THE COST OF CHOICE. WHY HOTEL DISTRIBUTION COSTS MATTER TO CORPORATES.

Transcription

1 THE COST OF CHOICE. WHY HOTEL DISTRIBUTION COSTS MATTER TO CORPORATES.

2 CONTENTS Introduction 3 Executive Summary 4 Distribution channels 8 HRS & the distribution chain 9 Why distribution costs matter to corporates 10 Cost comparison by channel 14 The hotelier s perspective 16 HRS solution 18 Conclusions 20 Acknowledgements & sources 22 32

3 INTRODUCTION. This is the follow up to Content is King the paper that looked at the impact of hotel content such as detailed descriptions, images, reviews and video on bookability and compliance to travel policy. In this paper, we look at the costs to hoteliers of distributing their products to business customers in particular, and why corporates should be taking a closer look at the systems powering their travel programmes. I believe that few travel managers will be aware of how much their preferred hotels spend on distribution; not just in terms of commission payment to TMCs but enhanced commissions to OTAs, sales and marketing funds and other hidden costs within the supply chain. Even fewer will have considered the true impact of those distribution costs on their preferred rates and whether by helping hotels on their corporate programmes to select lower cost channels they can use those savings to leverage incremental savings for themselves too. In this paper we will be looking at the wide range of channels through which consumers book hotels now and in the future; at the benefits (and associated costs) of those channels, and the benefits corporates can realistically derive by helping their hotel suppliers to improve the efficiency of their distribution. Jon West Managing Director (London), HRS 3

4 EXECUTIVE SUMMARY. Both the number of ways of booking a hotel and the costs of delivering a hotel booking through each of these channels has changed dramatically in recent years. In the early 1990s hotels relied on phone calls from their direct customers, business travel agents (as they were then called) and other intermediaries, with bookings confirmed by fax, telex or snail mail. Of course the internet changed everything, fragmenting the number and range of channels through which a hotel can receive a booking, and the rates applied to those channels. As Figure 1 (right) demonstrates, the number of parties potentially involved in a single transaction between corporate and hotel has increased too. TMC and HBA commissions, GDS and switch fees are nothing new, whilst the rise of Online Travel Agents (OTAs) with higher commission charges (compared to the traditional 8 or 10%) plus VAT have all eroded the hotelier s profitability. In fact, from a gross booking value of 100, the hotelier can lose as much as 30 in distribution and channel fees. Distribution management means tracking and assessing conversion ratios, revenueto-cost models and ancillary spend for both direct channels (i.e. the phone and hotels own website) as well as third parties, all adding to the cost of managing and monitoring these disparate revenue streams. But whilst the distribution landscape itself may be evolving, the challenge for the hotelier remains the same; to identify the channels that produce the best yield in terms of occupancy and rate. The internet is now a mature booking channel; 2014 s business and leisure traveller demands real-time pricing, availability and a lowest rate guarantee. Traditional pricing promotions can be counter-productive in a channel where a lower rate is only a couple of clicks away. Meta-search technology has given rise to price comparison sites who are all offering the same value proposition the lowest rates on the market. And yet hotels have been slow to adapt their distribution strategies to the fragmented landscape. Some have opted not to work with the OTAs during peak periods, but still turn to them when occupancy is down. Major trends in hotel distribution Hilton Arrival of TripAdvisor hotel availability check Hotels to take better control of distribution channels Rise of meta-search powering OTA growth Greater competition for online customers Social media and mobile making their presence felt Social media and mobile will take more market share 4

5 FIG. 1 - BOOKING CHANNELS Source: HRS PEGASUS ODD ADS/IDS, OTAs BY PEGASUS CA. 2,000 PARTNER : MERCHANT MODELS EXPEDIA BRAND / S&DP CRS SWITCH PEGASUS 600,000 STATIONERY TA TERMINALS, OTAs BY GDS GDS TA IMPLANTS (CORPORATE TAs AND TRAVEL DEPT.) HOTEL HOMEPAGE, IBE HOTEL DIRECT SALES RETAILER (HRS, HOTEL.DE, BOOKING.COM) TO TRAVELTAINMENT (LEISURE) BISTRO ONLINE / OFFLINE TA UNISTER FLUEGE.DE, AB-IN-DEM-URLAUB.DE HOTEL COMPANIES & TRAVELLERS 5

