An Introduction to the Wonderful World of Hotel e-distribution

Transcription

1 An Introduction to the Wonderful World of Hotel e-distribution Targeting different guests on multiple channels JULY 2016 EVOLUTION DISTRIBUTION, LONDON

2 SETTING THE SCENE The world of e-distribution is complex and its management requires strategic thinking. This whitepaper highlights important facts in order to better understand the primary objectives of e-distribution. The primary objective for hoteliers is to capture booking inquiries and convert them to actual bookings, hence revenue. It is crucial to be aware of the distribution costs for each channel as well as the trade-offs including guest retention, booking policies, cost of sale and clientele expectations. They must create a balanced strategy to maximise RevPAR (Revenue Per Available Room) with the most cost-effective distribution plan.

3 In a nutshell, every revenue and e-commerce manager should keep 3 key points at the forefront of their minds: KNOW WHICH GUESTS EACH CHANNEL CATERS FOR DISTRIBUTE THE RIGHT CONTENT ON EACH CHANNEL KNOW THE DISTRIBUTION COSTS FOR EACH CHANNEL

4 WHO BOOKS THROUGH WHICH CHANNEL?

5 GDS - GLOBAL DISTRIBUTION SYSTEM The airline industry created the first GDS in the 1960s as a way to keep track of flight schedules, availability and prices. The GDS soon became a pioneer for e- commerce in the world, facilitating B2B electronic commerce as early as the mid-70s. The GDS has changed the operational workflow of travel agents worldwide, greatly reducing the amount of time spent in entering reservations manually. Today travel agents book flights, accommodation and car rental services in one single place, which makes the GDS the preferred booking platform, especially for those arranging business travel. Amadeus, Sabre, Galileo and Worldspan are the 4 major GDSs that provide the backbone to the electronic travel distribution system, including most internet travel sites. Evolving from the traditional cryptic screens, they have also invested in the development of graphical user interfaces and self-booking tools for business travellers.

6 EXAMPLES OF THE DIFFERENT SOLUTIONS AMADEUS CURRENTLY OFFERS SOURCE: AMADEUS HOTEL DISTRIBUTION, MAY 2016 CRYPTIC INTERFACE GRAPHICAL USER INTERFACE SELF-BOOKING TOOL All travel agents need on one screen Easy to see indicators, facilities, policies Comparison features to save time and money Smart interface suits all types of users Intuitive booking flow Single screen display with all information in hand Data is easy to find, understand, bookmark, compare, save and forward Little training needed More relevant content integrated for greater efficiency stronger programme compliance through clear policy indicators and in-built approval tools intuitive interface: travel agents can book from the map, for easy, target searching and navigation Fast booking of optimum choice and user-friendly features

7 THE ODD SWITCH Sometimes called the 5th GDS, the ODD switch was created to be the translator for all coded language of the data that was pushed into the GDSs. The switch also has direct connections to many third party online travel agencies, both for descriptive property content and rates and availability data. This is why the switch is often referred to as ADS (Alternative Distribution System) or IDS (Internet Distribution System). In other words, it is because of ODD that hotels often appear on travel sites and OTAs despite not having an agreement with the OTA in question.

8 OTAS - ONLINE TRAVEL AGENCIES Online Travel Agencies (OTAs) have become powerful and efficient thanks to timely investment in tools to empower hoteliers to show their product, rates and availability to their guests. For the first time, hotels were also able to yield their rates and develop a more intelligent pricing strategy other than just a high / low season. From the guests point of view, they receive a clear picture of what the offer is and what they are going to pay on OTAs. Booking.com (Priceline Group) and Expedia are leading the market and include many different OTAs, which were once independent (for example, Expedia distributes for Hotels.com, Venere to name a few). The main advantage of these distribution channels is marketing exposure. Hotels would love to receive all of their bookings through their own website, without having to pay commission to anyone. However, if they are unable of fill inventory on certain dates, even high-commission OTAs would be considered beneficial for increasing RevPAR. WIHP conducted a three-year survey concluding that over 20% of direct bookings occurred after the guest found the hotel on an OTA. This shows us that being on an OTA can also increase hotels direct bookings [source: WIHP ]

9 HOTEL S WEBSITE AND INTEGRATED BOOKING ENGINE The hotel website is the most critical marketing tool because it aims to deliver a message that is both relevant and appealing to the target customer. It should highlight the unique attributes of the property with a design that reflects the image and brand of the hotel. The website needs to be designed strategically to increase the number of visitors, make the booking journey easy and with the aim to convert as many visitors as possible into hotel guests. Since hotels are now no longer constrained by rate parity compliance, the direct channel is also the best mean by which to promote the best rates. With the right use of online booking tools, internet marketing and creative website design, hotels have full control of their own image as well as of their inventory. To maximise revenue and decrease distribution costs, which include the high commissions paid to OTAs every month, hotels aim to drive more traffic to their own websites and booking engines and convert the visits into bookings. According to Google [ref. ], 52% of travellers will visit the hotel s website after finding the property on an OTA. This means that hoteliers have the opportunity to influence the consumer buying decision process.

10 HOW TO DISTRIBUTE THE RIGHT CONTENT ON EACH CHANNEL

11 THE EXTRANETS Inventory on OTA channels is managed through a managed website called an extranet or through a CRS. Managing inventory on each extranet individually is operationally time-consuming and inefficient, sometimes even a nightmare for revenue managers and reservation staff. Many independents have therefore chosen to manage all inventory from one unified source, to increase productivity.

