Comment by mattwdelong | Hacker News Reader

Comment by mattwdelong | Hacker News Reader

I'm currently employed in the hotel industry. I really have no defined role, but I perform a lot of the GM roles. I can give you a few things to think about.

First and foremost, the chain to which we belong just got out of a long fight with a large Online Travel Agency [OTA]. During this "fight", the chain really noticed that OTA's had a stranglehold on the online room distributions, especially the rates so in response, they have "initiated" some policies to nip that in the butt. (OTA's are currently killing Vegas)

I will show you the breakdown of our reservation distribution this year: 55% CHAINWEBSITE.com, 27% CHAIN Call Center, 9% GDS Travel Agencies, 9% Third Party Websites (broken down into Orbitz, Expedia and Travelocity). In short, due to our policies we CANNOT offer a lower price outside of our best available rate available on the CHAINWEBSITE.com - we could null our franchise agreement.

I only speak for one chains policies, but this chain has 6k properties and another 1k or so in development. It's not small.

Thats one thing to think about. Some more thoughts:

Getting GMs to lower rates is tough; if you give guest X rate Y, and guest Z finds out, they also want rate Y. It sometimes makes a messy situation dealing with this. Selling rooms in important, but keep rate integrity intact is also important.

Chicken/Egg conundrum. How do you plan on getting hotels to participate?

-- In response to the above, I would personally like to search my geographical area for any travelers without having to sign the hotel up. Can I do that? Why not?

Some solutions to the above thoughts:

Instead of getting hotels to directly negotiate prices, why not use a combination of that and a GDS system like Amadeus, SABRE or Galileo. You know, so if a hotel doesn't bid on their trip to offer occupancy, then they have the option of making a booking through your system opposed defaulting to Expedia (which books through the same systems). It might solve the intermittency between the chicken/egg problem, and having an active user base - attracting one before the other would be essential. Overall, I don't think the hotel industry will take kindly to having to bid for guests. On the other hand, there is LOTS of money to be had and I wish you the very best. Its an ambitious start!

Thanks a lot for your feedback Matt. It is very interesting and valuable. I can tell you know a lot about the industry and how it deals with OTAs.

First of all, LetMeGo is not only about low prices: it's about offers customized for each traveler depending on his/her needs (VentureBeat nailed it down here: http://bit.ly/5vioZZ ). Nevertheless, given that LetMeGo's pricing is "semiopaque" (the bids submitted by the lodging are ONLY visible to the traveler that submitted the itinerary), we think that some lodgings will offer prices below what they publish in CHAINWEBSITE.COM. This would be relatively similar to the way hotels do with other opaque-pricing service like Priceline and Hotwire that allow them to forget about parity. Time will tell if this assumption is correct.

By the way, we are not counting on large chains for our success. In fact, we want to work primarily with independent and small hotels, bed and breakfasts, and the large vacation rental market. Our system has been designed with them in mind first. Why? Because this area of the industry has a lot of potential that hasn't been discovered yet, and because I am against large corporations with too much power.

In reference to the chicken/egg dilemma, we have secured access to large databases of lodgings. We are inviting them all to list their lodgings for free using a very intuitive interface. They will only pay us a 10% commission per booking after they get paid.

We are staying away from the GDSs for now because most independent lodgings don't use them (outside the US independent lodgings account for more than 80% of the market). Also, because our service, as I mentioned above, is about custom offers and service, and not only about real-time and the-lowest pricing.

I had the "pleasure" of chatting with the VPs of Revenue Management of two of the largest hotel chains in the US and in the world. As you predicted in your comments, they didn't like LetMeGo's model. That, for me, was a good sign.

Thank you Matt!

Glad I could help in some way. A few other thoughts I had after reading your response.

First, don't let the VPs of Revenue Management make you deviate from targeting chains. They have THEIR profits to account for, just like each hotel has their own profits to account for. In a way, this scares them because the revenue is not coming in through THEIR channels. If you think you can help a hotel in a chain profit, if you can prove it with data and you're passionate about it then go for them too! There are some really awesome online tools I want to use, but there are just so many policies that don't allow it. Hotel industry right now is stuck between being "innovative" and "head stuck in and around the ass cheeks region". Simply put, the hotel industry is dropping the ball in many areas where they can thrive. I would LOVE to work for a chic independent hotel doing marketing, I think I know enough about the industry and online marketing to help them immensely.

I am going to discuss it with the owner of the establishment I work at to check out the site and see what they think. They are fairly old school in their thinking and I am scared that they might fall behind. I have been trying hard to be persuasive in transitioning them into online marketing. They might be willing to test it out at their smaller property first and see how it goes. I may get back in touch with you via email in the next couple days.

All I can tell you when negotiating with sales/gm/owner is put emphasis on their value. They do want to fill a room, as a room is perishable just like a food item. A room not sold is a room that can never be sold again. Just a quick question with regards to bidding on a guest - does the hotelier see other hoteliers bidding? Or is this private?

Regardless, I am very interested to see how your venture plays out. Again, good luck!

Thank you Matt :)

Yes, lodgings see the bids from other lodgings in real time, including all the details. Why?

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