6 EXECUTIVE SUMMARY. Although hotels want more direct business to enhance their margins, direct bookings present issues to the corporate travel manager. To fulfil their legal Duty of Care obligations to their employees, traveller tracking systems are now an essential element of any corporate programme. Consistency and security of data for Management Information and lost productivity are just three reasons why many organisations work with TMCs. The rate may appear cheaper, but the real cost is likely to be much higher. As a result, hoteliers have gravitated towards the cheaper or more costeffective distribution channels available to them. In 2014 the onus is on hotel managers to maximise business from their own websites but also to manage their third party relationships more effectively. Many corporates have leveraged cost reductions by moving from telephone to online bookings. Adoption rates vary from company to company depending on the maturity of the programme and the sophistication of the booking tool used. Whatever the success rate, the scope for the corporate to reduce processing costs is gradually diminishing as online adoption rates rise. However the distribution landscape has opened up a fifth avenue; to help partner hotels to reduce their distribution costs by channelling bookings into low-cost channels and leveraging the hotelier s savings to secure lower rates or incremental added value benefits. But whilst some hotels are missing revenue and occupancy opportunities by not understanding the digital travel market, corporates are ignoring the opportunity to drive greater value from their preferred programmes. It has long been accepted that there are four principal ways for corporates to drive down hotel costs. The first is to consolidate hotel bookings into fewer suppliers; the second by substituting cheaper alternatives for existing partners, thirdly through stronger negotiation and finally by reducing process costs through online adoption. 6

7 In 2014 the onus is on hotel managers to maximise business from their own websites but also to manage their third party relationships more effectively 7

8 DISTRIBUTION CHANNELS. Hotel profitability is driven by fixed costs versus occupancy. A hotel maximises its profits when its bedrooms are full, so distribution strategies are geared to selecting channels that will increase occupancy and revenue at the lowest cost. The hotelier s primary concerns when selecting distribution channels are the size and geography of audience, conversion of traffic to bookings, and the cost charged per booking. 92% of travellers now check online guest reviews before they book TripAdvisor Digital marketing charges are another major component of distribution costs. As well as pay-per-click advertising and online travel agent listing fees and hotel website management, digital marketing now includes guest and media review or earned content. TripAdvisor says that 92% of travellers now check online guest reviews before they book. In theory therefore, hoteliers have the means to distribute their properties globally to any type of B2B customer, but that choice comes at a cost to the hotelier and indirectly to the corporate. The cost of filling a hotel can be substantial. Connectivity, TMC and GDS transaction fees are all borne by the hotelier, squeezing margins already under pressure from corporates seeking discounted rates. The hotelier has to select their distribution channels with care and close out higher costing channels as occupancy rises. DIRECT CHANNELS The most profitable sales channels for hotels are the direct ones, where the booking is made over the phone or via the hotel s own website. Google estimates that just 20% of web traffic finds its way to hotels branded sites (although the figure is higher for budget brands), emphasising the power of the online intermediaries. The hotelier pays no commission for direct bookings; there are cross-selling and up-selling opportunities and the channel is relatively easy to monitor. On the other hand, the hotelier bears the cost of the personnel, systems and website development to convert and deliver the booking not to mention the sales team to source direct corporate contracts and the marketing spend to generate website traffic through pay-per-click and campaigns. And with mobile set to become a major distribution channel over the next two years, hotels relying on direct bookings will have to invest heavily to maintain this decreasing revenue source and competitive advantage. 8

