"I believe that individual hotels have lost out on technology and support costs"

Travel Distribution Europe Special: Interview with Andrew Rubinacci, IHGTraditional considerations for choosing a particular distribution channel and optimising channel profitability include booking fees, credit card fees and commission fees.

Published: 11 Apr 2008

Travel Distribution Europe Special: Interview with Andrew Rubinacci, IHG

Traditional considerations for choosing a particular distribution channel and optimising channel profitability include booking fees, credit card fees and commission fees.

But are suppliers ignoring technology costs, support costs and marketing cost?

One of hoteliers says the focus should be on picking the highest revenue customer with the lowest required support with the highest lifetime value that books through the lowest cost channel.

In order to assess how are all five channels - hotel direct, voice / reservation center, 3rd party Internet, brand web and GDS / agency shaping up, EyeforTravel.com's Ritesh Gupta recently spoke to Andrew Rubinacci, vice-president - Distribution Marketing EMEA, InterContinental Hotels Group.

"I believe all channels still have value. It really depends on where the customer chooses to book. This often varies by occasion. That being said, I believe the Hotel Direct channel is becoming less important as the internet grows and single image inventory becomes the standard across all hotels," said Rubinacci.

Significantly when it comes to controlling costs, are hoteliers often missing out on technology costs and support costs? Also, ideally, if the focus is on highest revenue customer with the lowest required support with the highest lifetime value that books through the lowest cost channel, how tough is it today to manage the same?

Commenting on the same, Rubinacci, who is scheduled to speaker during EyeforTravel's Travel Distribution Summit 2008 (scheduled to take place in London on 20 and 21 May), said, "I believe that individual hotels have lost out on technology and support costs simply due to the fact that they many are small businesses with limited scale. That is where the power of big hotel groups allows operators to take advantage of scale and leading edge technologies by joining a network of hotels."

If channel profitability is the ultimate application of revenue optimisation strategy, then what factors one should take into consideration before approaching the same?

Regarding this, Rubinacci said, "It is of course prudent and responsible to try and get customers to use the most profitable channels. That being said, I think that some part of our industry have taken this too far and have lost sight of the customer. A customer that is forced or penalized to interact with a company may do so if they have to, but given a choice they will work with a company that is easier to interact with and meets their needs."

In the recent years, the role of GDS in travel distribution has been consistently reviewed. It is being acknowledged that GDSs will remain an important distribution channel but there is a strong need adapt to a changing marketplace, embrace new business models and offer competitive costs and functionality. Also,

new distribution alternatives will shift share from the GDSs but will not replace them. Also, suppliers are investing in new opportunities such as the Internet and Web 2.0, OTA XML interfaces and mobile technologies.

According to Rubinacci, it is not only GDS but all channels need to constantly reinvent themselves in order to offer value to there customers.

"The GDSs have made many investments in order to remain relevant to agencies and their customers and I assume they will continue to do so going forward. If one of them comes up with an innovation or new business model that gives them a competitive advantage, that would just be another step toward those goals," he said.

(Rubinacci is scheduled to speak at EyeforTravel's Travel Distribution Summit Europe 2008, scheduled to take place in London on May 20-21 this year).

For more information, click here: http://events.eyefortravel.com/tds/travel-distribution-summit-overview.a...

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