10 Tips to sharpen your hotel distribution strategy in 2013
IN-DEPTH: Today hotel companies have plenty have of indirect distribution channels to choose from. EyeforTravel’s Ritesh Gupta considers the basics along with trends to look out for in 2013.
Hotel companies have to be spot on with their distribution strategy. They have to target operating efficiencies via appropriate rate distribution management and work out channel mix to optimise yields. On top of that they mustcut down distribution costs and improve top line revenues by strengthening their marketing and distribution reach.
The emergence of Google and new start-ups coupled with the growth of mobile means hotels couldn’t be complacent in 2012 and simply rely on growth from existing partners. Instead they had to plan for the future and start counting on relatively new distribution options. Those who did so are more likely to witness their channel mix adapt and respond in the coming years.
Talking of new and old distribution channels, here are ten things for is hotel companies to consider:
1. A hotel company cannot be everything to every guest. Rather the focus should be on supporting channels of distribution based on the customers the company intends to cater to. Are you trying to target consumers looking for ‘best value’ while booking a room or are you only looking at the ‘price-conscious’ booker or you have some other consideration?.
2. The hotel-OTA partnership works, but all relationships are not created equal. It takes time to assess value and develop relationships, and much like anything else, the more effort you put in, the more you stand to get out of it. Distribution through online travel agencies is often termed as the least profitable channel, but at the same time it has great utility when it comes to reaching out to brand agnostic customers. Plus don’t forget to quantify the ‘billboard’ effect by getting listed on third-party distributors’ sites.
3. It is imperative that general managers and hotel staff are updated about the new developments and impact on distribution strategies before considering any participation. “We have more leverage as an organisation if we are striving for the same goals and objectives globally,” says Audrey Murante, senior director, eBusiness Development, Carlson Hotels, Americas.
4. Meeting evolving content requirements of intermediaries- Maintaining direct connection and executing new functionality calls for resources which affects the cost per channel.
5. Online direct is fine, but it should resonate with guests too– A hotel company’s booking website should be simple, let a customer book in only few clicks and most importantly give confidence at various stages. Eliminate the guessing game and find ways to offer security to visitors to your websites. For instance, consumer reviews (be they for allowing consumers to post them on your sites or displaying by tying up with a site like TripAdvsior) are driving bookings. Guests increasingly visit online review sites to research hotels and validate decisions. So hotel websites have to feature such content to secure bookings. Do remember that customers need to trust that reviews are authentic and posted by a traveller that actually stayed at the property.
6. Setting realistic expectations from mobile and social: While mobile is clearly mainstream, has social started delivering or is still emerging as a major distribution methodology? Mobile is gaining ground across the travel space driven by the stair step effect of better smart mobile devices and better mobile apps/mobile sites. A big plus for travel is ithe ncreased ease of researching and booking on the go, which is needed given how often travel plans change on the fly. In this respect, hotel companies can learn from how some of the successful travel intermediaries are performing. For instance, Kayak’s mobile apps have been downloaded over 20 million times. Kayak’s 3Q app downloads and queries increased at tremendous pace and its revenue per 1,000 mobile queries is $62, growing by 63% over Q3 last year. “For Kayak specifically, the growth rate is largely a function of a smaller baseline and that kind of growth is unsustainable long-term. Mobile’s currently lower RPM is likely to grow as consumers get more comfortable with a buying a broader range of travel on mobile devices,” says Lincoln Merrihew, managing director of Automotive and Travel at Compete. He further adds, “The Achilles heel, at least of smartphones, is the smaller screen which means less real estate for promoting upsells/ incremental services and for ad revenue.”
7. Planning for same day booking: Whether hotel companies shouldn’t let go a room empty just because there are platforms today is a topic that has been regularly questioned. There may be hotels companies that are comfortable with the idea of offering last minute exclusive deals to third-party mobile platforms, but certain revenue management and distribution executives believe such practice can weaken the value proposition of brand.com and other partner channels. Hotel companies would need to decide whether this can be a sustainable strategy, and if they take a plunge then they would need to find ways to safeguard brands and price integrity. Hotels need to assess areas such cancellations for mobile bookers in order to strengthen their rate and guarantee policies.
8. Keep an eye on Google Hotel Finder: One can’t ignore the prowess of Google. So hotels have to evaluate Google Hotel Finder’s strength as a traffic source. Important factors would be keeping a tab on CPC rates on Hotel Finder and how they are faring against Google Adwords keywords, plus how the click-to-book ratios are shaping up; what sort of impact the tool is going to have on reliance of hotels on indirect distribution channels etc.
9. Make sure you understand the role of Roomkey.com – As Chris Murdock, manager – distribution, Fairmont Raffles Hotels International, Global Reservation Centre, says any online search engine that can direct reservation traffic back to your own branded web site is always favourable. The value for consumers is essentially more choice, much like OTAs offer.
10. Embrace innovation: Hotel companies need to shape up functionalities on their sites or partner with those who understand how customers are likely to book or what gets them going from the scratch for their booking. There has been talk of selling experiences rather than just a room, but how does a consumer think and how can a platform or technology facilitate this? So it could be about coming up with a ingeniously designed search interface that lets a consumer get closer to a booking.