Happy New Year; Rarecommunitynotes #4

The Rare Community Forums RARE Community Notes Happy New Year; Rarecommunitynotes #4

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  • #170

    RARE India
    Participant

    Dear Partners,

    Welcome to another edition of community notes. As we approach the end of the year and we look upon another season coming up, we have been doing a lot of questioning with our agent partners, direct travellers, media people and also other non-Rare hoteliers. It is true that Brexit, the Presidential polls in the US and our own issues with demonetization have effectively been vexing for the tourism industry. However agents are speaking of a better second half of the season that is Jan, Feb and Mar of 2017. So let’s look out to a more encouraging months coming up and ofcourse a wholly better season of 2017/18 and in anticipation it would be a great idea to plan your tariffs and promotions well in advance. We already touched upon the importance of tariffs and the annual increments there on, however there is more to this than just putting out costs. More and more travellers look for value while tour operators look for competitive price points.

    Here are some insights into effective pricing for the coming season 2017/18

    1. Are your rates ready for the season of 2017/18?: It is important to have your rates ready for the season, even as we speak. This is for two reasons – costing for brochures have already begun and especially for larger companies they are already strategizing for the next two years. If you wish to be ahead of your game you should have your rates ready for the season coming up well in advance.
    2. How about doubling the advance notice on pricing?: Infact this is one thing we have been advocating for sometime now, that you should socialise rates that can be effective for two years in succession. This helps your promoters plan and promote you constantly without a break or having to check with our offices for next year’s rates.
    3. CP, MAP, AP or JP or FLP (Fully loaded plan) : Promoted as experiences, it makes sense for RARE hotels to be promoted as full board + full experience, cash less bookings at the unit, but in most companies however committed they are to promoting unique travel programs, they are bound by rate comparisons and are subject to ‘price wars’. We have seen the best of companies succumb to pricing strategies which places many of you at risk, simply because on a costing sheet your rates stand out higher in comparison to other CPAI rates. One suggestion is to begin to look at CPAI rates especially for comparative purposes and especially if you have credit card and payment acceptance facility.
    4. Are we aligned with the comppetition around?: While you are looking at next seasons pricing, it would be a good idea to take stock of what your neighbours are pricing themselves at. Often it is brought to our notice and we point out that some of you are not aligned with the pricing for the destination. For example if you are placed on the fringe of a route, also traditionally the destination is a one night offering and other hotels are in the mid-budget, a high price point will not work in your favour unless you have been able to carve a ‘superb experience’ that matches the pricing. It is our knowledge, that in such cases, if program nights are reduced or budget comes up for question these properties are the first to be deleted from a program.
    5. Additional immersions and pricing: For those with additional services like safaris, rural rambles and other activities where you incur costs, your pricing should be tighter with no more than a 25% mark-up on the basic cost. This year it is our endeavour to promote as many indigenous experiences as possible. It would be a good idea to enlist as many private activities as possible which your guests can do on their own. It would be a good idea to invest in graphic maps and other details experiences which guests can discover on their own.
    6. Are you geared for Family Travel: RARE has been promoting family travel in a big way, it would be a great idea to have pricing for children well laid out and also listing activities and engagements for children. For older children please remember to list volunteer activities even if it is for a two day spell, for children of all ages there needs to be child centric activities, costs for extra beds, triple sharing, ranger programs, would be a great way to promote and list yourself as a family/ children oriented destination.
    7. Think about being market sensitive: Given the trials of this season, our recommendation is to keep your rates for the coming season 2017/18 the same as last years and not opt for any hikes. Infact one of our partners follows a very good thumb rule, is to substantiate hikes with service upgrades and property upgrades. Which is a good way to focus your evolution and hence the price points.
    8. How much hike?: Should you aim for a hike, we would not recommend more than a 10% hike and even then your price differentiator be substantiated with the value for the hike. Always putting hikes down to increase in fuel costs, increased operations etc. is really not a good marketing strategy.
    9. Off-Season Discount: Usually off-season discounts are anywhere between 30-40% off the printed tariffs, this is excluding the TAC and taxes. Another point about Off-seasons is that the traditional off-seasons are passe, please ensure your off-season are in line with your destination. So if you have seen that October and April have been traditionally low, they should feature in your off-season. It just helps promote yourself better.
    10. Do you have a domestic strategy? Where the domestic and direct booking strategy is concerned, our recommendation is to come up with packages which add value and aim at inclusive costs:
    • Transfers
    • Small children (up to 7 yrs) free of cost
    • Free upgrades and inclusions. Group discounts, long stay discounts, weekend and weekday pricing.
    • Off-season discounts at least 30-40%
    11. Dynamic Pricing: This is increasingly a painful area especially with agents. You should have a strong dynamic pricing strategy that is, (a) at par on all your sites and OTA portals. (b) if you are agency focussed, there has to be a margin for the agent in case of a double booking that can be handed back to the agency. This is just the reason why we have been recommending our online solution system Travel Mantra for sales and management of online portals and off-line queries among many other features.
    12. Check this before you advertise your pricing for the next season :
    • It has been proven that for RARE and small hotels, the travel agent is a big contributor who takes the concept and story out to the international trade effectively.
    • The discounting/commission for DMC/INB agents should at least have 25-30% margins so that they are effectively promoted to the FTO’s who also have their mark-ups and will stay within range of your printed tariffs.
    • Though we do not recommend credit, for a few high-profile DMCs you may see better bookings if you work on a system of voucher acceptance and credit facility with-in a specified time range. Many tell us that they will clear bills with-in 15 days of the guest checking-out.

    We hope the above has been helpful. Do write or call us in case you need any market or agent specific data and we are more than happy to research for you.

    Here’s to wishing you a great New Year of 2017 and promises to work towards making every initiative for the community count towards increasing your occupancies.

    Regards
    Shoba Mohan & Sowmya Vijaymohan
    Partners @ RARE India
    +9198102 65781
    http://www.rareindia.com

    What we save, saves us.
    Think before you print.

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