Today’s resort operators are rethinking their long-held reliance on wholesalers. Why? Because flexibility, speed, and profitability demand a new approach.
Historically, resort operators and wholesalers have worked together hand-in-glove in mutually beneficial partnerships. For resort operators, the benefits of this approach were simple enough—their properties could reliably build a solid base of business, improve reach into international markets, bundle rooms with additional appealing travel products and do it all in a relatively straightforward way that was not prohibitively expensive.
While that’s generally worked well enough, the booking, distribution and technology ecosystem driving resort business has not remained static and that’s ushering in an era of change. This evolution requires resort operators to reevaluate whether a business-as-usual approach of heavy wholesaler dependence is putting them in a competitive bind—and consider what they can do to adapt.
Why a wholesale-heavy approach falls flat
While many of the benefits of wholesale business relationships still ring true, they’re not without drawbacks. Some of the challenges modern resort operators face with these business arrangements include:
- Wholesale contracts locking in potentially lower than market-bearing ADRs months in advance
- Limited to no flexibility to react to last-minute demand spikes as contracts tie up valuable inventory that could potentially be sold via more profitable channels
- Lack of visibility into wholesaler rate distribution risks rate parity issues and erosion of traffic to lower cost direct channels
- Difficult to gather a complete view of guest data, limiting potential for future direct marketing promotions and personalization efforts
- Lack of control due to tour operator dependency
In short, the foundation of solid, typically-steady business wholesalers provide can be a valuable asset—but having too significant of a portion of your room inventory tied up in a relatively rigid arrangement can leave resorts with limited options for maintaining a healthy profit margin. And in a business environment clouded by rising operating costs and inflation, wholesaler-dependent resorts are feeling the pinch.
Those with an extreme reliance on wholesalers are left in a stressful—and likely unsustainable—position of needing to perfectly walk a tightrope when it comes to execution and limiting operational costs to meet budget targets. The organizational muscle memory that comes with reaching this level of operational excellence is certainly an asset, but it’s best paired with flexible revenue strategies that can offer financial breathing room when an unexpected setback inevitably hits.
How the resort market is shifting
Among this backdrop, there’s a storm of change brewing between guest behaviors, technology, and the overall market that are pushing operators to re-think their approach.
For one, transient demand for resorts remains relatively strong—especially among those catering to luxury segments—and that demand is spurring opportunities for more profitable pricing strategies.
Another significant factor is the shortening of booking windows. While many plan their resort vacations months in advance, more travellers are willing to make relatively quick plans to take advantage of the right opportunities. That behavior is fueled in part by the rise of OTAs, metasearch and direct booking channels making it easier than ever for potential guests to shop around and seek out what they perceive to be high-value, timely deals.
With this brew, many chains and tech-forward groups are opting to embrace a more dynamic revenue strategy that allows for increased flexibility with a greater share of room inventory set aside for often higher-value transient demand.
How IDeaS G3 Revenue Management System helps shift the balance for resorts
By investing an in advanced revenue management system built for resorts like G3 RMS, resort hoteliers are unlocking new ways to better balance their overall business mix—and in turn, unlock greater profitability.
“As a family-owned resort, we debated for years before committing to an RMS, unsure if it suited us. We were concerned about adapting our team to dynamic pricing and questioned the necessity given our stable finances. Now, after a year with IDeaS optimizing our rates and boosting ADR and RevPAR, we wish we had invested sooner. An RMS initially seemed daunting, but it has provided more control over pricing strategies. It’s definitely worth the investment!”
Here’s how G3 RMS makes that possible. One foundational component is the use of advanced demand forecasting techniques at a granular, room-type and market segment level to understand the true, unconstrained demand for each. This enables the rapid deployment of dynamic pricing and inventory management decisions that adjust daily (or even hourly) to market conditions. These optimized decisions help drive occupancy on shoulder nights, improve RevPAR and help deliver a stronger foundation of transient guest revenue.
Additionally, resorts can fold in data from ancillary revenue streams like F&B, spas, and more to gain insight into who their highest-value guests are and inform market segmentation. This allows for revenue optimization decisions that go beyond the room level so they’re not just filling rooms—but filling them with the guests most likely to provide the biggest revenue lift.
Furthermore, insights into current and future distribution channel mix allows resort revenue teams to make strategic changes like manually limiting booking availability from higher cost of acquisition channels during peak periods of demand to improve profitability.
Perhaps most importantly, with this insight in hand, resorts can strengthen their negotiating position with both wholesalers and OTAs as they negotiate more flexible terms and develop allocation plans for their future business mix.
A better balance, on balance
Over-reliance on any individual booking channel poses risks, and an advanced revenue management system is a key component for any resort looking to reshape their revenue strategies to a more flexible dynamic approach.
Could your property benefit from improved strategic flexibility? Connect with us today to discuss the possibilities.