hostels are represented by the red colour that have to adhere to their specific agreement with the agent and as a result have to work harder than individual hostels to gain increasing direct bookings. For them they never get a chance to gain super profits. Individual hostels that create or benefit from high demand for their beds can achieve super profits.
Hostels that have lower costs than competitors are more able to add value to guests and capture the least price sensitive guests. These guests are more likely to participate in tours, activities, drink at bars etc. For example there is not a top agent that sells tours with beds because it goes against the price sensitive people they attract to their aggregation site. The way an aggregation site makes money is by charging higher commissions to pay more to Google when they have run out of ways to value add to the traveller.
This is the point of differentiation of a hostel and an agent. The hostel can value add more easily than agents can and Google is the referee. Google makes agents pay for ranking but provides an abundance of free ranking improving opportunities for hostels. This is why the agent wants to be able to use your hostel name in their promotion efforts.
The message is clear. A hostel is the most responsible for their own success and a good PMS provider will automate a large part of their path to get there.
- Comments
11 years
HW and HB along with other agents are in business to make money. When running a hostel you need to find out how to get the agents to work for you so you receive value enough to more than compensate for the commission they retain. Eg. restrict them to two days minimum for the lowest priced dorm beds you sell.
Like most things in life - too much of something is often bad for you. Too much reliance on OTA's is bad for your hostel business and bad for the hostel industry.
Focusing a hostel business listing with too many OTA's mis-uses the multiplier effect. A hostel business has to know what it is that leads to success and then be prepared to say NO to false nirvana's. Because if you do not know what makes your business successful then you are likely to try anything. Then you fall in to a trap and get stuck having the multiplier effect ruin your business with too many short term commission reduced bookings.
By talking to your guests then you gain a clearer understanding of what they value. By talking to the guests that book on your website then you gain a clear understanding of what your preferred customer values and how they go about identifying that value before they make a booking. OTA's can not satisfy the value seeking traveller as well as the hostel's own website can. So then you modify many things that includes your PMS, Website, OTA content etc to deliver what they value.
If travellers could be certain they would have a great time at a hostel then the hostel could charge far more than other hostels. But we too often have more debates about what is charged than the amount of value the OTA, or PMS supplier delivers. Let's be clear. The OTA delivers mostly quantitative value so the hostel website should be communicating qualitative value to gain as many direct booking as possible. A PMS provider that can enable the hostel to communicate better quantitative and qualitative value will help that hostel gain a lot more bookings from preferred guests.
The PMS enables this to happen in many ways that includes value adding the guest experience and having those experiences have lasting effect that improves the hostel's web presence and results in more 100% bed price direct bookings.
The continuation of this thread about how many agents is healthy to be connected to can be continued by clicking this link. The conversation about increasing the profit of a hostel is now moving on to a new thread you can read below.
11 years
John TripConnect is an interesting question. We have seen TripAdvisor give large expensive quotes for Business Partner activation that is required for TripConnect to be activated before a hostel can activate our integration with TripConnect. Then we find that many games are played by OTA's (agents) to make their booking link on TripConnect to appear to be offering the lowest price. So it is not straight forward. In response we join in the games to help our users. Click here to see details on what Trip Connect is and how to use it.
In my own situation with our small family run hostel we are naturally ranked 3rd in the city on TripAdvisor. The price quoted from TripAdvisor to activate TripConnect via the Business Parter listing is too high. So we are taking a different approach. We are using the PMS to improve the relevance of TripConnect so that we can show that there is more value to the traveller in booking direct at the hostel rather than via the OTA booking links on TripAdvisor.
I understand the language is a bit specialised. I decided to do that when looking at how using laymans terms over past years seems not to get the message across. A lay person understands that they have overhead costs they need to cover and will think that giving the last few beds at super cheap prices is better than empty beds. This is their pursuit of economies of scale etc. I put the example of OTA commission rates going up when they can no longer deliver value to attract more traveller users and the example of Google being the common medium that causes the OTA to want to use the hostel's name, location etc. Then another example of how OTA's can't upsell tours etc because they being aggregation sites have characteristics that cause users of their sites to focus on price and not value.
