When it comes to reserving rooms, both business and leisure travels increasingly prefer online travel agencies (OTAs) to booking directly with a hotel. Compared to direct bookings with hospitality chains, OTAs typically offer advantages such as better prices, a smoother experience, name recognition and loyalty rewards.
The trend toward OTAs poses some thorny challenges for hospitality chains. For one thing, being left out of the booking loop represents a lost opportunity to engage with a customer, create a positive experience and collect data on travel plans and preferences to leverage in future interactions. More importantly, OTA commissions are squeezing already tight profit margins. Since 2009, commission rates have increased by 48 percent, rapidly outpacing the rate of growth both of room revenue and of costs such as local payroll and branding investments. As margins continue to shrink, funding innovation becomes increasingly difficult, leading to a cycle of declining services and eroded competitiveness.
In this environment, hotel chains face the challenge of enhancing – on a shoe-string budget – the capabilities of their direct booking systems and applications. Specifically, technology must enable a more seamless customer experience and greater responsiveness to customer feedback. Integration with multiple databases is essential to ensure rate parity and drive multi-channel marketing campaigns that leverage social media and search engine optimization to boost visibility.
An effectively deployed Agile development model can deliver the required combination of innovation, functionality and cost efficiency. At a high level, research shows that Agile development projects are three times more likely to succeed than Waterfall projects. More specifically, by virtue of its iteration-based methodology, Agile has the potential to reduce time to market and speed deliverables into production. Agile’s focus on communication and collaboration between teams, moreover, enhances flexibility and the ability to accommodate changes. Increased visibility is another advantage, as all steps of the project are transparent across teams throughout each phase.
Softtek recently worked with a multi-brand global hotel company that operates 5,000 hotels in more than 100 territories and countries. The hotel’s development teams were focused on enhancing the chain’s suite of websites, mobile presence and content displays used to support reservation agents. The team’s ability to innovate, however, was hampered by high internal staffing and vendor resource costs.
Softtek’s solution was to establish Agile enhancement and forward development teams in Mexico to support all of the hotel’s digital channels. The relative proximity of Softtek delivery centers – 3 to 4 hours from the client’s operations – was a key factor in facilitating collaboration and communication between the teams and enabling the success of the Agile model. Results included reduced staffing costs and increased efficiencies, allowing the client to enhance the functionality of the digital suite and drive a wide range of innovative efforts. Through the Softtek initiative, the client realized a 5 percent increase in total revenue growth, and a 2 percent increase in revenue per available room (RevPAR). Moreover, the hotel’s digital channel supplanted OTAs as the largest source of bookings.