Already an intricate web of online and offline sales channels, the hotel room distribution landscape is becoming even more complex as leisure and business travel begins to blur. Until quite recently, concepts such as “business” and “leisure” could still be counted upon to bring some order – and differentiated pricing, availability and product strategies – to this chaos. But no longer, as distribution channel managers decide how best to manage and distribute their inventory in an omni channel environment.
For the consumer, meta-search engines such as Kayak and Trivago now provide levels of price transparency that would have been unimaginable a few years ago, clearly raising the question of whether any meaningful regional price differentiation is still possible. Mobile sales and same-day reservations platforms such as Hotel Tonight, while offering new opportunities for distressed inventory and converting the offline “walk in” scenario to a more (centrally) controlled online transaction, have significantly raised the bar in terms of what it takes to run an effective “dynamic pricing and inventory strategy”.
At the same time, the “leisurefication” of corporate travel is eroding the position of GDSs as corporate travellers increasingly seek the same choice, brands and tools that they encounter in their private hotel shopping experience. Not surprisingly, Global Distribution Systems (GDS) have been actively integrating the traditional “B2B leisure” and distressed hotel inventory from bedbank and wholesalers such as Transhotel and GTA (e.g. Travelport Rooms & More, Amadeus Multisource) and serving it to a premium corporate travel audience. Accessing the wholesale market to bring to the attention of the corporate travel with the objective of maintaining market share.
While performance might still be “good enough” for many a traditional hotel chain working with log files and booking reports, for anyone seeking a better method and understanding of where business is coming from, it is becoming impossible to navigate this complex landscape without detailed insights into real-time shopping (i.e. search data). In other words, using transaction data to know where searches are coming from (ie channels) and which ones convert into bookings. This dynamic landscape is starting to accentuate the leaders from the laggards and it has never been truer that not all channels or partners are equal.
What is striking is how bad many hotel chains are at calculating the true longer-term cost/benefit of the channels they use, incorporating:
- Efficient use of their system, beyond simply look to book (e.g. Euros per search etc.)
- The trade-off between volume, margin and specific segment/niche of demand etc.
To ensure every room is sold for the best possible price using the best sales channel requires a detailed overview of the performance of all channels against key indicators. Such insight across the diverse channels is the best way to achieve three important Hotelier objectives:
- Combat the rising costs associated with distribution
- Guide sales and marketing efforts to drive occupancy
- Help improve profitability
All this requires a detailed and bird’s eye view of channel performance across different players and different channels that focused on detailed search and shopping behavior, rather than the traditional lenses of commission levels, bookings and market silos (e.g. “GDS”, “wholesaler”, “OTA”). In other words, it requires a robust search-based business intelligence capability.
In a world where the channel type or booking patterns fails to identify the shopper, driving conversions increasingly depends on being able to leverage detailed search intelligence to create more relevant offers. More than that, while transparency is driving price commoditisation and any possibilities of “static” price differentiation, the same technology is opening the doors for highly effective contextual price differentiation and revenue management (i.e. based on window of opportunity, rather than static market segmentations). The catch? It requires you to have access, and be able to respond effectively to, detailed real time search information.
An effective distribution strategy that is integrated with revenue management can help forge beneficial links between crucial hotel operating departments and positively influence the pricing strategy. Instead of relying on more static rates uploaded daily or less, more dynamic pricing and room allocations can be applied in response to channel performance insight from search and booking traffic. Today’s leading wholesalers expect real-time access to inventories, usually via XML application interfaces. This gives hotel companies that are fully connected to these third party channels the ability manage yield rates. This evolution towards real-time environment in distribution also enables them to offer late availability not only from their own reservation systems but also to their wholesale partners.
So having set out the arguments of why search and booking intelligence can offer a clearer perspective of hotel room distribution costs, how can this be achieved? Well most hotel groups are already sitting on much of the XML data that can help build the picture, but till now have failed to give it the attention it deserves or appreciated the value it holds. XML is widely used within the travel industry to exchange data such as room availability and rates. The ability to tap into and analyse the wealth of information that is embedded in this flow of transactions up and down the network and to be able to do this in real time opens up possibilities and benchmarking opportunities between the different channels. Essentially, by monitoring and analysing the rich content embedded in all these messages hotel distribution managers can manage their channel SLAs, while marketing managers can monitor their programs, with clear insights into:
- Consumer demand by capturing exactly what is searched
- Consumer satisfaction (in terms of the options and prices offered)
- Whether there are gaps between what is being searched for and what is available
- Consumer experience in terms of speed of response
- How many lookers are turned into bookers and at what ratio
- Any transmission errors and how they are rectified
- Any degradation or outage in web services that impacts user experience
- The commercial performance of each channel
Getting the right distribution mix and then monitoring the performance of third party channels is crucial to getting the best returns on a hotel’s inventory. Harnessing this intelligence from search and booking data is today’s competitive weapon to not only understand channels better, but ultimately also the buying habits and preferences of consumers.
For more information about how Hoteliers can tap into intelligence from XML search and booking data visit: www.triometric.net/sector/hotels
About Matthew Goulden
Matthew Goulden has 25 years of General Management, Sales & Marketing and Business Development experience in the software & automotive industries. Since 2007 Matthew, as CEO, has been responsible for the strategic vision, overall management and business leadership of Triometric, a specialist in online travel analytics.
Prior to joining Triometric in early 2003, Matthew held senior executive positions in VC backed software firms based in the UK and Europe with responsibility for strategy and growth. Matthew started his management career with the Ford Motor Company (Europe), during which time he held global responsibility for the successful implementation of Ford’s worldwide Internet based dealer network.
Today Matthew works closely with the management team and technologists to formulate and drive the strategies that have made Triometric a pioneer and technical leader in business intelligence and API performance monitoring for the online travel market. Always with a hands-on approach he has developed key accounts with Fortune 500 customers including Thomson Reuters, Regus and HSBC and large online travel specialists such as GTA, Hotelbeds and Farelogix.
Matthew holds an MBA from INSEAD business school and a Master of Engineering from Imperial College, London.
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