So I need to put terms on these actions and characteristics so I can continue the conversation. I need to be able to walk users towards success. I need them to see that OTA's have an important part to play. Sometimes it may be necessary to use 10+ OTA's to get to the start point relevant to that hostel. But then I need the user to understand why they should slowly shut off OTA's to be left with just a few key OTA's.
WHAT IS AN INDEPENDENT HOSTEL? Just as in an economy, full employment does not mean every single person is employed. There is still about 2% unemployed people in a full employment economy. Therefore, similarly a hostel is independent and in control of their own business when they have about 30% of reservations coming from all their integratied OTA's, which will be just a few OTA's.
The latest HostelBookers agreement highlights why they could be a good OTA to stay with when they are suggesting they will list only those hostels that have third party insurance and fire safety. Unless Hostel Management starts a certification process for hostels then HostelBookers would be a good OTA to support and deploy for gaining more bookings from guests seeking safety. If travellers book on HostelBookers because they are safety conscious then there is the chance that HostelBookers delivered guests will become more elastic with decreasing price sensitivity and will be prepared to pay more.
Basically if a hostel does not want to follow how we make them more profitable then it looks like they only want a PMS to integrate with more agents and not to make them more profitable. For example we have some users that do not use the capability shown in this film that improves their direct bookings.
OTA's experience the same from hostels that do not post enough photos, do not make films for guests, do not translate their micro sites etc etc. Hostels contribute largely to OTA aggregation sites causing travellers to focus on price alone. Then the critical mass moves to giving priority to quantitative comparison. That is why HostelWorld introduced the Quality Score that is a name they copied from Google.
11 years
As previously highlighted – hostels have the opportunity to deliver qualitative value to their guests and as a result differentiate their hostel from competitors that are giving priority mostly to the quantitative price of the bed. Examples of extra value for the guest that costs the hostel nothing extra are: Free WIFI, Late check-out, Free luggage storage, Pre-arranged discounts from local businesses etc. The most appreciated and valued extras are those that pleasantly surprise the guest such as - free room upgrades when possible.
Some Property Management Software (PMS) can easily facilitate these things but it will be wasted on the hostel that is stuck in quantitative thinking. For example if two bookings are taken at the same time for the last 2 beds in a Four Bed Dorm then the quantitative hostel is most likely to be upset that they have to cancel one of the reservations or give the guest a reduced priced Twin Room. But the hostel looking for value delivering opportunities will see the opportunity to give a free upgrade in to the Twin Room for one of the reservations. Such a hostel will have established processes that the software assists them with to know which of the two reservations provides the best possible returns from the free upgrade.
The management will also know to make sure staff inform the guest that they have been given a free upgrade so the guest does not feel stressed during their stay that in any second they may get a knock on their door and told to change rooms. Again a good PMS has established templates that are auto populated with the guest's name, dates, and details such as room type booked and room type being upgraded to that is sent to the guest in advance via couple clicks in the PMS. As we know some people who book a dorm room do not want to be upgraded in to a private room so can benefit from advanced warning so they can have the chance to reject the offer. Then of course the PMS template gives them links to click on to communicate they do not want the upgrade.
In the above example what may be an immediate loss of an amount like 40 euros income is also an opportunity to be on a path towards gaining over 1000 euros in extra bookings. Such pleasantly surprised guests have more reason to leave a very positive review and rating. However, for the non PMS user then free upgrading can be too much of a gamble because they do not have automated and well thought through established processes set within the PMS that enables the highest probability that the guest will leave a positive rating and review.
But this only gets me to the start of the point I want to make in this post. That point is to do with how a hostel gains a comparative advantage when it is unable to gain the competitive advantage on agent sites. Comparative advantage is what a hostel pursues when it is being beaten by hostels with better location, ridiculously good staff, lower prices because they own the building they are in etc. Comparative advantage can be achieved when a hostel is not a leader in any obvious particular thing the guests value, but is still a good hostel. Competitive advantage is most easily associated with quantitative things that agent aggregation sites do well. Comparative advantage is more associated with overall outcomes. Eg what was the overall outcome for the guest.
