UPDATE: Looks like things will move forward. A new hostel OTA Dorms.com has entered the space and has a very featured rate and policy options. Also, Hostelworld was slow to change, but now might move fast under new leadership.
Hostelworld has recently made some major improvements since their commission hike last year. Their front end improved quite a bit, their mobile apps improved a lot, and the rumors of the MyAllocator integration is great news. However there has been little to no word on any improvements that can really help us all capitalize on the revenue we make from them. It is about time Hostelworld offers the basic revenue management controls the “big boy” OTAs offer, such as non-refundable rates, length of stay pricing, and packages.
The hotel OTA’s (especially booking.com and expedia.com) are light years ahead, and some of the tech-adventurous hostels actually utilize them accordingly to promote certain guest behaviors. Most do not. The thing is, promotions play a daily role in a hotel pricing strategy. It is becoming a standard for hotels to hire revenue managers and use revenue management programs and recieving a high returns for doing so. Here they use their old data to plan a strategy, and then use current progress and pacing reports to act, promoting the types bookings they want more. To do so, they use “controls” such as length of stay rates, advance purchase rates, geo-targeted deals, closed group deals, and package deals to name a few. They use specific promotions across different channels, chosen strategically, boosts their revenue, and it works wonders. You do not have to be a statistician, fluent in R programming language, or a predictive modeling data scientist to boost your own revenue.
What I can say, is that hostelworld lacks when it comes to offering hostels the tools to properly manage their incomine revenue. Advance purchase and non-refundable rates are outright against their policies, and it only offers the basics, where, if you use BPO, you can have the rate increase if the availability decreases automatically. Whoopdi-do.
With non-refundable rates, you would charge the customer at the time of booking, so you have some revenue to work with. If they cancel or no-show, there is no loss to you. You could even resell the bed, and make double. You keep it cheaper, to encourage the behavior, and they usually are applied to dates far out as advance purchase rates, to get you a base of bookings. If you have a high cancellation rate, you should look into it because it offsets that problem. Also advance purchase rates do not have to be non-refundable, but I urge them to be.
Length of stay pricing can offer a discount only if they stay a certain amount of time. There is an options for discounts, but nothing like how the “big guys” do it. Here you want to encourage guests to stay longer, by making it cheaper for them, but you still take bookings from those staying shorter times. Some management systems even offer length of stay pricing, but that is getting complicated.
It is about time Hostelworld offers the basic revenue management controls the “big boy” OTAs offer
Package deals are including your extras into the deal. Simply as that. You can call the promotion “Free Champagne” and offer a bottle of champagne to your private room guests on valentine’s day. Think of the extras guests always ask for, like including airport transfer, breakfast, dinner, pubcrawl, etc. You can get creative and this is where you can separate from your competition, that is, if hostelworld let you do it.
Now more about controls… controls are parameters you apply to your promotion or special rates. What you have is a “booking window,” basically an amount of time people can see the deal. So you should be able to open and close the rate either by a solid date for date specific promotion like valentine’s day, or contingent on the current date, like from 90 days out to 30 days out. Geo-based controls allows you to target people in or out our your country, or maybe even specific countries. This all depends on the capability of the OTA, But say, if you dislike Irish people, because they can take a joke, you can have a negative discount, thus charging them more. Unfortunately, Geo-deals are based off of the IP of where they are looking, and considering many non-Irish live on the Emerald Isle nowadays, it won’t work that great. Finally, with closed groups, you can assign groups a discount for being the loyal OTA customers, frequent bookers, or anything like that. They usually bring a better quality of guest, so I recommend it.
If you get a lot of Booking.com or Expedia bookings, I recommend you play around and see what it can do for you. However, I highly recommend you tell you Hostelworld account manager that you want these possibilities on their channels as well. They might have a strong marketshare of hostel bookings, but they are “small potatoes” compared to accommodation booking market overall. They need to up their game to compete with the giants of Expeida and Priceline, and this will help, help us and help them.
If you want to get into revenue management, I recommend you look into the HostelBench product. It offers many features at price that is beyond reasonable.
