Expedia’s new value-add tool can potentially drive hotel RevPAR gains

The hospitality industry is headed for dubious times. Expedia says its new platform is here to help.

If PwC’s updated lodging outlook is any indication, revenue-per-available-room deceleration is the new norm. According to Hospitality Directions U.S., released in August, RevPAR grew at 3.1 percent in the first half of the year, “the lowest year-over-year growth since 2010” with “recent trends pointing to further deceleration.” Similarly, the report also finds that “while average daily rates are expected to continue to grow, albeit at a decelerating pace, driving an increase in RevPAR of 2.9 percent, the lowest increase since the economic recovering began.”

Enter Expedia’s newly launched Value Add Promotions tool. Available to hotel partners on Expedia PartnerCentral and its associated mobile app, the new Value Add platform allows hotels to increase their property’s promotional performance across Expedia, Inc. brands and their 450 million monthly shoppers without using price as the influencer; rather, by offering complimentary amenities with the hotel booking. The current list of more than 25 categories of Value Add Promotions—from free WiFi to room upgrades—are, by design, intended to translate into greater demand and greater revenues for hotel partners.

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“Essentially, we created the tool to increase visibility and conversion so hotel partners can enhance the amount of business and the number of guests that they obtain through Expedia’s marketplaces by maintaining and protecting their ADR and increasing their RevPAR,” Benoit Jolin, VP of Expedia’s Global Product, told HOTEL MANAGEMENT.

The Cost of Doing Business

To that end, returns derived from value-add offers on the OTA are not diminished by incremental costs such as additional marketing or merchandising fees, nor advertising costs. The platform is equally a value-add service to all Expedia hotel partners worldwide and operates on a cost-per-acquisition model. Nor will hotels incur any pay-per-view costs, although Expedia’s “promotional badging” calls out value add offers and prominently highlights them on the hotel’s details page.

“We’re actively optimizing ways in which we can convey these promotions to our customers and we’re constantly employing our ‘Test and Learn’ philosophy to use different techniques that will lead to more visibility for our hotel partners and increase conversion,” said Jolin. “We’ll take on the analytics work on behalf of our hotel partners to drive the greatest results possible for those who participate.”

Value-Adds and Visibility

Accordingly to Jolin, the “promotional badging” of these offers will only indirectly impact Expedia’s algorithm for determining hotel rankings on the site; increased conversion that results from a property’s value add promotion on Expedia will, over time, strengthen the hotel’s visibility on the site. “The more the offer resonates with the needs of our customers, the more it will translate into conversion and the more that will translate into visibility,” he explained.

To determine the value-adds that are key to conversion, Expedia conducted its own survey based on Merrill Research, concluding that the five most sought-after amenities include: free WiFi (75 percent); special rates (70 percent); free parking (65 percent); loyalty points (40 percent); and breakfast (20 percent). But the survey was actually spurred by interviews and focus groups with a panel of Expedia hotel partners—of which there are more than 5,800 worldwide—to ascertain some of the challenges they face in online distribution, one of which was distinguishing their properties in a marketplace driven by price.

“This initial list is a result of our primary research with the hotel partners who make up our international partner panel and our research with travelers,” Jolin said. “So we indexed these promotions because they’re the most consumer-desired value-add categories and it’s a pretty solid shortlist.”

Customized Offers by Market

However, Jolin also pointed out that the list will evolve to reflect the needs of specific markets and specific niches so ski resorts and beachfront properties can offer more relevant value-adds. “With so much diversity in the world, we’re already getting requests from hotels in different markets for unique amenities like our South Korean hotel partners who want to offer a free chicken and soju dinner and other hotel partners who want to offer ghost tours of their properties,” he said. “We may offer a different set of categories for hotels in Southeast Asia than we will for hotels in northern Canada in order for the value-adds to reflect the unique environment where the hotel is located. We’re making this flexible so we can cater to the world.”

In the meantime, hotel partners can still customize their value-add promotions on Expedia to certain travel and/or booking dates, room types, as well as specific characteristics of their value-add offer, such as breakfast in the form of a room credit, voucher or discount for a select number of guests and a select number of days of stay. “Hotels may be willing to offer travelers more value when they need incremental visibility,” Jolin said. “They can also structure their offerings to certain room types, which our hotel partners were very clear that they see opportunity to move their most premium inventory because that’s always a bit harder to market and sell. So promoting higher premium inventory with value-add offerings is also going to contribute to higher ADR and higher RevPAR.”

More Listing for More Data

He also made the point that in addition to driving occupancy and RevPAR, value-add promotions can also serve as marketing vehicles for hotel partners who can take a cue from Expedia’s “Test and Learn” philosophy by offering multiple value-add on the OTA’s sites to suss out the promotions that generate the highest response rates among travelers. “By offering four or five different amenities, hotel partners can use the Expedia marketplace as a lab to determine which offers are worth keeping and consequently, to understand how to best promote their property to the world,” he said.

Cost-effective, the information will certainly prove valuable for Expedia’s hotel partners when the OTA rolls out another of its upcoming new tools: a platform through which hotels can monetize certain value add offering in order to generate ancillary revenue to the property.

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