TECHNOLOGY : WORKING WITH OTAS
ESSENTIAL DISTRIBUTION STEPS
Chains / Brands
1 . Develop internal and external lowcost channels with as much control over rates , inventory and branding as possible . Perfect your mobile strategy .
2 . Build up programs to expand highmargin ancillary revenue streams through central channels .
3 . Tightly control costs for channels .
4 . Audit every channel to ensure it is capturing the most incremental business possible . Investigate and develop attribution modeling .
5 . Tap the intelligence you have about your customers and apply it extensively at every touch point possible .
Managers / Owners
1 . Determine a hotel ’ s optimal channel mix and manage to that objective .
2 . Compare channels in their ability to shift share and the cost they each incur .
3 . Seek out , develop and invest in channels that help acquire , engage and retain customers and create sustainable profit streams .
4 . Guard your hotel ’ s pricing structure , inventory and brand . Price smart .
5 . Conduct an audit of every channel to ensure peak functionality .
Source : “ Distribution Channel Analysis : A Guide For Hotels ,” from AH & LA / STR / HSMAI
I don ’ t know exactly what ’ s going to shake out with mobile . There may be somebody who does mobile exceedingly well and becomes a big , big player . It might be a disruptive technology where a new player can come in .
– Andrew Rubinacci , IHG
Makemytrip . com in India ,” Chrétien says . “ We have also developed a channel manager connection with Rate Tiger to give access to some very national / regional players , like Hotel . nl or Agoda .”
Priceline owns a major piece of the global pie between subsidiaries Booking . com , based in Europe , and Agoda , which focuses on Asia , but they are not alone . For example , the massive conglomerate Odigeo was created last summer by the merger of large European online travel agencies eDreams , Go Voyages , Opodo and TravelLink , and the company now boasts 12 million customers and a presence in 28 countries .
Groupon , a relative newcomer , already operates in 47 countries , including Chinese joint venture GaoPeng . com , while for other sites globalization has been a slow , bumpy climb . Expedia executives chuckle while recounting stories about using bike messengers to conduct cash ticketing transactions at one time in China , but these are growing pains that must be endured .
“ In the next couple of years we want to be doing half our business internationally and half domestically ,” says Expedia ’ s Maher . “ Right now , we have
36 languages we ’ re translated in . When we first started , we had people in local markets that were translating in the local language , so that when consumers are reading reviews , it made sense , it was easier to read and it was more localized .”
With hotel chains , the same efforts must be applied to brand . com sites . Accorhotels . com offers 28 different sale points , each adapted for a specific country . The company just opened its 29th POS in Indonesia , in the Bahasa language .
In some ways , leaning on regional and local staff still makes all the difference . “ At the end of the day , we sell hotel rooms , whether we sell them in China , the U . S . or the U . K .,” adds IHG ’ s Rubinacci . “ You can go really wrong if you don ’ t take into consideration some of those cultural nuances , but that ’ s really the power and scale that a big brand has : We have people on the ground who understand those cultural differences .”
The road ahead Although it ’ s almost certain that hotels will continue to deal with the various OTAs in the immediate future , some believe the nature of these relationships may change over time . Experts point to the growing health of the lodging business for greater leverage when negotiating future contracts , as well as projected drops in GDS commissions . It may not be impossible to see hotel OTA booking commissions someday fall within the 10 % to 15 % range .
“ These abnormally high OTA commissions will not disappear overnight , but the whole dynamic of the industry will change , by lowering or abolishing the travel agent commission of 10 %, lowering across the board the OTA commission and tying those OTA commissions to concrete results ,” Starkov says .
Until then , experts recommend hoteliers take a hard look at how they ’ re being represented online and make sure visitors see the best content possible , with consistent pricing and features tailored to the clientele . With increasingly competitive brand . com sites , more chains are expected to regain control of their online distribution in the coming years .
“ We anticipate that it shall be more conflicted , dealing with certain OTAs in the future ,” admits Accor ’ s Chrétien . “ We shall have some drastic choices to make one day .”
60 HOTELS April 2012 www . hotelsmag . com