9 TMCS/HBAS Regardless of the level of human involvement - or touch in the booking, Travel Management Companies (TMCs) and Hotel Booking Agencies (HBAs) rely on the GDS for content and rate information. As well as the standard commission payable to the TMC of around 8 15% of the total booking value, hoteliers are again faced with fees for CRS, Switch and GDS, taking the average cost of the channel to around 30% of booking value. Corporates who receive rebates on collected commission may even be better off by negotiating a lower rate, especially on overseas or independent hotel bookings where TMCs have traditionally struggled to collect due commissions. GDS It is often said of the Global Distribution Systems that the best and worst thing about them is that they were built before the internet. The GDSs were originally created by the airlines in the 1970s to provide a central booking mechanism for travel agents. Today the GDS is a collective online system that delivers content, rates and inventory to the many systems supported by it, but is not geared to the breadth and depth of content that 2014 s digital customer demands. Hotels supply content to the GDS and then manage their inventory either via a management company (e.g. Best Western), switch or direct CRS connect. Each link in the supply chain dilutes the hotelier s income stream, racking up an additional in charges to the hotelier. Of the three major GDS providers, HRS supplies content to two - Amadeus and Sabre as well as directly to both TMCs and OBTs. Corporate profiles in the HRS system make booking in policy easier and enable corporates to access content/ profiles through each of these channels. 9

10 DISTRIBUTION CHANNELS. OTAS MOBILE One in five of all mobile bookings are now made using an ipad Pegasus Google estimates 80% of web traffic is now channelled via OTAs. STR and the HSMAI Foundation reckon that 76% of online bookings into independent hotels comes from OTAs compared to just 24% from hotels own websites. Standard OTA commission rates are around 18% of the total booking value. GTR Global estimates that luxury hotel chains could be paying as much as $500,000 a year in OTA commissions, whilst the conversion rates of hotel branded website traffic to bookings is as low 2%. But whilst OTAs have built their reputation upon offering the lowest rates and instant availability, there are a number of pitfalls facing the corporate who wishes to book via an OTA. Apart from the issues of traveller tracking, capturing the trip and spend data, there s also the problem of not booking in policy. GTMC estimates that up to 50% of all corporate hotel bookings were made outside policy during This means that 3.3 billion of corporate hotel spend went unleveraged. According to Google, in July % of all internet usage worldwide came via mobile. Around 35% of all hotel and travel website traffic comes from the same source, with 15% of all hotel reservations done on mobile or tablet, each taking an average of 26 minutes and visiting 5.7 sites. HRS estimates that 75% of mobile bookings are for same or next day arrival and predicts that a third of all hotel bookings will be made via mobile by Mobile is both an opportunity and challenge to hoteliers, creating another channel but also giving rise to another layer of complexity and the cost of enabling the booking to be made. Leakage is the biggest frustration for 45% of travel managers and a key objective for 80% (source: HRS). Carlson Wagonlit Travel estimates that although 95% of all corporate travel bookings are made in policy, compliance for hotel bookings is as low as 50%. 10

11 SOCIAL MEDIA FIG. 2 TOP 5 HOTEL BRANDS BY SOCIAL MEDIA TRAFFIC (AS AT DECEMBER 2013) Source: Skift/HVS Brand Twitter followers Facebook likes YouTube views Instagram followers Marriott International 280, , ,005 5,332 Hilton 114,119 1,163,844 1,132,878 3,272 Four Seasons 96, ,089 1,656,537 25,991 Room Mate hotels 90,299 33, ,380 0 Fairmont 23, ,716 87,788 16,040 Social media is also becoming an influential distribution channel research by Pegasus shows that one in five of all mobile bookings are now coming via ipads, whilst Google says that 54% of all social media usage is via mobile. As Figure 2 shows, hotels are investing heavily in digital marketing. A 2012 report by Bain & Company estimates that consumers who interact with suppliers via social media spend 20 40% more with these companies than others. Some hotels have even appointed in-house or outsourced Online Reputation Managers to provide ever more sophisticated content marketing skills. Social media is bringing new intermediaries into the sector, thereby increasing hoteliers costs. Social media sites offering hotel content may also directly encourage non-compliance to travel policy. In % of all internet usage worldwide came via mobile Around 35% of all hotel and travel website traffic came from the same source 11

