And this only works in your favour, the consumer.
With all due respect to Managers, they are not a Jack of all Trades as you need to be to cover the vast spectrum of skills required to successfully market, advertise, maintain and refurbish etc. etc. accommodation complexes. And this is having a major impact on their income, but they don't really know it yet: So you, the consumer, is the winner. With cheap accommodation.
Why, I hear you ask. Easy, traditionally the main funnel of business to accommodation houses were from Travel Agents with big wholesale divisions; Qantas, Sunlover, Go Holidays and the like. Well, surprise surprise, like everything, you had to pay for this service; up to 33% in some instances, but 25% being the norm.
Sounds expensive doesn't it? Then what mark-up do you think wholesalers receive in the liquor industry, as one example. I won't go on about that! But I will say this; the move away from Travel Agents has saved the accommodation complexes a lot of commission. But guess what? A travel agent booking is sold at Rack Rate, that's right, 100% of the advertised rack rate, not specials, not last minute offers etc. So again, we are left with cheap accommodation.
So what does that mean to the accommodation manager? Sounds clever doesn't it? Well quite the opposite, they may well have saved between 25 – 30% on agents fees, remember these agents offering HUGE marketing and advertising skills, not to mention their enormous distribution network (which is what current digital marketing is all about; distribution). But what they are doing is now selling cheap accommodation at ridiculous levels. FAR below the Net rate received from an agent. In some instances we have been putting our clients into accommodation at up to 75% off, while 50% off is absolutely stock standard for cheap accommodation deals.
So now you may see why you, the consumer, is the BIG winner. You get super cheap accommodation! Sounds great, sorry it's not so great at all. I won't go into this, it's a topic for another day, but with such levels of income into accommodation houses, the maintenance has to be cut and refurbishments are nearly nonexistent. As I said, that's a topic for another blog.
So in short, Accommodation managers should stick with the marketing and advertising techniques of the big wholesalers and in the meantime, until this trend reverses (and it will), the consumer can take full advantage of amazing deals.