I know where I am going with this but instead of my monologue getting too lengthy I will pause here. I would love to know what you have witnessed as being valuable to guests other than a low bed price?
11 years
A hostel's online presence is made of of many online representations. There are broad open access non membership mediums like search engines such as Google and YouTube. Then there are silos of member mediums like FaceBook and Pinterest and they all enable socialisation of your hostel online.
Considering that hostels have a social competitive advantage in the accommodation market place then there a compelling reason for hostels to create content for online mediums. Most hostels do not do enough in this area because it requires extra work and there is always a new medium that ought to be included.
Online Travel Agents (OTAs) pay Google to get higher ranked and TripAdvisor seeks to create a Google for travellers so TripAdvisor charges OTAs and you, to get higher ranked. But all along these OTAs can not represent your business as well as you can if you made the effort. Your hostel is the primary source and the authority for online content about it.
So what you need is to facilitate and automate the sharing of content about your hostel and make the experience of dealing with your hostel super smooth. Travellers want to share their experiences and other travellers value this user generated content more highly than sales spin posted on OTA sites.
The OTA needs to be seen by you as a module that you plug in to serve the purpose of making your hostel more profitable. There are many modules you could use and they are not all OTAs. Your PMS supplier will facilitate the plugging in of modules that are also mediums to enable guests to have a smooth experience and share their stories that entices others to book in to your hostel.
If you do not have Property Management Software (PMS) then you will not facilitate travellers to do what they want to do. Just look at how the automated booking engine being placed in a hostel website dramatically improves bookings because it allows the traveller to do what they want to do. Users of our software will see a minimum 100% increase in direct bookings when they place the integrated booking engine in to their website. The booking engine is a module, the App store is full of modules, and people have smart phones full of modules they want to use when touching your hostel.
Travellers get value for using the modules they have chosen and they do not like it that you inhibit their fun by not being part of the module content experience. Let your PMS introduce your travellers to your modules so they can do what they want to do and enable your hostel to have more relevance with them.
Over time the content created on these modules contributes far more to gain you more 100% bed price paying guests than at OTA can achieve in delivering you 88% and less paying guests. When you do it well your hostel will cast information shadows of positive influence to become a valued contributor to the information ecology of hostels. If you do it really well then your business can become what is known as a keystone species in the hostel industry that sets the trends and standards that other will try to emulate.
The diagram below shows the profit margin a guest is willing to incur to book a bed when that bed night appears to be backed by value. The Market Relevance is the extra value the guest feels and experiences that entices them to spend more, participate more, and post positive content.
Negative content is posted when the price is higher than the value experienced. This is subjective and makes it more necessary that you are more active with medium modules so that every guest has more chance to gain value.
11 years
Traditionally hostels created added value for guests via physical experiences like breakfast, tours, bars, laundry etc. These were advertised and pushed out to entice potential guests. Now valued hostel experiences are often created by the guest to share online such as images, music, films, introductions etc, that third parties try to tap in to for advertising, offer discounts, gain more users etc.
So basically the traveller still wants experiences and has increasingly different mediums to pursue them. Many online businesses are trying to tap in to your guests to capture them as a participant. This provides the hostel with the opportunity to orchestrate the connection of their guests with online intermediaries. If you can introduce your guest with an online business that adds value to the guest then you increase the shadow of online information that is associated with your hostel. You use that online business to be a component of your hostel to extend your hostel's presence online.
This is what we are doing for our users by connecting them with a set of intermediary components and enabling them to add more. It is highly valued by the traveller if the first time they are informed or experience a new app is from the hostel. When a hostel brands their account on the medium then they have an increased opportunity to communicate and add more value to the guest. Then in turn the guest engages and or creates content that promotes the hostel further.
Of course different guests have different influence and the savvy hostel would give free accommodation to the guests that have enough clout online to improve the web presence ranking of the hostel. Hostelworld, has done this for years promoting travel bloggers and helping them gain free accommodation at hostels in return for a news story that links to the booking page on HostelWorld. Of course the better value adding exercise is one that adds value to your own web presence and not that of an OTA. But why not host a travel blogger from an OTA if you do not have an abundance of bloggers to choose from.
