It is impossible to invest time in every available channel, so how should distribution managers allocate their time? EyeforTravel.com hears how from a senior executive at Mövenpick Hotels & Resorts.
Being responsible for desktop and mobile websites on a daily basis as well as coordinating e-commerce projects and keeping up relationships with global online travel agencies is a challenge. Indeed senior distribution executives must display sound judgement, because one wrong move can have a profound impact on overall channel profitability. Their skill set should feature commercial management expertise, a thorough knowledge of customer relationship, global distribution and reservation management systems among others and they must be able to making the most of web technology.
Over the years the retail model has been defined in hotel distribution terms as intermediaries selling at public rates for a commission. This model has the lowest threat on the rate integrity of a hotel and is therefore often preferred by hoteliers.
“The daily balancing act of having to manage multiple channels with a variety of business models has become a challenge, increased workloads and is a constant source of errors. The retail model is just easier to handle for hoteliers,” says Heiko Siebert, vice president distribution, Mövenpick Hotels & Resorts.
Siebert says in general hotels will put more effort into selling business directly to consumers through proprietary channels. “Though high attention is put on the online share – for most hotels the biggest portion yet is happening directly but offline. Therefore I expect a slight trend ‘back to the roots’, and more focus on training and education,” he says.
EyeforTravel’s Ritesh Gupta talks to Siebert about how to work on optimal results.
EFT: If you were to pick any disruptive change in distribution, what would it be? How will this change the game in future?
Mobile is changing search and buying behaviour. Personally I am not sure how private accommodation sales platforms like Airbnb, Wimdu and so on can have an impact on distribution. As people become more familiar with sharing views or experiences online they may be less reluctant to share accommodation, not sure whether there is a correlation. If so this will disrupt leisure sales, when it comes to choice of destination, as well as the channel or platform to choose and buy from.
EFT: Last year Airbnb reached a milestone of 10 million guest nights booked on the site. Is the business model settling down?
That is a very good point and you are correct - Airbnb is an established player already, and the preferred booking option for many consumers.
I believe in general the hotel industry has not yet realised the disruptivity potential of this model on the leisure market. Airbnb, Wimdu and other players have established private accommodation as a substitute product for hotel accommodation - in particular in the weekend and city trips segment. I am not so sure of the magnitude of the impact - it will vary by market. The success levels of opaque players in different geographic markets indicate consumers varying acceptance of business models.
EFT: What do you consider to be the biggest distribution challenge today?
In contrast to all points (focusing on brand sites, e-commerce projects and dealing with OTAs), which are challenging but represent opportunities for hotels at the same time, the cooperation with global OTAs is becoming increasingly a threat. Because OTAs are overly assertive, maybe aggressive sometimes – hoteliers are easily pulled into an understanding where distribution through OTAs is taken for granted, as a given fact of life, and proprietary distribution channels are neglected. When you ask the question “What is your most important booking channel?” and you hear an OTA’s name as a reply, you know something has gone very wrong.
EFT: How has fragmentation in online distribution changed online room distribution and channel management today?
The requirements on technology, knowhow, time and effort in the daily operation and maintenance of a hotel in today’s distribution environment are significantly larger than they were five years ago. There is an increasing dilemma between the opportunities given on multiple platforms, targeting different consumer segments in a variety of markets, and the resources available in a hotel. The opportunities increase, whereas the resources are limited.
Distribution managers today have to decide which channel to spend their time on, as they cannot invest their time on every available or possible channel.
In addition to that I see a widening gap between the knowhow required to work channels profitably and the knowhow available in hotels. Distribution managers with a sense for ROI and profitability are in demand. Also, in order to provide a coherent picture or message of the hotel and brand across all channels, distribution and e-commerce managers have to work very closely today with communications, marketing and revenue management. It is impossible today to prepare and launch a profitable campaign without close cooperation with the other departments.
EFT: What do you make of the whole talk about selling an experience rather than just rooms and seats?
The customer’s experience during the research and booking process determines the expectation on the stay and experience in the hotel. What he experiences after the stay has an influence on his next choice. Hotel companies need to create an appearance in the very early stages of the customer’s buying cycle – that is why investments into search engines, SEO and SEM, are important. Ideally hotels are able to provide a coherent picture in all stages of the customer’s buying and travel experience, and after the stay.
EFT: How can you optimise the effectiveness of all distribution channels today?
You cannot do it all so you concentrate and spend time on identifying the right things to do. Put measures in place and monitor these.
EFT: Hotels have to embrace a mix of direct and indirect, online and offline channels. So expect any major changse in the multi-channel strategy when it comes to driving higher yield and better volumes?
No, this challenge will remain. If anything it will very likely get more fragmented, complicated, laborious, and costly. Some platforms or tools will change but it more likely though there will be more channels.