12 HRS & THE DISTRIBUTION CHAIN. HRS customers can book online, with no booking fees, at marketbeating rates HRS is unique in the global travel industry; a hotel solutions provider operating a global hotel portal connecting business and leisure travellers with hotels worldwide; a distributor of hotel content to Travel Agents and a developer of market-leading software. 250,000 properties are available through the HRS system, our GDS, OBT and TMC partners, 90,000 retail travel agents and through apps for smartphones and tablet PCs. HRS customers can book accommodation online, with no booking fees, at marketbeating rates. Our corporate customers can access exclusive HRS corporate discounts (the HRS Business Tariff) of up to 30% off the Best Available Rate (BAR). HRS supplies content to TMCs and OBTs but makes no charge to corporates using the HRS portal, mobile app or call centre, so there s no penalty for corporates who insist on HRS powering hotel programmes delivered through their nominated TMCs. As such, HRS can provide a one-stop distribution solution to hotels. At a fixed rate of 15% commission, HRS represents a low-cost, high value channel in the market. FIG. 3 - THE DISTRIBUTION CHAIN Source: HRS MORE THAN 40,000 CORPORATES MORE THAN 80 million VISITS A YEAR MORE THAN 8,000 BUSINESS PARTNERS MORE THAN 300,000 TMC POSs OBT TMC CORPORATE PORTALS 24/7 CALL CENTRE HRS.COM MOBILE APPS SOCIAL MEDIA AFFILIATE PORTAL GDSs CHAIN HOTELS INDEPENDENT HOTELS 12

13 WHY DISTRIBUTION COSTS MATTER TO CORPORATES. FIG. 4 THE COST OF DISTRIBUTION Source: HRS TRANSACTION FEE: 5-7.5% ONLINE: TRANSACTION FEE OFFLINE: TRANSACTION FEE PMS / CRS SWITCH COMPANY GDS TMC BOOKING FEE: > 10 7% TRANSACTION FEE OR FIXED FEE INCENTIVE 10% COMMISSION + 2-4% OVERRIDE + SOFT MARKETING FUNDS (+ LISTING FEE) As Figure 4 shows, each of the links in the supply chain carries its own incremental cost. Rising distribution costs have been covertly passed onto corporates in the form of higher rates or rather rates that might have been lower had incremental margin been available to the hotelier. Corporate programmes also have to be managed; the cheapest channel for the hotelier is the riskiest to the corporate, 69% of who pursue leakage reduction initiatives (source: HRS). Aside from the diluted leverage of overall company hotel spend, there s also the element of lost productivity. Google estimates that it takes 2 hours and 9 minutes to search and book a hotel online, with an average of 10 websites visited per search. This compares to three minutes using HRS. Microsoft estimates that it takes 1 hour to search and book a hotel directly. The UK s Office of National Statistics estimates the average worker s 2014 salary at 29,000 inclusive of PAYE and NI contributions. As Figure 5 shows, assuming a 37.5 hour working week and 44 weeks worked per annum, this means that one hour spent booking a hotel direct costs the employer in lost productivity. For a corporate making 100,000 bookings a year at an average rate of 100 per person per night this equates to an annual cost of 1.76m. By comparison, according to the same sources, every booking made via an OTA takes 32 minutes. Based on the same average salary calculation, this means a cost to the employer of 9.37 in lost productivity. Based on the same salary figures, the cost of booking via HRS costs just 87p. This invisible cost represents the potential for corporates to make incremental savings. The point is that by understanding the cost of distribution, the scope for more effective rate negotiation is enhanced significantly. FIG. 5 LOST PRODUCTIVITY ESTIMATES Average annual salary (inc. NI) for booker 29,000 inc. employee & employer NI* Cost to employer per hour (44 weeks at 37.5 hours per week* Cost to employer per minute 0.29 Cost to employer for booking via OTA 9.37 (32 minutes x 0.29)** Cost to employer for booking via HRS 0.87 (3 minutes x 0.29)*** (*) Source Office of National Statistics (*) Source: Microsoft/ACTE (***) Source: HRS 13