Guest-created online content most often communicates the value other guests will experience. A travel blogger will communicate the experiences but adds extra value for your hostel via the link they create to your website. Hostels can be the blogger with authority for their location, but 99.99% of hostels in the world put no effort in to promoting their location and the businesses within it. Each hostel has the opportunity to communicate the value delivered by other businesses and facilities that surround their hostel. By doing this the hostel works towards creating an information ecology that places the hostel in the centre as the 'key species'.
A good example is demonstrated by Clink Hostels in London where they are submitting reviews via their Google+ page of local locations and businesses. Over time Clink will become the authority on what to see and do in their part of London, if there is no better more popular site. If hostels were more serious about adding value to guests and gaining more bookings then they could dominate Google+ globally for localised up to date information. There is great incentive to do this as a Google+ page used properly can turbo charge the search engine ranking of a hostel website.
It is also important where possible to pursue online relationships that are purely orientated towards improving your online ranking, especially if you have a hostel in a location with many businesses competing for the traveller's attention. In big cities there is too much clutter of information online for the travellers to be able to curate in their mind. This is why Hostelworld promotes featured listings with the statement "In our top 20 cities, on average hostels with a Featured Listing on Hostelworld.com receive 4 times as many bookings as non Featured Hostels". Google is the big tool used for curation of information and they want hostels to be active curating editors. People are reduced to selecting hostels in big cities from aggregation sites when they can not read anything of other value to help them make a decision.
Clink Hostels in London innovated the idea to use Bitcoin hype to create a news story that works like an advertisement for them. See the story here. The www.travelerstoday.com news forum hosting the Click Hostels story, use over 40 plugins for their website so they can create value from the people that visit their website. Clink tapped in to Travelers Today popularity and industry relevance to gain a news story link to the Clink website. In this case the value comes mostly from the link that is ranked by Google better than 200 to 20,000 direct links from standard websites. But likewise Travelers Today benefit's from linking to a business that has placed much effort in to it's Google+ page. The better is the hostel's Google+ page then the more likely it will gain news story exposure.
The three most important things for a traditional retail business are: Location, location, and location. As most people book a hostel online then it is gaining of online location that needs to be pursued. Never before has it been so obvious and so easy for a hostel to gain online representation that equals improvement of online location. Yes of course the HostelOffice software will automate many steps for gaining online popularity and connection to many modules that add value to the guest.
You do not have to do all things as by doing only some things do you put great distance between your hostel business and your competitors. The diagram about is showing you that there is much value to be delivered to travellers if you start on the journey. Traditionally the most value for traveller has been delivered by OTA's and many of your competitors are thinking that the OTA's will keep laying golden eggs for them. The price of feeding the goose has now moved to feeding more hungrier geese taking more commission and delivering smaller less profitable eggs.
11 years
We are please to see for the first time, 11 April 2014, HostelWorld reach out to it's internal customers - you the hostel owner and manager - seeking your ideas to add value to how Hostelworld goes to market.
This is a classic example of how the hostel industry can improve in the directions we all want if we all share information. If there is enough value added by suppliers to the hostel industry then that value will be enough to justify payment to those suppliers. So if you do not feel that you gain enough value from Hostelworld for the 12% they retain then start looking at why that is. There are many ways to adjust settings and content to improve the value you receive.
11 years
After leaving the corporate world the hostel industry taught me that most people are not in business only to earn money. The hostel lifestyle is very good and most hostel managers and owners do not want to turn their hostels in to oppressive money generating machines. There is much non monetary value gained from interacting with guests and assisting them experience what is located around your hostel. As you also know, many guests do not think in a way that causes them to consciously recognise a private and a corporate owned hostel. Private family owned hostels can suffer when on a backpacker trail fed by corporate style hostels that place a high value on processes and technology. Likewise corporate hostels can suffer from low reviews when fed by family owned backpacker hostels that place high value on personalised interaction.
So I want to point out where HostelOffice sits in the PMS supply sector of the hostel industry. We are a result of Swiss and Australian culture that places high importance on ethics and personalisation. We do not want to supply software to all hostels. We say no to many hostels because we feel their go-to-market culture does not fit with our culture.
