Development Quarterly - Issue 3 IHG Europe's Development, Design & Openings magazine

TRENDS
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The initiative is important and the aim is clear: Lowest Price
Promise guarantees that loyalty club members will get a lower
price than anywhere else when booking directly with IHG ® .
Launching the Lowest Price Promise – a pledge to guests
Earlier this year IHG ® launched Advantage Pricing, a discounted rate offered to IHG ® Rewards Club members if they
book direct. Sounds simple enough, but this Lowest Price Promise is a result of substantial research into online
travel agencies, loyalty clubs and most of all improving the guest experience.
It’s been almost 20 years since Microsoft launched online travel
agency Expedia. After a slow start, what followed was an explosion
in online travel agencies (OTAs) which has been nothing short of
an industry revolution. As access to the internet grew, so too did
people’s confidence in internet security, leading to more online
bookings. But the business model really expanded when hospitality
called for a much needed boost in the wake of 9/11. Coupled with
increasingly cost conscious customers following 2008’s economic
crisis OTAs have, in a relatively short period of time, grown beyond
all predictions. Last year alone, they took a combined total of
$278 billion in bookings*.
Now IHG has launched its very own way to connect with today’s new
breed of savvy guest. Advantage Pricing piloted in May with Holiday
Inn Express ® in the UK & Ireland. Currently direct channels have
price parity with OTAs, but by offering rooms through the closed
user group of IHG Rewards Club, IHG is able to offer the best value.
The initiative is important and the aim is clear: Lowest Price Promise
guarantees that loyalty club members will get a lower price than
anywhere else when booking directly with IHG. Vice President of
Distribution & Commercial Marketing in Europe, Apurva Pratap
elaborates, “Lowest Price Promise was born out of finding a way to
make things simple for our guests and addressing their key needs.
Everything starts with the customer and customers have been
telling us they find it increasingly difficult to determine where to
get the best price for our hotels. The distribution landscape has got
much more complicated.”
Research commissioned by Holiday Inn Express backs this up.
The average British person spends approximately eight days a year
searching for the best deals. Out of the 2,000 people surveyed,
75% were ‘frustrated’ when searching for the lowest price for
holidays, hotels, mobile phones and bills. A massive 69% felt there
were too many price comparison sites, which left them feeling
muddled and unsure whether they had got the best deal or not. It’s
clear that trust is a major issue between the customer and booking
channel. Apurva continues, “What we want to make sure of is when
we offer Lowest Price Promise it is a promise with real substance
which is true every single time, so there can never be an occasion
where that promise is broken.”
Direct booking channels include the IHG website, the Central
Reservations Office and the mobile application which is a route to
purchase that is only going to increase. Last year, market research
company Euromonitor estimated that by 2017 over 30% of online
travel bookings will be made on mobile devices. If this trend
continues, IHG can be confident that its app will deliver as it was
recently voted as the best iOS app in the world by Apptentive.
As IHG’s largest estate, the Holiday Inn Express brand was an
obvious choice for piloting the scheme. It is also the brand that
customers most associate with simplicity, so aligning the booking
process with that ‘Simple. Smart. Spot On.’ messaging became the
priority. But what of the plans to roll it out across IHG’s brand family?
“We are working through how we can create that same simplicity
and are able to ensure that without question, there will never be
an instance where you can find a lower price through some other
means” confirms Apurva. “When we are confident that we are able
to achieve that across all the brands, we will do so.”
It is a clever solution that has been a long time coming. Through
direct channels cost-of-sale is reduced, brand reputation and
guest experience are more closely managed and guests benefit
from loyalty club features as well as the lowest prices. But how
will OTAs respond to this initiative? With deep pockets, they are
well resourced to respond. “Certainly they are attempting to
respond with loyalty programmes” Apurva comments, “but one of
the things that the hotel companies have over OTAs is they actually
manage the hotel experience. You might spend seven minutes and
40 seconds on a booking website but you spend 48 hours at the
hotel, so what’s actually delivered by the hotel stay is a huge part
of the overall experience. We value OTAs. They have a role to play
and we would like to keep supporting that, but at the same time we
want to make sure that as the brand owner, we ensure guests have
the best possible experience in terms of price and stay.”
Advantage Pricing is a game changer. It answers the customer call
for clarity and value while increasing loyalty members, preserving
brand integrity and ultimately improving the owner proposition.
And in the end, everybody wins.
* Euromonitor, January 2014
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