The One Year Expedia Bump – Data Crunchers Beware! – narrative

4923_4x6@72 - Biz 1 Richard B Evans, CHA CHAE CRME                               logochp- small logo

 “The One Year Expedia Bump”

Expedia’s Collection Model Changes – Data Cruchers Be Aware!     

             

i). Changes that the condo-hotel unit owner will see comparing year over year results.

ii). Intellectual Considerations – Year over year changes effecting STR Report data & analysis

Our metric model shows the ‘cause and effect’ analysis (exhibit C) of Expedia’s change

What if I told you that the ADR and Rev Par changes on Exhibit C (below) were ALL due to the change in Expedia’s Commission Collection Model?!

A new commission collection model is being put into play by Expedia in 2013 that will affect what unit owners in condo-hotels see on their Owner Statements and what hoteliers see on their monthly STR Reports.

Background

The On-Line Travel agent (OTA), Booking.com introduced a different commission collection model upon entering the market a number of years ago, in which guests booking reservations through the Booking.com website are required to pay the hotel directly and in full at check in.  In turn, the condo-hotel (or traditional hotel) would be required to pay the percentage fee commission owed to Booking.com, by cutting a check for the established percentage rate agreed upon and multiplied by the Gross Room Revenues received.

Since inception, Expedia.com (and most other OTA’s) collected gross room revenues directly from guests and, in turn, would remove their commission fee before paying the condo-hotel (or traditional hotel) for the guests stay.

Sales tax challenges experienced by OTA’s (because they have been collecting revenues directly from guests) are believed to be a significant factor in making this change to the commission collection model.    In effect, the move no longer will require Expedia (or any other OTA who follows) to be looked to for sales taxes.

i). the Gross Room Revenue change in revenues reported to condo-hotel unit owners.

Exhibit A                                                                              Old Model          New Model

Gross Room Revenues Collected by OTA:                              $1,000                   $       0

Gross Room Revenues Collected by Hotel                                       0                   $1,000

**Fess Removed by OTA:                                                             <  250>                           0

Owner Statements in 2012 showe                                 $  750                            – 

Hotel pays Expedia & Booking.com                                                                        < 250>  

Amount collected by hotel for reservation                 $  750                     $  750

**IF commission were equal from both OTA’s the aforementioned would be the result.  Commission, however are not always equal.

 THE ONLY CHANGE that will be seen is the appearance that Gross Room Revenues in the Condo-Hotel have increased.   THERE SHOULD BE NO NET CHANGE TO THE OWNERS CHECK.

Exhibit B    

Condo-Hotel Owners Statement                      Before-2012                     New-2013

Gross Room Revenues from Expedia              $         750                            $  1,000

Less: Travel Agent & OTA commissions          <         50>                           <    300>

Less: Reservation Fees                                         <        10>                            <      10>

Less: Credit Card Fees                                          <          5>                            <        5>

Total Deductions from GRR                               <        65>                            <    315>

Net Gross Room Revenues                                          685                                      685

Percentage Representing Unit Owner Share            46%                                     46%

Amont due to owner before deductions                     315                                       315

Linen Fee, etc.                                                           <      15>                               <      15>

CHECK TO OWNER                                            $    300                                 $   300

ii). Intellectual Considerations – the one year Expedia bump!

The real change that takes place in looking at data in 2012 and 2013 (from the Expedia Commission Model Collection change) comes about when analyzing your Average Daily Rate and Rev Par results each month in reports like STR, where even small dollar jumps can be deemed to be significant. Further comparisons to your competitive set will also change year-over-year depending upon each hotels sales mix.

Condo-hotels (and traditional hotels) with excessive reliance on OTA channels (of which Expedia always is a significant part) to generate Gross Room Revenues will show a higher 2013 Average Daily Rate and REVPAR rate, even if sales have been the same as the prior year.  The difference will be the 20% to 30% fee commission paid to Expedia.

As no one can ever know what each member of your competitive sets sales mix is, for one year you could see a “superficial” bump up of ADR and REVPAR.

Our intellectual review also shows that the “Expedia One Year Bump” will have an effect on components relating to Incentive Bonus Plans in many Hotel Management Agreements!

Exhibit “C”

  

About Condo Hotel Answers by Richard Evans CHA, CHAE, CRME

Selected Current & Former Accomplishments ◾Currently preparing as event organizer, keynote speaker and lecturer for the first “Annual Condo-Hotel Conference“, Miami, Florida - sponsored by Florida International University (FIU), Greater Miami Convention & Visitors Bureau (GMCVB) and the Miami Hotel Association – June 21 & 22, 2013 at FIU North Campus. ◾Authoring “The Definitive Study of Condo-Hotels” for FIU and Other University use. Expected publication date is June, 2013 ◾Current BLOGGER: www. CondoHotelAnswers.com ◾Currently sitting on FIU panel to organize series of Revenue Management Programs. ◾May 17, 2013 - Panel member and assist FIU; Revenue Management: The Hotel in 2020 ◾Currently creating FANTASY REVENUE MANAGEMENT competition for Revenue Managers. ◾Current President of Condo Hotel Professionals LLC ◾Current volunteer to HFTP in making Condo Hotel Financial Statement suggestions toward better clarifying the financial position of the Condo-Hotel. •CHA – Certified Hotel Administrator – American Hotel & Lodging Assoc •CHAE – Certified Hospitality Accountant Executive – Hospitality Financial & Tech Professionals •CRME – Certified Revenue Management Executive – Hospitality Sales & Marketing Assoc Int’l •GMP – Cornell University Executive Training – Ithaca, New York •Produced: 3 Symphonies, Broward County – Symphony of the Americas raised funds for Cystic Fibrosis – Symphony of the Americas •Bachelors Degree: Long Island University – Accounting •Board of Director – Greater Miami Convention & Visitors Bureau •Board of Director – Ocean Drive Executive Committee, South Beach •Board of Director – North Beach Hotels, North Beach •Board of Director – SOBE TMA, SOBE •City of MB Transporation & Parking Committee – Task Force representing all MB hotels •Liaison with former Mayor Neisen Kasdin & all Miami Beach hotels / GMCVB Speaker - Revenue Management (Yield Management, Optimization)
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