"Organisational culture is the behavior of humans who are part of an organisation and how people interact with their actions. Culture includes the organisation values, visions, norms, working language, systems, symbols, beliefs, and habits. It is also the pattern of such collective behaviours and assumptions that are taught to new organisational members as a way of perceiving, and even thinking and feeling. Organisational culture affects the way people and groups interact with each other, with clients, and with stakeholders."
Maslows Hierarchy of Needs helps explain where we are:
All three of us that supply the DormProject software are not at all giving priority to gaining money. We gain much value from contributing to this world via the hostel industry that facilitates the exchange of cultural insights for the greater good of humanity. But as there is much work involved to supply this software and it facilitates the users being able to greatly increase their income and profit, then there has to be a nominal charge.
We are sponsoring this forum because it enables us to extend what we seek to achieve via the supply of software - to facilitate the sharing of information and ideas. Many people have contacted us as a result of this form and applied their own interpretation on us simply because they see us as a business and as a result 'must be out to make money at any cost'.
Anyone else can be a sponsor of this forum but unfortunately at the time of writing this post there are less than 10 sponsors so the idea of not sponsoring this forum to prove we are not here to make money is not an option for us. If more hostels sponsored this forum and the forum owners asked us to no longer contribute our product orientated information to this forum then we would stop.
For now when we are trying to convince hostel owners and managers that there is a better way to run hostels then we need to point to evidence. When there is a void of information then it is easier for mis-information to fill that void. So we place an effort it to filling the void and correcting mis-information. EG, the role of a PMS software provider is not solely to be a Channel Manager and linking to as many agents as possible does not lead to more profit in the long term.
We are very pleased this forum gives us the opportunity to demonstrate what our business culture is like. We do hope to connect with others that identify with our culture. If as a result we gain more sales then I do not think we should be begrudged for that as we only gain sales when we deliver value and as there are many types of hostels then new users are not always compatible with any other software provider.
As the saying goes - "If you do not know what road to take then any road you see will look like the road for you". It is after applying human factors of culture etc that one starts to clearly see that not any road or any hostel is suitable. If you have a PMS business then do not get grumpy at us because you think we are competing with you. If you are not sponsoring this forum and not trying to assist hostels gain as many direct bookings as possible via your software and the content you share online then we are not competing with you and you are not losing any possible users to us.
11 years
To connect your hostel to Google so you can gain direct bookings paying 100% bed price that enables guests to not be forced to use commission charging agents then you have to be using Property Management Software integrated with Google. Google will NOT allow individual hostels to integrate with Google directly without the use of an intermediary software supplier. Then the next challenge is for any other software provider that could get integrated with Google is that they have to know what they are doing. If they do not get it right then they will cost you a lot of money because you have to pay for the bidding to win that direct booking from Google Maps, Google Locations, Google Hotels and Google Plus. The software supplier does not have to have an official qualification so all skill levels will be representing hostels.
We would like to point out our official recognition for our professional skill level for managing Google bidding as can be seen in the attached.
If you think that integrating with Google is not so important to your hostel bookings then you will financially suffer from that belief in a year or three years from now when your competitors have gained an advance Google presence. Your competitors will be attracting most of the Google savvy backpackers that are right now the most desired guest for a hostel. But if you are a user of the HostelOffice software you will attract many of the Google savvy travellers as well as most of the Google savvy backpackers for your location and your hostel will see an exponential growth in Google reviews and ratings. With so many Google reviews and ratings your hostel's SEO will be greatly improved so it attracts even more direct bookings and your hostel business will move forever away from having to rely heavily on commission taking agents. Your hostel will be so much in demand that you will be able to consider opening another hostel that Google will fill for you at zero commission.
The hostel owners and managers that today do not take action to be more Google integrated, will be forever struggling and will not get past gaining an average of 1 Google rating and review a month. Considering the early adopter of Google will be gaining at least 30 reviews and ratings a month then the slow adopters will never catch up and doom their hostel to many years of misery and low profits. Read more here.
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