12 THE CRS Naturally, the first and most efficient way to manage channel distribution should be through your Central Reservation System (CRS). A CRS should be a user-friendly and intuitive distribution system which makes the task of managing rates and availability across multiple channels easy and efficient. It also has to be designed to look attractive and accessible so that even users that are less technology savvy feel at ease when using the system. Purpose of the CRS is to manage distribution to all channels from the same screen. Some of the CRSs and Channel Management systems on the market split the management of rates to GDS, booking engine and OTAs. Ease of rate management is key whether a hotel chooses to use the CRS only for distribution to one or multiple channel types. Price linking must be straightforward and allow for various levels of price calculations, enabling the hotelier to choose all rooms and rates they want to derive price from. Another key feature for a CRS is the sale of last room on all channels through inventory pool. A system that enables management of all rates and channels from the same core place is able to sell the last room across all channels.

13 In the example below, one can see that the Standard Double room has 4 rooms available on the 1st of July. This means that as soon as 4 rooms are sold from any channel, all other channels will closeout (unless there is a contracted allocation still available). Hoteliers should also be able to identify availability for dates when some channels are open and some are closed. Typically, the PMS is inward-looking and designed for on-site operations activity. One cannot be swapped for the other.

14 WHAT ARE THE KEY FEATURES THAT YOU WANT TO SEE IN A CRS? USER FRIENDLINESS The CRS should be a user-friendly and intuitive system which makes the task of managing rates and availability across multiple channels easy and efficient. It should also be designed to look attractive and accessible so that even users that are less technology savvy feel at ease when using the system. EASY MANAGEMENT OF RATES & AVAILABILITY TO ALL CHANNELS Most CRS and Channel Management systems prove to be complex and less efficient because they split the management of rates to GDS and OTAs. There are however a few CRSs which, like evolution, were built to manage distribution to all channels from the same screen. Price linking must be very straight forward and allow for various levels of price calculations. With derived pricing rates/channels can derive their price from any other rate/channel; evolution CRS is flexible enough to allow every rate & channel to link its price to a single rate plan if necessary. CREATING DISCOUNTS AND OFFERS SHOULD BE A PIECE OF CAKE The CRS should include tools that allow to create a set of discounts/incenti ves for all channels, which can then be applied if and when required to any dates easily. The user shouldn t be asked to modify prices or make calculations. Having the CRS to automatically work these out is the best way to avoid manual entry errors. COMPREHENSIVE REPORTING The CRS should be able to produce comprehensive reports that track performance of all channels as well as other key performance indicators that one can us e to build stronger strategies by making better decisions. Many reports display a graphical option which also provides a table version that can then be exported to Excel, CSV or PDF.

15 SEAMLESS GDS CONNECTION HOTELS SHOULD BE CONNECTED TO ALL 4 MAJOR GDSS: SABRE, AMADEUS, GALILEO AND WORLDSPAN. Hotels should be represented on the GDS under a well-established chain code, which the travel agent community can book with trust. Also, hoteliers want to make sure that the GDS provider participates in all of the GDSs Best Available Rate programmes, guaranteeing BAR rates across all properties. In addition to this, the GDS provider may provide access to additional services aimed to increase GDS visibility and revenue: Access to Consortia Programmes Access to marketing opportunities with Consortia and the GDSs Support with Negotiated Rates loading if required Support with Corporate RFPs if required

16 WHAT CONTENT SHOULD BE LOADED ON THE GDS? There are a number of rate codes applicable to all GDSs which are looked for by travel agents worldwide. These rate codes should be kept in mind when setting up the GDS rate strategy. Furthermore, rich content is also distributed on the GDSs and there are some tools (like VFM Leonardo VScape and ICE Portal) that enable hotels to manage images across tens of thousands of forward distribution channels covering all 4 GDSs, major OTAs as well as many non-ota travel research sites.

17 DIRECT CONNECTIONS More and more CRS technology companies have developed direct connections to the main OTA sites. The advantage of this is that it helps keep connection costs to a minimum and guarantee seamless connectivity to the channels which are most important.

18 MONITORING COST OF SALE & TAKING ACTION TO MAXIMIZE ROI

19 HOTEL E-DISTRIBUTION CHANGES CONSTANTLY, HOWEVER THERE ARE SOME FUNDAMENTAL PRINCIPLES THAT REMAIN UNCHANGED. Hoteliers need to be aware of: How much the distribution costs are for distributing rates on each channel (fixed and variable) Which channels generate the most bookings How much manual and operational work is needed for the inventory controls of each channel How each channel help reaching the targeted customer segments Applying these principles can be helpful to determine which the most profitable channels are and to decide on any changes needed to the list of OTAs and rate strategy.

20 TO WRAP UP This all requires time and attention, but it is essential to make the business more profitable. Hotel technology partners can also help you and advise further on how to optimise a hotel's position and presence within desired channels. REQUEST A DEMO

21 ABOUT THE AUTHOR Anna Kerekes joined evolution Distribution in As part of the corporate sales team, she has been supporting hotels with their corporate sales and marketing activities as well as consulting clients on GDS rate strategies. Over the years she has expanded her knowledge to all aspects of revenue management and hotel marketing. Today, Anna is in charge of sales, marketing and e-distribution, and she can be contacted at +44 (0) or