Thursday, July 14, 2011

Giving Away Room Inventory?

I was interested to read that a renegade collective of moteliers from Rotorua Association of Motels (RAM), entered into a one-off agreement with a North American tour company Great Atlantic Travel and  New Zealand tour company Navigator Tours. The moteliers agreed to hold allocation of approximately 1000 motel beds over the Rugby World Cup in the hope that rugby fans would purchase package deals.

The deal fell over and with the benefit of hindsight, there appears to be a valuable lesson somewhere HERE. 

Large events such as the Rugby World Cup usually bring out Johnny-come-lately third party agents that attempt to cash-in by packaging deals that include accommodation. Accommodation providers are often approached and an allocation of rooms are requested to be held while the agents attempt to sell the packages to the public.

When approached, accommodation providers have a vexing decision: Do they give away rooms to an agent (that they often have no prior relationship with), or do they go it alone and manage their own inventory?

There are advantages of dealing with a single agent as the accommodation provider can set tariff with one provider, have the luxury of blocking out future room nights and simply leave the marketing to someone else. There are risks however and the main issue appears to be that agents requesting room allocation over a major events often drastically overstate their requirements and leave accommodation operators in the lurch when public demand falls below what was expected.

I have no problem using agents or offering room allocation when it suits, however blindly handing over your business's lifeblood (room inventory) over an anticipated peak time seems to me to be foolhardy. Over high demand periods it is preferable for accommodation providers to individually manage their own yield and inventory in order to minimise risk by dealing with the customer direct. After all, they should be experts in doing so...

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