Hotel distribution executives acknowledge the need to evolve but they don’t want to be dictated to, writes Ritesh Gupta

It is a case of can’t live with them, can’t live without them. Yes, most hotel organisations are all for direct distribution but they still can’t do without the indirect channel.

Knowledgeable and astute hotel executives are very clear about what to expect from third party distribution. For them, it’s about ensuring that their inventory is available wherever the guest intends to book. It’s about having a presence whenever and wherever revenue generation is optimised. But that’s not where the consideration ends as far as indirect partners, especially the online ones, are concerned. It’s about being opportunistic. In other words: distinguish third party distribution on the basis of the commercial arrangement, but do consider the marketing and branding opportunity as a result. One should remember, that OTAs have the financial ability to cast a wide net!

Here we explore some of the aspects that hotel executives need to be consider while strengthening their plans:

1.  Use online as a strong tool

Hotel executives acknowledge the power of OTAs and the fact that this is not going to go away anytime soon. “OTAs will continue to dominate but many suppliers will figure out ways to wrest control back with smart marketing, social media and personalisation,” Chetan Patel, VP, Strategic Marketing & E-Commerce, Onyx Hospitality Group told EyeforTravel recently.

Some hotel organisations, however, acknowledge seeing ‘great’ results from online distribution. WorldHotels is one of these. According to Torsten Rolke, vice president - Global Revenue and Distribution at Worldhotels, says reservations made via the website worldhotels.com have increased by 67 % since 2012. “In 2013, we have also successfully launched our new mobile booking engine and can confirm, that the current mobile trend is monetising more and more,” he says.

Currently the firm is working with hotels on various campaigns and social media initiatives to encourage our customers to use direct booking channels.

2.  Know what works best today

According to Rolke, looking at this mix, the organisation is experiencing a decline in direct voice bookings made at hotel level, while GDS remains consistent; they offer full service solutions for corporate, TMC’s as well for independent travel agencies.

So the word is that online direct bookings are improving and hoteliers need to work on further strengthening this distribution channel to remain competitive against online indirect channels, and gain more control of their distribution costs. The hotel industry has recognised that it is beneficial to have OTA’s in their distribution mix, but don’t want them to dictate the rules of the game. “GDS and OTAs also remain important distribution channels for us. With the latter, we rely on a healthy business mix to ensure maximum exposure and remain independent from other major players, says Rolke. While it is important to be connected with OTAs in established and emerging markets, we also see the need to connect to various meta-search engines to remain flexible in distribution.

3.  Understand what intermediaries are up to

The line between consolidators, intermediaries and distributors is increasingly blurred, especially in the online arena, says GTA’s CEO Ivan Walter. “The travel and tourism industry is so competitive today often because so many companies aim to fulfil all these functions. This growing trend will see the distinction get even harder to see,”says Walter, adding that there are a number of threats that have different levels of significance depending on geography, market maturity and political, economic, social and technological factors. Perhaps the greatest risk is that we underestimate the need to understand as much as possible about travellers and their needs, and act to serve them quickly and efficiently. After all, the Internet, new technology, meta-search, mobile capabilities, social media and more mean consumers expect to find precisely what they are looking for – sometimes when they don’t know what they are looking for – in a vast amount of information, quickly and wherever they are. “They will be loyal to businesses that can help them do that and it would be a mistake for the B2B industry to think that this trend only impacts the B2C space,” says Walter.

4.  Capitalise on the opportunities

Not all trends are relevant, but one needs to be innovative to secure the best possible guest experience. Two big opportunities are in:

1.   Mobile: The long predicted trend of mobile distribution has now started to become significant - not only in terms of research, but also as an important revenue generating factor, says Rolke. It has been triggered by the growing use of tablet devices and smartphones and will evolve even further as technology improves. The industry needs to adapt and evolve to these changes in user behaviour to remain competitive – this includes both observing the market and reacting to new trends as they develop.

2.   Analytics: When it comes big data/analytics, it is still early days. A lot of the data available on the web (respecting data security rules) remains unused. Some hotel groups –WorldHotels included – do have or are currently setting up a CRM solution to come full circle with customer relationships. “I’m convinced we can expect a lot more in the future. GOPAR and TRevPAR will then play a bigger role than RevPAR,” says Rolke.

5.  Evolve as a professional

Revenue management and distribution has changed tremendously, with reviews, social media and web analytics now being of central importance to a company’s performance. 

“The distribution landscape is very complex and you have to have the right understanding to sell a hotel at its best price,” stresses Rolke. With GDS, voice, online direct, online indirect, meta-search, Google HotelFinder, bedbanks and so on, there is a lot to consider with respect to different business models and distribution costs that leads to real rewards.

WorldHotels is currently looking at tools, which integrate review data into pricing tools. “We have already seen a direct impact from this way of working, and will continue to use them in the future,” says Rolke.