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Viral Marketing Meets Hospitality Revenue Management in Cornell Roundtable

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May 14, 2009

Viral Marketing Meets Hospitality Revenue Management in Cornell Roundtable

Ithaca, NY, May 13, 2009 ? The first ever “integration” of hospitality revenue management and marketing provoked wide-ranging discussions at the  Customer Management – The Integration of Revenue Management & Marketing Roundtable, presented by Cornell’s Center for Hospitality Research. Participants agreed that the two disciplines should continue the dialogue to maximize effectiveness and efficiency of both functions. The roundtable, held in April 2009, was co-chaired by Cornell faculty members Chris K. Anderson and Lisa Klein Pearo.  

Although marketing and hospitality revenue management are both aimed at increasing patronage and revenue, the discussions were not without a certain level of tension. According to Pearo: “The issue that drew the most attention was the challenges involved in capturing all available revenue while at the same time possibly compromising brand integrity.”

Other discussions focused on the issues relating to the emergence of new media and new media capabilities, including informal promotions through viral marketing. “Accountability is an increasingly important criterion in marketing efforts connected with new media,” Pearo pointed out. “Participants agreed that the difficulty of measurement in any new medium should not be an obstacle to experimentation.”

As Ashwin Kamlani, CEO of AboutAnywhere.com and a member of the hotel revenue management panel explained, “Social media are the new TV.” The group debated the necessity of waiting for “trackability.”

Expanding on the theme of what marketers can learn from users’ web activities, Anderson explained the evolving roles of hospitality revenue management via online travel agents (OTAs), such as Expedia, Priceline, and Orbitz. “I am studying the value of incremental reservations created by listing on OTAs,” Anderson said. “For instance, I have found lifts of 10 to 30 percent in total reservations from listing at Expedia (compared to periods when properties were not listing on Expedia).” Moreover, Tim Gordon, SVP of Hotels at Priceline.com, explained: “We have identified a recent increasing trend that hotels are becoming more favorable towards opaque pricing. We believe that this is driven by the economic situation.”

Anderson added that opaque pricing, such as that used by Priceline.com, can be used to segment customers. “This can be done by simultaneously selling services at different prices to distinct customer segments, offering both regular prices and discounted opaque prices.” Anderson teamed with Cornell professor and hotel revenue management panelist Rohit Verma to explain how customer value can be assessed using a technique known as discrete choice modeling, in which customers state their preferences for specific bundles of product attributes. “We can gain information on customer preferences by seeing how they react to offers from online travel agents,” said Anderson. “Using data from Hotwire.com, for example, we can see how transaction data can be used to understand how customers choose their lodging and travel providers.”

For more information about future roundtables at the Cornell School of Hotel Administration, please visit http://hotelschool.cornell.edu/research/chr/events/roundtables/.

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