How to identify a poor distribution architecture in a hotel?

Published: 24 Jun 2008

Revenue and Pricing Strategies in Travel, TDS Europe 2008 Special

Experts acknowledge that hoteliers have take a call between their key resources spending hours updating several channels manually or to opt for a scenario where the implementation of any pricing decision is largely automated.

The latter frees up these resources to focus on strategically important issues to enhance a hotel's performance.

So which is the best way to address this?

In order to know more about the same and even other relevant issues related to RM, EyeforTravel.com's Ritesh Gupta recently spoke to Chinmai Sharma, Vice President, Revenue Management, Wyndham Hotels and Resorts and Duncan Bramwell, Managing Director, Duncan Bramwell & Company. Excerpts:

On assigning responsibilities:

Chinmai Sharma: I think the situation has improved although there is still a lot of scope for more. Irrespective of who implements the pricing and inventory decisions, the amount of time currently being spent on mundane implementation work is very high. As per a HSMAI survey, time spent on implementation by RM managers and Directors is significantly more than time spent on strategy or customer engagement. I think most RM executives can be more strategic with more automated reporting and price/inventory implementation.

Duncan Bramwell: Determining your optimal sell-strategy is a key revenue management function; updating pricing and strategy in the channels is an administration task. Period. Now rethink your time utilisation assessment.

EyeforTravel: How can a hotel be prepared for the increased workload that comes with having to manually update rates according to information being received from multiple channels? How can one bring in efficiency in this regard?

Chinmai Sharma: The channel management tools are crucial in updating pricing and inventory changes across channels. The hotelier obviously needs to do a cost benefit analysis of time spent in managing another channel (including accounting, payables etc) vs. incremental revenue received. Another solution that's helping hoteliers is content management solutions where they update content and media across multiple channels from a single platform.

Duncan Bramwell: If this is a problem in your organisation today, then pause and think about the world tomorrow. This situation reflects poor distribution architecture in your hotel, and it is time to change. Distribution is no longer as expensive as it once was, and affordable and efficient solutions with some impressive ROI's exist. Find someone to help you out of the problem instead of consuming attention in trying to simply manage within the problem.

EyeforTravel: How can information seamlessly flow between all systems in a timely and efficient manner?

Chinmai Sharma: The partner providing such a channel management platform should be:

· Reliable: Minimum down time, solid infrastructure and up-to-date technology. Also responsive to OTA extranet upgrades etc.

· Cost effective: per transaction charge should not be significant on top of the regular costs like OTA margins, GDS fees etc.

· Capable of providing Business Analysis: capable of providing meaningful reporting (past and forward looking) and also be able to raise flags when booking pace by channel is unsatisfactory.

· Support: responsive tech support and a dedicated account manager helps.

Duncan Bramwell: With the lines between Distribution, RM, and Sales & Marketing being more and more vague, the role of the RM must continue to develop. We shouldn't expect our RMs to be masters of all; buy in the expertise only when you need it...don't cut corners by having small-weights make heavyweight decisions. The RM ought to be aware of Distribution challenges and solutions, but you shouldn't expect them to be fully versed in every aspect - involve an expert when you recognise that you need to address the situation and be bold enough to take some bold decisions - winning is never easy, so be smart about it.

EyeforTravel: How do you measure your performance across various channels and streamline your processes to effectively implement revenue management?

Chinmai Sharma: This is an ongoing process and a ROI calculation across various channels always helps plan in planning revenue and share goals for next year. Distribution channel comparison vs. industry norms through benchmarking reports like eTRAK from TravelClick also helps in identifying opportunities. Measuring performance across channels consists of tracking metrics like costs or margins, LOS / Booking window / Seasonality statistics, measuring revenue share from each channel and trends over time, impact on net ADR due to varying channel mix, measuring booking pace by channel to be able to focus on the right channel and finally making pricing/inventory decisions to impact the dominant channel at the optimal booking lead time.

Duncan Bramwell: Do you have targets by channel? Do you have deliberate and specific strategies to improve channel delivery? The smart hotelier has chosen specific and sensible channels, employed the right software solutions to provide efficiencies and integrate all revenue activities - performance must be measurable if we hope to manage it, and performance is usually remarkably simple to measure...but usually we don't. The difference here is changing from being busy to being productive.

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