The competitive bed bank sector is facing a new threat from foreign-based contractors looking to work direct with UK agents. There is also the ongoing threat of retailers contracting with hotels.
Matt Cheevers, managing director of Youhotels.com, said the tough trading environment was forcing businesses to reassess everything they do and focus on quality above quantity.
Youhotels said this change in the market was what prompted it to announce recently that it would be cutting the number of properties it featured by 30% as it looked to focus on those that delivered the best returns for itself and agent partners.
"The reality about the market we are in now is you have got to have flexibility and you have got to concentrate on reducing the risk to your business," said Cheevers. "The bed bank sector is a very competitive marketplace and we have had a new tranche of competitors come into that space: local agents in destinations now contracting with our clients.
"All these people coming in has given a lot of people a wake-up call. And we have a number of clients who will direct-contract with hotels now.
"A lot of this is being driven by tough market conditions where people feel they can get one step closer to the product. In tough times the first person you will look at is your middleman."
Altura Destination Services is one such overseas contractor looking to work directly with agents. And this year, leading online travel agent On the Beach took on former Thomas Cook contractor Andy Tilby Baxter to build direct relationships with some hoteliers.
To meet this challenge Youhotels has re-established an on-the-road sales team and intends to conduct many more face-to-face meetings with key agency clients.
It wants to concentrate on its ‘castle’ properties where it can offer exclusivity on either price or distribution.
Cheevers said: "We are going back to the core values of what [Youhotels founder] John Kent set up in which we are a middleman and in that situation, you are only as good as your last deal.
"We are going to go back to trading on a daily basis and understanding our partners better and matching our product to that. At times in the past we have forgotten our role in the whole scheme of things. We overcomplicated our product and the way we dealt with people and the pace with which we ran our organisation.
"When technology gets involved there’s a tendency to think once the technology is done that’s the end of it."
Cheevers took over at the helm of Youhotels following a management restructure earlier this year that saw former sales and marketing director Paul Riches and Graham Nichols, his predecessor, leave.
One of the last moves they made was to split the business into two, with a consumer brand, Youtravel.com, the firm’s original name, becoming consumer-only, and Youhotels created to become the trade supplier.
Cheevers said this rebranding exercise had not had any negative impact on trade business, but he conceded the consumer-facing side had not gone as well as hoped and still represented only about 1% of overall business.
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