14 COST COMPARISON BY CHANNEL. Figure 6 shows the estimated cost to the hotel of each distribution channel, expressed as the percentage of booked price lost. But even though the hotelier retains 100% of booked price from direct bookings by voice or website, labour, marketing and systems adds another 10%+ to process costs. As booking through HRS leaves the hotelier with at least 83% of booked price, compared to as little as 65% for TMC/ HBA bookings, HRS offers a lower cost of distribution channel than direct bookings by telephone or hotel website. Up to 35% of the hotelier s booking revenue can be freed-up by managing the booking through a lower-cost distribution channel. This is how the informed travel manager can make a big impact on the 100 booked rate, either by negotiating addedvalue benefits such as free WiFi, or by negotiating a lower rate. Changing distribution channels lowers costs and allows rates to be reduced because of the savings being made by the hotel, as Figure 6 demonstrates. 14

15 FIG. 6 HOTEL DISTRIBUTION CHANNELS ESTIMATED COST COMPARISON Source: HRS/TIN Channel Phone call to hotel Hotel website visit Hotel website accessed via mobile Cost items to hotel (based on 100 booking) 10 labour / systems 2 labour / systems 8-10 digital marketing (10:1 yield) 5 transaction fee to website transaction engine 2 labour / systems 3 digital marketing 5 transaction fee to website transaction engine Total cost to hotel ( & as % of ADR) (based on 100 booking) 10 (10%) (15% - 17%) 10 (10%) Cost to corporate (hard & soft cost) 7.54 lost employee productivity (average 26 minutes per booking) lost employee productivity (average one hour per booking) 7.54 lost employee productivity (average 26 minutes per booking) HRS offers a lower cost of distribution channel than direct bookings by telephone or hotel website TMC/HBA 8% 10% commission 2 4 listing fees 5% 7.5% GDS fees 7% switch fees 2% - 4% override 2 labour / systems (26% - 35%) 5 (online) - 12 (offline) OBT transaction fee + lost productivity OTA 18% - 25% commission (average) 2 labour / systems (20% - 27%) 9.37 lost employee productivity (average 32 minutes per booking) HRS corporate portal 15% commission ( 0 for bookings on corporate negotiated rates) 2 labour / systems 9.50* 87p lost employee productivity (*) Assuming 50% of the bookings are corporate negotiated rates 15

16 THE HOTELIER S PERSPECTIVE. CASE STUDY #1 The five-star Dukes Hotel in Mayfair was voted the AA s London Hotel of the Year in 2013/14 and is one of the world s leading classic boutique hotels. The overall cost of distribution equates to 10% of gross sales per annum Revenue Manager Olga Boiko estimates that the overall cost of distribution (commission, marketing, reservations and sales) equates to 10% of gross sales per annum. As expected, the cost to the hotel of processing a booking varies according to the channel used. Olga confirms that direct channels generate the highest percentage of her business in terms of occupancy, ADR and RevPAR and puts processing costs at up to 10% of the achieved rate for a phone call to the hotel and 6.50 per booking received via GDS, with 15% commission on top. At the opposite end of the spectrum, she puts the processing cost of OTA bookings at between 15 and 20% and TMC bookings even higher at 30%. In the last 5 years we have seen a strong increase in Online Travel Agencies production, which has a high cost for a hotel attached to it says Olga. Due to a change in customer behaviour and a heavy reliance on online booking platforms this channel is continuing to grow. The associated costs grow as well as the distribution takes over the market and demands higher prices for the services provided. A number of new luxury hotel openings in London over the past 5 years and a difficult international economic situation has resulted in a drop of ADR. Online Travel Agencies are focused primarily on lowest possible rate rather than a quality of a hotel and provided services, pushing hotels to drop rates or offer more promotions in order to get their market share, which is resulting in drop of ADR Olga continues. However Boiko denies that the choice of distribution channel affects the rate offered and says that lower distribution costs would not be passed onto the corporate in the form of a lower rate. Our corporate account rates are based purely on volume she says. 16

