Mr Dabrowski, HRS started to position itself as a full-service provider in the accommodation business back in 2014. Now you’re saying, “we’re not an OTA anymore.” So what do you do, then?
Well, let’s talk about the full picture. We have three business areas nowadays. Under the “Global Hotel Solutions” brand, we serve large multi-national corporations - the field of “Managed Corporate Travel”. In this segment, we’ve evolved beyond the transaction itself and established a new service chain – and are therefore covering all the processes associated with booking of rooms for an individual stay or in combination with meetings or events. This business area is all about Business Process Outsourcing (BPO): Sourcing the corporate hotel program, negotiating rates, conducting rate audits, making hotels bookable in all channels utilized by a corporate, introducing virtual payment solutions, etc. – a very dynamic segment with rapid changes. Our goal is to address the pain points both hotels and corporates have to deal with – for example the annual, time-consuming, static sourcing exercise. We want to push this to a more dynamic model, opening the entire hotel market to corporates, and enabling hotels – next to global chain hotels especially local chains and individual hotels – to get access to new business which they could not acquire otherwise.
How about the business segment OTA?
Next to this area, our “old” OTA heritage still exists and our hotel portal nowadays focuses on catering for the needs of individual business travelers and thousands of SMEs – small and medium-sized businesses - to book the hotel stays for their business trips. Last but not least, we also operate our “Destination Solutions” model, for the digital commercialization of regional holiday accommodation.
That’s why it would be wrong to limit the discussion to our OTA past. Today, we’re much more than that. And that is demonstrated in our transaction figures, too. In 2018, we’ll generate two-thirds of our sales in the corporate area; as a solution provider for technology and services.
Travel management companies (TMCs) are currently flocking to the hotel sector. Some are even promising their corporate clients a completely “new and innovative booking procedure” and “an even broader range of hotels.” Is that not a threat to HRS?
As a company focusing exclusively on the lodging sector, we have always provided more targeted value than the generalists in the field – we have to! And this innovative mindset is embedded in our DNA. To stay ahead of the curve, we will keep evolving our solution portfolio and redefine the status quo in the accommodation market.
Can you tell us a little more about that?
Our core message to companies is: “We handle all the operational stuff, so you don’t have to!” And increasing volumes of customers are now taking advantage of this offer. Recently, in the USA alone, we have won contracts with companies such as Apple, Google, Tesla and Uber, and are just a little bit proud of this! These are organizations that “get” tech and the advantages that we’re happy to deliver. We’ve also achieved strong presence in Asia, as demonstrated by our client base in the region, which features China Mobile, Alibaba and Hitachi. In short, the industry is currently in the midst of a period of transformation. In the past, all bookings were made offline. In the future, it will all be driven by technology.
And that’s actually the message we want to convey to the hotel industry: it’s only if you remain open to technological innovation that you can stand a chance to be successful at catching these big fish.
What makes you so sure?
Let's put it this way: the big companies do not want to carry out tenders themselves, but outsource these procedures to specialists. Currently, more than 40 percent of hotel shopping is done in this way, and the proportion is growing. However, if hotel shopping is done internally, those in charge tend to focus on a few select hotel chains, but these represent only a small segment of the total available market. Quite simply, today's corporate travel managers have neither the resources nor the time to conduct lengthy negotiations at all potential destinations. Independent hotels and small or medium-sized hotel chains simply fall through the net in this case.
Nur wer für technologische Innovationen offen bleibt, hat eine Chance auf attraktive Geschäfte.
In this respect, our offer is attractive for all sides: if a customer asks us to buy the hotel, we will transparently present all options to him. Not only can we capitalise on the big chains, we also represent all the relevant and important players in the market. So the company has access to thousands of hotels that it probably did not even know about before. And regional hotels allow HRS to be active at par and be included in a corporate hotel program with high, even international bookings. Something that comes to him on his own and without equal access to technology and data probably would not have succeeded.
According to a study by the German Institute for Economics (IW) in Cologne, the accommodation industry is already one of the “most strongly digitized industries in Germany”.
Yes, because we make it possible. Let’s take HRS Payment Solutions as an example. It allows companies to pay our hotel partners centrally, an absolute must. Or let’s look at the Market Place initiative: Even beyond this area, through which companies request their eRFPs, our partners can demonstrate that they are right up to date. And we support them in doing this.
If they want us to, of course.
Last year, large hotel chain organizations launched attempts to change the rules of the game. For example, by further strengthening their direct business. And that’s entirely legitimate. Having said that, these players seem to be forgetting about the global corporate clients, who don’t book through Hotel.com or Brand.com, because their booking channels are mandated by travel policy (i.e. for security reasons, etc.). By taking this path, the chains take a risk of creating major strategic misalignment with their partners.
The same goes for cancellation policies. Here we observed a power play between the corporate clients and the large chains, whereby the former always have the advantage. I don’t believe that the chains will actually go all the way through with enforcing stricter cancellation restrictions in the managed corporate sector. In our fast-growing Global Sourcing programs, we can’t name a single customer who wouldn’t insist on including the right to cancellation flexibility among their basic requirements from the very start.
Mr Dabrowski, thank you for talking to us.