4 ways for hotels to regain control of their wholesaler relationships in the internet age

In the Wild West that is today’s hotel distribution landscape, Pamela Whitby hears tips for managing it

From global heavyweights like InterContinental Hotel Group to boutique players like Morgans and national chains like Scandinavia’s First Hotels, managing the wholesaler relationship in the age of the Internet is keeping many hoteliers awake.

That is changing, as we outlined in an in depth analysis last month, but not fast enough. It’s particularly challenging for some of the smaller national players, which lack the resources for international marketing, and have no way of reaching out to a global market other than through third parties.

Against that backdrop here is some advice from the frontline.

1.  Educate the front desk

If you are seeing repeated abuses by the big players, then you need to take action, warns Catarina Randow, VP Revenue & Distribution, First Hotel. Hotels should know that if a deal looks too good to be true, it probably is.

If a deal looks too good, it probably is

So if the name of an unknown wholesaler appears once too often on a guest voucher, then hotels need to report that to their national sales teams. 

As Marco Corsi, a third-party and distribution manager for Sokos Hotels in Finland, points out: “Should the reservation get lost along the extended distribution chain the hotel would have no means of knowing who the original wholesaler is that the hotel has an agreement with is and the voucher would not constitute any guarantee of payment for the hotel.”

Not a position any hotel wants to be in and one that will require a fair bit of detective work to establish who to invoice.

2.  Set clear rules and be willing to stick to them

Corsi argues that hotels should only work with wholesalers that have the right technology and those that will to agree to a dynamic model with ‘fixed’ mark up. Alternatively they should have the necessary means to be able to direct the static rates (offline inventory) only to offline and packaged tour B2C vendors.

3.  Share lessons with others and pick the brains of the chains

There is a real need, and willingness, to share information with others. One suggestion is for hotels to name and shame the wholesalers that are playing dirty but others advocate a firm but softly, softly approach. Although IHG has not been afraid to lower the axe, Brian Hicks, Vice President, Revenue Management, Europe & Global Revenue / Property Based Systems is quick to stress that many partners have now recognised there is a problem and are willing to work with, rather than against the hotels. What has worked for IHG is umbrella agreements, with binding terms and conditions, that include both static and dynamic rates but with prices still set by hotels.

4.  Pick and choose your partners

A year and a half ago, Chadi Farhat, CRO, Morgans Hotel Group, decided to tackle the ‘big problem’ that wholesalers had become. He did this by limiting the numbers of wholesalers they worked with and moved to dynamic pricing rather than the old model based on allotments. “In this way, we are have been able to regain control of our inventory,” he says.

It’s true that the move initially saw a dip in business of about 12-15% but that’s now recovered and Farhat is clear that the risk was worth it. “We took a very strategic decision and chose wholesalers based on where they were strong,” he explains. Where in the past Morgans might have used two wholesalers in Europe, now it has just one and the same is true for Asia, Latin America and the US. “My wholesalers don’t compete but rather compliment each other because each one has its own strength in each region,” he says.

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