17 CASE STUDY #2 The Best Western Plus Seraphine Hammersmith is a 58 room four star hotel serving both business and leisure customers in and around West London. The booking channels that generate both the highest numbers of reservations and highest Average Daily Rate are OTAs, according to Group Revenue Manager Ravi Ivaturi, although the commission rates charged vary from 10 17%. Overall, the hotel spends 25% of its total income on distribution, with the OTAs also being the fastest growing channel for bookings. Although Ravi s team does not see the taking of a direct booking by phone or website visit as carrying any cost, he estimates that a booking from a TMC or OTA carries an additional 50p charge over and above the commission he pays to the agent. Most crucially, Ravi confirms the direct link between distribution channel cost and the rate offered. We would definitely pass on the benefit of lower distribution costs to the corporate in the form of a lower rate he says. We would definitely pass on the benefit of lower distribution costs to the corporate 17

18 HRS SOLUTION. HRS absorbs commissions, transaction, digital marketing and other fees that account for up to 40% of the hotelier s booking revenue 90,000 FIG. 7 - REDUCING DISTRIBUTION COSTS FOR THE HOTEL LEGACY WORLD LEGACY WORLD NEW WORLD NEW WORLD 90,000 CHAIN HOTELS CHAIN HOTELS 100, ,000 CHAIN HOTELS CHAIN HOTELS 150, ,000 INDEPENDENT HOTELS PMS PMS CRS CRS SWITCH SWITCH GDS GDS ONLINE ONLINE GDS OBT OBT OFFLINE OFFLINE TMC TMC MOBILE MOBILE TMC TRAVELLER TRAVELLER TRAVELLER TRAVELLER INDEPENDENT HOTELS 15% COMMISSION GDS ON HRS MARKET TMC RATES (PAY FOR PERFORMANCE) 0% COMMISSION ON NEGOTIATED RATES 15% COMMISSION ON HRS MARKET RATES (PAY FOR PERFORMANCE) The HRS solution works on several levels for hoteliers and corporates alike. The cost of generating and fulfilling direct bookings those that allow the hotelier to retain the highest proportion of booking revenue can be substantial. As a result, the level of occupancy generated needs to be topped up with bookings from other channels. Unlike OTAs or the conventional TMC/GDS model, HRS charges a flat 15% commission to distribute hoteliers content globally (see Figure 7, above) and 0% for bookings made on corporate negotiated rates. 0% COMMISSION ON NEGOTIATED RATES Hotel content can be delivered direct to corporates as well as via TMCs, enabling hoteliers costs to be reduced even further and giving the Travel Manager further scope for negotiation, but more importantly the choice of how to receive that content. This includes hotel content and inventory being loaded onto the GDS with a direct connect into partner TMCs and OBTs to access corporate rates. HRS absorbs commissions, transaction, digital marketing and other fees that account for up to 40% of the hotelier s booking revenue, and the cost of translating content into 30+ languages. 18 As a result the hotelier enjoys a better Return on Investment than any localised marketing activity, OTAs or the GDS. Cash flow is improved too, with hoteliers paying commission only after the traveller s bill has been paid.

