There is a big push right now from companies that claim innkeepers can capture additional revenue through their association's website. These companies offer some form of member directory that displays availability and maybe even pricing for each bed and breakfast member. They also offer to bypass your online booking engine and capture the reservation using their booking tool.
Is this process adding to the pie or taking away from it? Are these companies bottom feeders or can you really experience a significant boost in revenue?
The biggest challenge, like most marketing and promotion ventures, is that it's so intriguing. We think in our minds that it's going to explode business. Very few marketing ventures cause a 20 or 30% increase. In addition, there will be those within every association that get very excited about this idea and it's tough not to get sucked in. Who wants to go against a friend or temper a friend's excitement?
Talking with associations that have gone this route, it hasn't been what they have expected. A few have even backed out of their contracts as fast as they can. Those that remain for the most part see very little increase and are looking for other solutions.
So let's take a moment and evaluate the challenges with trying to obtain more revenue through association websites:
1) Most association websites have very little guest oriented website traffic.
Taking a step back, association websites aren't the best medium for attracting potential guests. They are about attracting potential bed and breakfast members for that national, state or local association.
Check the status of any association you belong to. It's easy. Simply Google your state and "bed and breakfasts" for example "Alabama bed and breakfasts". What page does your association show up on? Very few association websites have solid website traffic that would benefit you. Take PAII for example which is the largest national association of innkeepers and has been around for a very long time. Google "bed and breakfasts" and PAII doesn't show up even by page 10. Even if an association claims to have good website traffic, make sure it is the traffic you need: potential guests.
One of the few associations that really has great search engine placement and promotion is Bed and Breakfast Association of Utah (BBIU). Google "utah bed and breakfasts" they are normally in the top 3! Most of their members agree they get a lot of business through the association website. As a community we need to applaud BBIU because their association website looks, acts and feels more like a travel website than an association website. We would encourage more associations to take this approach. See how membership is a secondary link almost as a "oh by the way, become a member". The Texas Bed and Breakfast Association is another stellar example. Notice how both Utah and Texas don't show availability grids or introduce price wars but just highlight their members. This is best.
2) Will this add to our pie or take away from it?
What will this company do to push more visitors to the association's website? If you do go with them use Google Analytics to track this boost in promotion. If they are not pushing more quality visits to your association's website, they are taking from the pie, not adding to it.
Most of these companies are reintroducing commissions to the bed and breakfast industry by taking up to 30% per reservation. Ouch! Often they share a little with the association. Skimming money away from the member inns and giving it to the association isn't a good long term idea.
Some offer a "free" online booking engine but those rarely compete with the industry leaders that have special and packages, gift shops, retail items, minimum night enhancements and more. It's not free if they take a commission per reservation. That's actually the most expensive online booking engine on the market. Even GDS reservations are fee based, not commission based. Look for a low monthly fixed cost not commission based. You need online bookings for your inn's website anyway. Directories that push business to your website and booking engine trump those that try to skim for themselves.
3) Price wars have come close to destroying the hotel and airline industries.
Some associations want to compare association members side by side pricing wise. That is a terrible idea since the bed and breakfast industry is all about the experience guests enjoy, not who is cheapest. If you want cheap go to a motel.
Look at the industries that have done price wars: the airline and chain hotel industries. Airlines have been doing so amazing (not!) they wanted a bailout a few years back. Southwest Airlines never did GDS or travel websites and is one of the few airlines to thrive and not rip off their clients with silly fees. They can offer low rates because they don't have to pay a middle man.
Hotels really struggle from time to time beating each other up on Hotels.com, Priceline, Expedia, Travelocity, etc. Marriot Hotels is pulling out from travel websites (GDS) and promoting their own website and booking system because the commissions are killing them. Others will follow.
Associations should highlight their members, not introduce a price war. Don't be shocked if members start leaving to get out of devaluing their rooms.
4) Is displaying association availability a good thing?
What about showing who has vacancy? Studies by Reservation Nexus have shown that displaying an availability grid can often do more harm than good. For bed and breakfasts that are not full (80% of bed and breakfasts) it sends the message: "since they are so vacant, it might not be the best place to stay". A simple "vacancy" or "no vacancy" is better than a full grid in most scenarios.
Most of the time the big push for showing detailed availability is for members that want to share with other members when they are full. This is a valid request, but that doesn't mean you share that information with the public. Availability grids normally help the full get fuller and everyone else remains the same.
5) A member list and/or availability grid should be just the start.
Showing members and availability is just part of the toolset an association needs to more easily run their operations and better communicate and coordinate with its members. Member management, member dues, conference management, forums, newsletters, articles & education, vendor management, etc. need to be a part of any association system put into place.
6) Contracts are a bad thing.
It is kind of baffling that most of these companies approaching associations are forcing them into two or three year contracts to skim revenue. Their cost for setting up the operation is trivial so why the long term contracts? Long term contracts are good if an initial investment needs to be covered, for items such as equipment or payroll. Be wary of long term contracts where there is very little risk or initial investment involved.
Recommendation: Convert your association website to be more of a travel website.
Like the Utah and Texas state associations, reinvent your association website to be focused on attracting potential guests. Associations by their nature have great search engine potential. Doing so will increase revenue to your members and increase membership. The key is to push business to your association members, not take profits away from them. You are associating to build everyone up, not getting them to compete in a price war.
Summary
There are several new products circulating in the industry for associations. Look for a product that will improve the association and doesn't just work for a profit. You want to add to your pie with better communication among members as well as other associations. Weigh the options before signing up for a new association product or joining in an association that maybe hasn't done all their homework.
