By Sean O’Neal
In a state that entertains more than 100 million visitors a year, it seems reasonable that one of the most innovative and fastest growing companies in this sector is in South Florida.
HotelPlanner.com has grown organically to become the world’s largest seller of online group hotel bookings. To put that in perspective, about a third of hotel room bookings in North America are for group reservations, or about $60 billion a year’s worth. HotelPlanner says it is only processing about $3.6 billion a year of that volume, suggesting the mammoth amount of offline and semi-offline opportunity. Look abroad and the opportunity is even greater. The global market for group bookings is estimated at $192 billion, much of which remains offline, a gap HotelPlanner.com is looking to close.
Launched in 2002, founders Tim Hentschel and John Prince decided to relocate their corporate headquarters from San Diego, CA to West Palm Beach, FL a few years back. Both saw Florida as an opportunity to expand the company based on the geographical access to global destinations, warm climate, family-friendly environment, and most importantly, its up-and- coming business potential with a well cultured workforce. Over the past few years, the company has gone from renting an executive suite with only five employees to settling into a 15,000-square foot office downtown with 150 employees worldwide.
Currently, about one out of every 20 group bookings in the US goes through HotelPlanner’s system, processing nearly 3,000 groups and meetings per day. The company also powers the white-label group booking tools of Priceline, Travelocity, Orbitz, Expedia, Hotwire, and Kayak. (For an example, see groups. expedia.com.). However, only a sliver of all group bookings go through those online travel agencies and only a small share of group bookings are fully online today.
Helping Properties Shine
Hentschel has travel distribution in his blood. His family owns hotels and the in-bound tour operator American Tours International. His grandparents have also owned hotels and his wife has been a director of sales for several convention- sized hotels.
From that background, he argues that many hotel owners need to wise up to the changing digital channel or see an attrition of market share that dramatically decreases the value of their properties. He says: “The play in the hotel market, where the money is made, is on the real estate side. If I run a hotel correctly because I set rates more effectively than my competitor and show nice profits, I can flip that hotel in a few years and dramatically raise the value of what I bought it for. Say I bought it for $100 million dollars. I might get $200 million for it in 5 years’ time, so long as I make sure that I’m a rate leader.
According to Hentschel you can’t become a rate leader without dominating the group business, which is going to book 6 to 8 months in advance, and sometimes 2 years out for the really big events. “If I, as the hotel owner, have that group on the books and my competition doesn’t, I can yield up from there. I’m going to win the rate game. If I win the rate game, then I will get more value out of my real estate investment than the competition. So, I’m going to get more money for that hotel when I, as the hotel owner, go to sell it, by showing the trends on revenue numbers have gone up, up, and up.”
He went on to explain that this is where the greatest long term values are found. “That matters more than squeezing out an extra couple of dollars on a group booking negotiation today, which is being penny wise and pound foolish. Yes, some hotels fight over margin. But who cares what the margin is if I’m getting twice as much for my hotel room than the property next door?” he said.
This rationale also explains part of HotelPlanner’s appeal, “You see more of that logic when you have the owner- operator,” he added. “We have 60,000 hotel members and 60 percent of them are owner-operators. Especially in the two- and three-star hotel category. They get it.
They’re all about winning that group because they know winning that group brings that rate. They know that moving more revenues through their hotel is going to get them a better interest rate from the bank, so that’s going to save them more money on a monthly basis, too.”
The Technology Edge
Just since 2015, the company has expanded its workforce from 90 to 150 workers across its offices in Florida, Las Vegas, London, and Hong Kong. Taking the long view, Hentschel believes that all of the reduction in friction that has taken place in online bookings of individual leisure and corporate travel bookings is coming now to group travel bookings.
“We get criticized as an industry that we’re not advanced enough, but people don’t understand that we’re working as fast as we can and as hard as we can. The innovation from group travel platforms is only as good as we can get the hotels to adopt new workflows. Their existing processes are often slow, document-based requests-for-proposals,” Hentschel explained.
“One way of reducing friction is by having computers replace sales managers in generating instant rates for groups, based on data about what a hotel wants to achieve according to several metrics, such as yield. Our revenue management software helps with that. We also simplify the million qualifications hotels may be tempted to put around a deal.”
HotelPlanner also has functionality that lets it sell packages with sporting events and concert tickets plus hotel rooms. For that, there is the opportunity to offer multiple hotel options by working with distribution partners, especially if it is a really big event like the Super Bowl and consumers are going to need inventory within, say, a 30-mile radius.
“In the future, customers are going to want to ask devices like Amazon Alexa, ‘Book me a room for my wedding.’ When somebody asks their voice-based, artificial intelligence system to book them something, we need to be there.”