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October 2018, Las Vegas
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Words of wisdom for hotel distribution
EyeforTravel recently interviewed distribution executives at Hyatt and Wyndham. Here is a snappy summary of just some of their insights
In the past few weeks, EyeforTravel has been investigating some of the distribution challenges facing hotels. As part of this, and ahead of upcoming EyeforTravel North America and EyeforTravel Amsterdam we talked to Inderpreet Banga, a senior director of e-distribution and wholesale strategy at Wyndham Hotels & Resorts and Hyatt’s Sanchit Rege, who is manager of E-Distribution of Europe, Africa, Middle East and South West Asia. Here they share just a few insights from their day-to-day activities, and some of the steps they are taking to remain competitive.
1. The distribution landscape is blurring, silos need bashing
With more competition and more blurring of the lines of distribution, Wyndham Hotels is actively expanding its partner base to include new partners such as Ctrip and Meituan in China or new metasearch players. Today, the metasearch landscape is pretty established, with no obvious new ones emerging, but Banga says it’s important to keep monitoring the landscape.
As the lines blur, it’s also important to bash down silos. At Hyatt, says Rege, the group has recently moved to a new commercial structure where distribution has been elevated as a function alongside revenue management and sales.
“With this structure, we expect to better tackle the sea of changes occurring in the world of distribution and the ubiquity of digital platforms,” he says.
2. Partnerships are a priority, but should be fair
Banga, who will be speaking at EyeforTravel North America next month, says optimising partner value is an account management function. What is required, is to focus on partners like Expedia and Booking.com, and to ensure that hotel chains like Wyndham are getting their fair share within each channel.
“Ultimately, the group wants any third-party partner to be converted to a direct booking by converting the customer to the group’s rewards programme,” Banga says.
As the industry continues to evolve, it is also important to renegotiate the terms of agreement and connectivity with partners, and to drive lower commissions. Wyndham, for example, wants to ensure that the group’s 9,000 properties “continue to pay a very competitive rate in the industry and against our key competitors”.
3. Static pricing is so last year
Amsterdam speaker Rege warns that given the tremendous progress in travel technology, price transparency among customers in the same segment and across segments is now a reality. Customers today are able to choose their preferred booking channel based on access and preference. At the same time, they are able to check for availability of the same product on another channel at a lower price. So, for Rege, “the price arbitrage among static and dynamic channels for the same room is not sustainable in the future”.
The price arbitrage among static and dynamic channels for the same room is not sustainable in the future
4. The guest should be at the centre of channel optimisation strategy
Rege is also quick to stress that one cannot assume the customer segment, based on the channel name, given that all of them are interconnected. It’s important, he argues, to look at each customer segment, evaluate all options available and then ensure that the products offered to the customer segment are the right ones at the right price. It’s also worth noting, that channel optimisation can only be achieved if done in partnership with customer segmentation.
“A logical next step would be to use a customer lifetime value driven approach to evaluate the value created by channels,” he says.
5. Platforms rule, but brand clout still counts
Looking into the crystal ball, will the world be dominated by a few platforms like Google/Amazon/WeChat/Facebook? For Rege, this is already a reality today! “Be it travel, retail, entertainment or any other sector, customer access is guarded by these platforms,” he says.
Depending on the sector, - iTunes or Spotify for music, Youtube or Netflix for entertainment and Google or Facebook for digital media – platforms rule, and are usurping offline establishments such as a retail stores or traditional billboards.
And it’s no different for travel. Says Rege: “Google is very much a travel company. They have a platform that provides access to prices, products and reputation related information for travel components, creating immense value for the traveller. At the same time, their search engine and metasearch platforms are an integral and unavoidable part of the traveller journey from the dreaming phase to the booking phase. And they are able to capture the subsequent value from [targeting the customer] in these various phases.”
“However Rege believes that, ultimately, “the power and reputation of a good brand are instrumental in building customer preferences, and can overcome the platform barriers be it on desktop, mobile or voice devices”.
Not long now until EyeforTravel North America (Las Vegas Oct 18-19) or, for that matter, EyeforTravel Europe in Amsterdam (Nov 28-29). Join us to hear more about the rapidly advancing travel landscape from leading senior executives and innovators