19 CONTENT QUALITY As we saw in our paper Content is King, website and GDS content are essential components of bookability and therefore corporate traveller compliance to travel programme. Insufficient, poor or out of date content will reduce the volume of bookings received. Legacy systems such as those used by the TMCs are often unable to use the full depth of content available, whilst different channels often display hotel content differently, so the quality of content is vital. Although HRS delivers a high level of functionality and bookability, other channels are not used to dealing with rich content such as multiple HD photographs, reducing them to a single thumbnail instead. Some channels will not feature user reviews or HRS geo-coding. Consequently, every time a hotel s content is passed along the supply chain from GDS to switch and from consortia/alliance to channel manager, it becomes diluted whilst the hotelier pays more for every link in the chain. HRS focus is on enhancing content to make it more bookable, for example changing the look and feel of its own websites and portals annually and content/functionality every two weeks. BENEFITS FOR CORPORATES The HRS solution clearly benefits the corporate. There are no management or transaction fees, even if HRS undertakes rate negotiations with hotels as part of it Intelligent Sourcing solution. Corporates can enjoy a wider choice of hotels for their programmes as many independent hotels cannot afford GDS fees and are therefore excluded from TMC bookings. HRS also maintains the critical elements of any corporate programme such as payment terms, MI and traveller tracking. Based on the calculation that a corporate can save a hotelier between 25 30% on distribution costs compared to a TMC, and assuming an annual corporate hotel spend of 1m (10,000 room nights at 100 each), 250,000 is saved every year. Any travel manager aware of this would want to at least share the benefit with the hotelier through lower rates. Let s put in another way. What corporate buyer would forego the equivalent of 250 complimentary room nights every year for the sake of looking more closely at the cost of their hotel programme to their supplier? The cost of generating and fulfilling direct bookings can be substantial 19

20 CONCLUSIONS. As we have seen, increased competition between distribution channels has increased both choice and cost for hotels. The hotelier pays for every link in the supply chain. The impact of these changes has gone largely unnoticed by corporates, but it is the buying community that holds the key to reducing their hotel suppliers distribution costs by controlling and specifying the channels through which their hotel programmes are distributed. Changing distribution channels lowers costs and allows hotel rates to be reduced because of the savings made as a result. On the flipside, any travel manager needs to understand the cost of distribution to be able to negotiate a hotel rate effectively. In a future paper we will be looking at how hotel rates are structured and how to negotiate effectively. As this paper has demonstrated, the HRS solution offers the hotelier the lowest-cost distribution channel, whether received directly or via the TMC without affecting the other elements of travel policy delivered in the same way. Whatever option provides the best fit, the corporate retains the power to generate additional savings for both parties a truly preferred partnership. FIG. 8 - DO YOU KNOW THE COST OF DISTRIBUTION? DIRECT DEAL WITH HOTEL ONLINE SEARCH OTA, AFFILIATE, SEARCH ENGINE HBA HOTEL BOOKING AGENCY OBT ONLINE BOOKING TOOL TMC TRAVEL MANAGEMENT COMPANY HOTEL AGGREGATOR GDS CHAIN HOTELS INDEPENDENT HOTELS 20

21 Changing distribution channels lowers costs and allows hotel rates to be reduced because of the savings made as a result 21

22 ACKNOWLEDGEMENTS & SOURCES ACKNOWLEDGEMENTS & SOURCES ABOUT THE AUTHOR ACTE Bain & Co. Best Western Plus Seraphine Hammersmith Carlson Wagonlit Travel Dukes Hotel Google GTMC HRS HVS HSMAI Foundation Microsoft Office of National Statistics Pegasus Skift.com STR Global The cost of choice was written by Mark Harris of Travel Intelligence Network on behalf of HRS. Mark Harris joined the business travel industry in 1990 and has been a Director of TIN since A former Marketing Director of Expotel and First Option, and Head of Marketing at ITM, he was voted the Business Travel Industry s Personality of the Year in TIN s output has included five editions of the Meetings Industry Report and four Serviced Apartments Industry Reports, many white papers, client magazines and articles for trade magazines as well as helping create and launch Business Travel Market. He is also one of the driving forces behind The People Awards. For more information visit TripAdvisor 22

23 HRS - Hotel Reservation Service Ltd. The Triangle, 5-17 Hammersmith Grove, London W6 0LG UK Telephone +44 (0) Fax +44 (0) uksales@hrs.com