Guest post: Shaping the future of hotel distribution

The distribution marketplace, in essence, the mechanics of how to book a hotel, has grown overly complex in recent years.

By Peter Waters, Director of Distribution, Global Hotel Group, Amadeus

The distribution marketplace, in essence, the mechanics of how to book a hotel, has grown overly complex in recent years.

Different technologies and channels overlap, legacy systems abound, and more choice, while a good thing, has also bred more complexity for hotel bookers.

Distribution channels have evolved over the past decades: going from the humble phone in the 1980s to dedicated terminals in the 1990s, then to the web and the advent of OTAs in the 2000s.

Now we have all of these, plus the additional complication of mobile and meta-searchers, it’s a Cambrian explosion of distribution channels.

And today, bookers have umpteen options available to them when searching for a hotel, meaning it is often easy to get lost in the maze.

There is increasing pressure for professional bookers or hotel agents to find not only the right deal; but the right deal at the right time, at the right price.

Travellers’ needs, thanks to the vast choice available, have become more exact over time and so bookers find they now have to consider options for leisure, for example, or work into regions that have only recently opened up as business destinations.

Given the huge range of accommodation options and distribution outlets available, finding the right one ought to be easy, but surprisingly, it’s become a longer more manual process than before.

The hotel marketplace is a mature marketplace, but its maturity has bred inefficiencies that have crept in over time.

It’s not just bookers who bear the brunt of this: hoteliers are also paying the price, as there is no guarantee that bookers will be able to find their content.

There is a dichotomy between the growing amount of choice, and how hard it is to efficiently compare and contrast that choice.

An inefficient marketplace encourages people to exploit the inefficiencies, and we see this in the guise of rising distributor commission rates and ‘must have’ meta-search advertising exposure, making it increasingly expensive for hoteliers to access the customers they need, although in theory, hoteliers and bookers alike have never had so many distribution channels to choose from.

A more efficient model is needed to ensure a sustainable future for all.

So, how can we shape the future of the hotel distribution marketplace?

The answer, is that all hotel industry players need to work together to create a linear route between professional bookers and hotel content.

This approach excises loopholes in the system, preserves the amount of choice (which is clearly a good thing), and makes it easier to compare and contrast hotel packages.

There needs to be a better option available for hoteliers and bookers, that allows simple comparison of offers, sustainable revenue growth, facilitation of various payment options and business models, and that can sell a wide range of hotel content.

In practice, what this looks like is a single point of entry to access multiple distribution channels.

Once inside, content from multiple sources needs to be held centrally in a standardized format, so that even disparate information – such as public vs private rates, or owned vs user-generated content – can be compared side-by-side.

At the moment, bookers use, on average, 3.7 different systems to find hotel rooms.

Compare this with the number of channels hotels distribute their content through; own-brand websites, OTAs, consumer sites, corporate sites, GDSs, TAs…and it’s clear that a booker’s 3.7 searches are only scratching the surface of what’s available.

So for hoteliers, creating a one-stop shop for bookers means that their content will be seen by a much bigger audience, rather than spread thinly across multiple channels.

The sector also needs to be more open to the simplicity that many disruptive concepts bring to mature markets, it’s not about reinventing the wheel, it’s about ensuring that the core concept still does what it’s meant to do.

It would do the industry no harm to ask itself, in the age of the customer, whether its distribution mechanisms deliver a service that is customer-friendly.

While previous developments in the distribution sector have progressed decorously down the decades, one at a time (the aforementioned progression from phones to terminals to web), we are now in an age driven by disruption and consumer-led innovation.

Bookers and hoteliers are coming at the same problem from different angles, how to find the right room vs. how to find the right customer, and the unifying factor needs to be personalisation.

For hoteliers, the key to personalisation is an in-depth understanding of not just who their customers are, but where they come from.

This is not about geographic location, but about the point at which they engage in the booking process, and where that point is.

Better control over their distribution channels will help hoteliers further that process.

Hotels need to intelligently manage their booking channels, dynamically vary their rates in real-time and be able to see and track results. It’s this level of insight that feeds the personalisation machine.