There is no escaping the need for third-party distribution channels, but hotels should be using them to their best advantage. In this exclusive interview, EyeforTravel finds out how the Onyx Hospitality Group is managing the challenges and opportunities, which from mobile are “tremendous”.
Hotel companies are upping their game when it comes to strengthening online-direct initiatives. Be it for offering valuable incentives for booking direct, or coming up with appropriate lay-out, design and content options that fit with the booking funnel, suppliers are getting smarter in making the most of traffic that comes their way. At the same time, many are still wary of established online intermediaries, which are quick to grab emerging opportunities like mobile.
Hoteliers acknowledge that third-party distribution continues to pose new challenges. It’s not only about making the most of emerging channels or platforms but also about keeping an eye on how intermediaries are approaching new developments.
“Having to keep up with new devices, social networks and apps is challenging enough – and OTAs almost always beat hotels to it,” says Chetan Patel, vice president, strategic marketing and e-commerce, Onyx Hospitality Group.
EyeforTravel’s Ritesh Gupta talks to Patel about what hotel companies need to be alert about.
EFT: How is the face of hotel distribution changing and what do you see as the most disruptive developments today?
CP: The continuous shift to the business online is a big change. Many properties could live off online business as their staple. There was a time when we considered only offline channels for wholesale business. Now online channels are as good for wholesale or base business at hotels. More direct competition between some segments of online and the offline business is the result of this. This is a double-edged sword though; if the hotels are not careful in keeping an eye on distribution costs, it is possible to generate worse revenue on average from online channels compared to the offline channels, considering commissions or margin bidding.
The rapid change in the technology and media is a huge disruption. Two years ago we would not have talked about Android, Apps, Google+, Instagram, HotelTonight and so on in the same way we do now.
EFT: Going forward, what are the new trends in electronic distribution?
CP: The trends would be:
-Devices like smartphones and tablets are becoming more important.
-The rise of apps will force hotels to think more about connectivity using APIs and more.
-Watch out for more social networks and apps. You may think differently about Android Tablets and Google+ by end of this year.
-Focus on Asia will continue in terms of both source markets as well as the place to be in hotel industry.
EFT: What would are the do’s and don’ts for optimising revenue generation through third-party distribution channels?
CP: My recommendations are:
-Discriminate based on the cost of doing business with them. However take into account the marketing and branding mileage you get out of them too.
-Treat them as more than just distribution channels. They are effective in branding, marketing and generally differentiating your property and offers.
-Use all channels to promote your offers. The wider you can spread them, more effective they will be.
-Talk to market managers. Distribution does not run well on autopilot. You need the intelligence on your competition and new strategies that the third parties found effective.
-Have third-party distribution as your only or main strategy. You cannot have a robust indirect strategy without an effective direct one.
-Rely on too few third-party channels. Spread the business across these channels and geographical areas.
-Bid on commission and margins as a tool too often. Once you get used to the short cuts, you’ll stop looking for alternative strategies.
EFT: How do you rate the efficacy of OTAs versus suppliers in targeting travellers today?
CP: OTAs are effective in reaching out to customers. They have the financial wherewithal to cast a wide net. They can reach out to customers in countries and segments that suppliers might find difficult to get to. Look at how Booking.com has captured the market in the Middle East. The big difference between suppliers and OTAs here is that OTAs are predominantly interested in capturing the existing demand. They do little to generate demand, which is largely left to suppliers and tourism agencies.
EFT: In your opinion, how wil OTAs stand out in 2013 in the distribution space?
-OTAs will continue to dominate the distribution landscape. The volumes they will drive will make them stand out.
-More consolidation should be expected with mergers and acquisitions.
-We would hope that the business diversifies to more OTAs but we will still be looking at a few players dominating a bulk of online business.
-OTAs will still stand out in online advertising and new technology (devices, apps etc)
EFT: How should OTAs build on their position in the travel planning and booking journey?
CP: This may sound more like wishful thinking but OTAs could do better in promoting the destinations. Most OTAs are active in the lower part of sales funnel but have less or nothing to say. If I am still at the planning stage, I am less interested in a particular hotel or flight. How can they help a consumer with more information on the destination, activities, events and more? How can they inspire travel where the key selling point is not the price? Most OTAs do pretty awful job at this.
EFT: How do you find the right balance between managing and controlling content in an age of social media?
CP: We are at very early stages of this transition. Social media has already forced us to let more control go out of our hands. We are looking at more ways to integrate social media on our websites. This year we will go beyond the sharing buttons and minor widgets. Forpersonalisation, we are looking at loyalty programme, frequent users and related apps at some stage. I have to admit that this is hard and we will most likely not be satisfied with what we achieved by end this year.
EFT: How are consumers’ buying patterns changing with the increasing popularity of mobile devices?
CP: Users are jumping on to our sites from mobile apps, maps, email links and so on. We took a while to get our redirection sorted out as users could be on any page of the website, which was sending them to our mobile site home page - not a good experience.
We are prioritisingbased on the volume of traffic and trying to send them to the right pages. We have observed that mobile is contributing not only in the last minute and for short-stay bookings but also normal bookings with long stay and higher value and with higher lead time. There are also a lot of cross platform interactions. Users browse the website on a mobile device but book on desktop and the other way around. The changes over that last 12 months have been so rapid that I cannot give a definitive answer to this but I can say if we add an app of our own into this mix the funnel will be even more distributed. For some there is tremendous opportunity here. We are looking at ways to brand, convert and engage users on all.