Reinvigorating hotel distribution — seeing the warning signs

Sciant
Sciant
Jan 2 · 4 min read

Travel distribution is changing at an almost dizzying speed. Digital transformation has meant that the number of available channels seems to be increasing daily. With 45 digital touchpoints in a traveller’s average accommodation purchase journey, businesses need to maintain visibility across a host of channels and platforms in order to keep up.

A plethora of channels

Hotels need to diversify the range and breadth of their collaborative network and the key to doing so is digital technology. Online travel agencies (OTAs) have been and continue to be the biggest disruptor in the travel sector with 64% of all mobile bookings coming from OTAs. It is vital that hotels stay connected with these, and not just the major players like Expedia and Booking.com, but smaller OTAs that serve the particular niche they focus on.

However with some OTA commissions rising at twice the rate of guest revenue, it’s important to seek out other channels too. Metasearch engines such as Trivago, Skyscanner, Kayak drive a huge amount of business, with up to 30% of Booking.com traffic coming from them. Not only that but they can host cost-per-click campaigns that drive traffic straight to businesses’ websites, boosting direct bookings.

Global distribution systems (GDS) like Amadeus, Travelport and Sabre can be another beneficial link to the wider world, helping to build important relationships with travel agents all across the globe and drive worldwide bookings.

Keeping track with tech

With such a range of different channels, it is becoming evermore challenging to keep track of them all. Cloud-based technologies such as channel managers are becoming increasingly important, allowing businesses to keep track and manage their rates and distribution across all channels via a single platform.

Once all channels are easily accessible via channel manager technology, it becomes increasingly easy to implement dynamic pricing — adjusting room rates responsively across different channels to reflect demand and occupancy. Revenue management technology that uses AI can also be implemented to make intelligent pricing decisions on rooms across different channels, enabling businesses to maximise their revenue and occupancy.

Neither should the most profitable channels be forgotten — direct ones such as the hotel’s own website, email marketing and social media. Direct bookings are by far the most valuable booking channel but they too depend on investment in technology. Websites need to keep pace with the rest of the industry, firstly that means thinking mobile-first and featuring the simplest and most intuitive booking engines and even live (automated) chat technology to improve user experience and increase conversion. Customer relationship management (CRM) software can gather and analyse crucial data on guest histories and combine with email and social media marketing to drive future business.

Don’t ignore the warnings

The way companies distribute product in all industry sectors is changing, no longer are we using purely wholesalers with agreed quantity of product/inventory at a set price. The market is dynamic due to instant access and fluctuation of prices because of demand, which is much easier to identify considering we have access to so much data.

The hospitality industry was heavily disrupted in the early 00’s with the big OTAs, and again in the early 10’s with the rise of the sharing economy and a new take on travel accommodation thanks to Airbnb. However, many businesses are still working within a limited distribution network that could severely hamper the future of the business — all eggs are still often being placed in one basket.

While the hospitality industry had a shock from the 2008/9 recession leading to more direct access to OTAs and the rise of channel managers, there has still been an over reliance on traditional market structures. This we have recently witnessed with Thomas Cook, look at all those suppliers (hotels mainly) that now have lost business and need to find new partners for access to tourists.

It won’t be long before static contracts become extinct in favour of dynamic contracts which will allow hotels to truly focus on their bottom line.

Integration: the meta-narrative

The overarching key to all these technologies is connectivity. The systems and the data they provide increasingly need to integrate so that insights from one can provide solutions in other areas and to the business as a whole. Open APIs that are ready to connect efficiently with other software are crucial, and cloud-based, connected technology is becoming increasingly the norm.

Centralised data combined with strategic forward planning is the future for hotels that wish to succeed, as we are already seeing with the growing convergence of revenue management, marketing, sales and distribution. It is a mixture of this convergence of technologies with the divergence of distribution channels that will drive future success for forward-thinking businesses.

Sciant

IT and Software Development Services Company

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