Suite Exchange is a new blog developed to give tips and how to's on running a bed and breakfast. The authors have years of experience in the industry and continue working with hundreds of inns daily.
Is this process adding to the pie or taking away from it? Are these companies bottom feeders or can you really experience a significant boost in revenue?
The biggest challenge, like most marketing and promotion ventures, is that it's so intriguing. We think in our minds that it's going to explode business. Very few marketing ventures cause a 20 or 30% increase. In addition, there will be those within every association that get very excited about this idea and it's tough not to get sucked in. Who wants to go against a friend or temper a friend's excitement?
Talking with associations that have gone this route, it hasn't been what they have expected. A few have even backed out of their contracts as fast as they can. Those that remain for the most part see very little increase and are looking for other solutions.
So let's take a moment and evaluate the challenges with trying to obtain more revenue through association websites:
1) Most association websites have very little guest oriented website traffic.
Taking a step back, association websites aren't the best medium for attracting potential guests. They are about attracting potential bed and breakfast members for that national, state or local association.
Check the status of any association you belong to. It's easy. Simply Google your state and "bed and breakfasts" for example "Alabama bed and breakfasts". What page does your association show up on? Very few association websites have solid website traffic that would benefit you. Take PAII for example which is the largest national association of innkeepers and has been around for a very long time. Google "bed and breakfasts" and PAII doesn't show up even by page 10. Even if an association claims to have good website traffic, make sure it is the traffic you need: potential guests.
One of the few associations that really has great search engine placement and promotion is Bed and Breakfast Association of Utah (BBIU). Google "utah bed and breakfasts" they are normally in the top 3! Most of their members agree they get a lot of business through the association website. As a community we need to applaud BBIU because their association website looks, acts and feels more like a travel website than an association website. We would encourage more associations to take this approach. See how membership is a secondary link almost as a "oh by the way, become a member". The Texas Bed and Breakfast Association is another stellar example. Notice how both Utah and Texas don't show availability grids or introduce price wars but just highlight their members. This is best.
2) Will this add to our pie or take away from it?
What will this company do to push more visitors to the association's website? If you do go with them use Google Analytics to track this boost in promotion. If they are not pushing more quality visits to your association's website, they are taking from the pie, not adding to it.
Most of these companies are reintroducing commissions to the bed and breakfast industry by taking up to 30% per reservation. Ouch! Often they share a little with the association. Skimming money away from the member inns and giving it to the association isn't a good long term idea.
Some offer a "free" online booking engine but those rarely compete with the industry leaders that have special and packages, gift shops, retail items, minimum night enhancements and more. It's not free if they take a commission per reservation. That's actually the most expensive online booking engine on the market. Even GDS reservations are fee based, not commission based. Look for a low monthly fixed cost not commission based. You need online bookings for your inn's website anyway. Directories that push business to your website and booking engine trump those that try to skim for themselves.
3) Price wars have come close to destroying the hotel and airline industries.
Some associations want to compare association members side by side pricing wise. That is a terrible idea since the bed and breakfast industry is all about the experience guests enjoy, not who is cheapest. If you want cheap go to a motel.
Look at the industries that have done price wars: the airline and chain hotel industries. Airlines have been doing so amazing (not!) they wanted a bailout a few years back. Southwest Airlines never did GDS or travel websites and is one of the few airlines to thrive and not rip off their clients with silly fees. They can offer low rates because they don't have to pay a middle man.
Hotels really struggle from time to time beating each other up on Hotels.com, Priceline, Expedia, Travelocity, etc. Marriot Hotels is pulling out from travel websites (GDS) and promoting their own website and booking system because the commissions are killing them. Others will follow.
Associations should highlight their members, not introduce a price war. Don't be shocked if members start leaving to get out of devaluing their rooms.
4) Is displaying association availability a good thing?
What about showing who has vacancy? Studies by Reservation Nexus have shown that displaying an availability grid can often do more harm than good. For bed and breakfasts that are not full (80% of bed and breakfasts) it sends the message: "since they are so vacant, it might not be the best place to stay". A simple "vacancy" or "no vacancy" is better than a full grid in most scenarios.
Most of the time the big push for showing detailed availability is for members that want to share with other members when they are full. This is a valid request, but that doesn't mean you share that information with the public. Availability grids normally help the full get fuller and everyone else remains the same.
5) A member list and/or availability grid should be just the start.
Showing members and availability is just part of the toolset an association needs to more easily run their operations and better communicate and coordinate with its members. Member management, member dues, conference management, forums, newsletters, articles & education, vendor management, etc. need to be a part of any association system put into place.
6) Contracts are a bad thing.
It is kind of baffling that most of these companies approaching associations are forcing them into two or three year contracts to skim revenue. Their cost for setting up the operation is trivial so why the long term contracts? Long term contracts are good if an initial investment needs to be covered, for items such as equipment or payroll. Be wary of long term contracts where there is very little risk or initial investment involved.
Recommendation: Convert your association website to be more of a travel website.
Like the Utah and Texas state associations, reinvent your association website to be focused on attracting potential guests. Associations by their nature have great search engine potential. Doing so will increase revenue to your members and increase membership. The key is to push business to your association members, not take profits away from them. You are associating to build everyone up, not getting them to compete in a price war.
Summary
There are several new products circulating in the industry for associations. Look for a product that will improve the association and doesn't just work for a profit. You want to add to your pie with better communication among members as well as other associations. Weigh the options before signing up for a new association product or joining in an association that maybe hasn't done all their homework.
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