If you missed this piece by Pamela Whitby, published on Tnooz earlier in the week, now is your chance to catch up

A day in the life of somebody dealing with hotel distribution involves fighting a lot of fires.

“I think distribution teams are becoming more like guardians for rate and inventory parity as we look at what is happening across channels overall,” says Inderpreet Banga, senior director, e-distribution and wholesale strategy, Wyndham, who will be speaking at EyeforTravel Las Vegas.

Banga, whose main role is to strategically navigate the group’s network of global partners, says it’s a “pretty hectic” environment as the landscape continues to evolve.

Indeed, the channels of the ‘old days’, which Sanchit Rege, a manager of distribution strategy at Hyatt, likens to tanks filled with water, are now empty. Then, each tank was exclusively meant for a different segment, and customers did not have access to or knowledge of the water in another tank.

“The world now has modern pipes, where water flows between tanks seamlessly,” says Rege, who will be speaking at EyeforTravel Amsterdam.

What this means is that whereas typically, hotels had a different strategy for each channel – for GDSs, OTAs, wholesalers, corporate booking tools, and TMCs – today these are merging as the industry is becoming more agnostic. To address this, hotels need a strategic shift because rates will find themselves on all these platforms whether they like it or not.

[Rate parity] is more than just rates – it’s everything from compensation, cancellation policy, and discounts that are being distributed through other third parties

At Wyndham, rate competitiveness is more relevant now than it ever has been. Banga says: “When people think about rate parity they are thinking about online leisure channels. But it’s more than just rates – it’s everything from compensation, cancellation policy, and discounts that are being distributed through other third parties.”

While the chains may have more power in this environment Rege believes it is important for all hotels, including independents, to start putting the guest back at the centre of their channel optimisation strategy.

A shifting environment requires education 

As Banga explains, the GDSs and TMCs haven’t grown at the same pace as the OTAs over the past few years.

“It was only a matter of time before they [the OTAs] started innovating to get better rates [from GDSs/wholesale players et al] to increase booking fees and conversions. Ultimately, this comes back to the rate parity discussion because every provider wants the booking to happen through them, or at least to own some part of the transaction.”

Recent indications of how this is playing out include Booking Holdings’ agreement to feed its circa 28 million listings into Sabre Corp’s lodging platform. Meanwhile, Carlson Wagonlit Travel (CWT), a travel management company, is gathering rates from Bedsonline, which is part of Hotelbeds, the biggest wholesaler, following the integration of GTA and Tourico Holidays.

Another bigger picture question which has direct relevance to rate parity is whether the OTA and metasearch landscape is merging. Banga thinks so. In his view, it’s clear that conversions increase dramatically when the booking occurs on the same channel, whether it’s facilitated or otherwise. This explains the emergence of instant booking tools such as Skyscanner Direct Booking and TripAdvisor’s TripConnect.

Google is very much a travel company

And, it also explains recent deals like Booking.com’s acquisition of Australia-based HotelsCombined, which has a huge affiliate network, and the Momondo Group in 2017. Both these deals could be viewed as digital real estate plays to secure a stronger foothold in certain regions – Kayak, for example, wasn’t getting traction in EMEA where Momondo had a bigger footprint.

The HotelsCombined acquisition could also be viewed as a push back against Google because “nobody wants to pay the gorilla in the room”.

And when it comes to the big picture, there is nobody that wields more power than Google. On this, Rege’s stance is unequivocal.

“Google is very much a travel company. They have a platform that provides access to prices, products and reputation related information for travel components, creating immense value for the traveller. At the same time, their search engine and metasearch platforms are an integral and unavoidable part of the traveller’s booking journey from the dreaming to the booking phase. And they are able to capture the subsequent value from these customer phases.”

That is, of course, of serious concern for travel suppliers like hotels, airlines, rails operators and so on.

Direct is still best 

In an ideal world, driving direct bookings is the best approach. But the world is not ideal and the challenge remains that price remains the no 1 converting factor. Consumer perception that the hotels are the bad guys overcharging, and the OTAs are the good guys keeping rates down, is hard to shake off.

Consumer perception that the hotels are the bad guys overcharging, and the OTAs are the good guys keeping rates down, is hard to shake off

What they – the consumer – doesn’t know is that this isn’t always transparent. For example, often if a customer books a lower rate through a wholesaler or OTA, then they may not earn points.

So, global sales offices (GSOs) and travel agencies – not to mention consumers – need more education. “Education is so important for travel agents booking through the GDS. Because, with technology changes and OTA rates finding themselves on these channels, consumers are asking for their points but don’t realise the travel agent booked the lowest rate,” says Banga.

Static vs dynamic 

The shift from static to dynamic rate plans and structures has been a crucial focus for the hotel industry but there is still work to do. Indeed, a lot of rate parity issues are caused by static agreements. “If you go to Kayak or Trivago, you will find that those hotels with property level agreements are likely being undercut by the big players, and that’s a threat as you aren’t building your direct base,” says Banga.

While some chains have aggressively moved to axe static plans entirely, Wyndham has taken a more scaled approach, with a success metric to move share direct and regain control of distribution.

Says Banga: “Renegotiating agreements, pushing compensations lower and inventory control is a priority as the industry continues to evolve. But a central goal for us is to ensure that our properties are paying a very competitive rate. And when it comes to wholesale partners, the strategy is to ‘protect and connect’.”

It’s not always apparent to hoteliers that if they are giving an OTA an exclusive promotion, its not just exclusivity on the OTA platform

What is clear is that the future is control of inventory. “Those brands that don’t have that are really going to be up the creek without a paddle, and at the mercy of third-party providers,” says Banga.

Hyatt stresses the importance of 'channel optimisation', which Sanchit believes must happen in partnership with customer segmentation. Hotels need to look at each customer segment, evaluate all options [on all channels] available to them and then make sure that the products offered to the customer segment are the right ones at the right price.

Hotels also need be aware of onward distribution. “It’s not always apparent to hoteliers that if they are giving an OTA an exclusive promotion, its not just exclusivity on the OTA platform. Those rates have a downstream impact on other direct partners, GDSs and travel agents, potentially impacting other areas of business. It is getting in the way in the way of new partnerships as well,” says Banga.

Inderpreet Banga, Senior Director, E-Distribution & Wholesale Strategy, Wyndham will be speaking at EyeforTravel Las Vegas (Oct 18-19) and Sanchit Rege, Manager, Distribution Strategy, Hyatt at EyeforTravel Amsterdam (28-29 November)