October 17 2012

Indirect and Direct Distribution

I have been reading around www.eyefortravel.com over the last few days and came across another article that sparked my interest.  “The article Direct versus indirect distribution: making the most of a love-hate relationship.” Last week I wrote about where the hotel room of the future will be sold. What was sold through the PMS and even a CRS is more and more sold on many other channels. OTA’s help to create brand awareness and bring in new clients not currently loyal to the brand. Apple and Google are mentioned as potentially disrupting the distribution world (if they have not done so already). A couple of highlights from the article by EyeforTravel:

  • hotel companies that attempt to go direct cannot ignore that travelers are driven by other priorities
  • rather than thinking of the lost commission fees, hotels should think in the total marketing value the booking brings
  • channels should be measured on its value propositions
  • some channels will begin to offer more than just a room
  • consumer is faced with many choices, and it is now very easy to use those choices
  • consumers buying extras is still a great opportunity for hotels to market while the guest is on site

From this article it is easy to conclude that OTA channels will continue to grow their play in filling all hotel rooms globally. More and more OTAs appear, more of them focusing on a niche market and many more are adding a great mobile experience to their channel web site.  Now let’s look at this from a technology point. What role will the PMS continue to play in selling the room and the same for CRS. Will (overtime) these two systems just become a database that holds the number of rooms which are available, with maybe a min and max price threshold to communicate to the OTAs the desired price, or will price (within reason) left for the OTAs to deal with.

If many of the rooms are sold outside control of the hotel, once the guest has booked and arrives at the hotel there are many opportunities to sell additional services or packages to the guest. Can a PMS help with that? Once at the property with a self service app, the hotel can begin to create loyalty, surely an functional opportunity for the future PMS. If hotels have a good and well connected distribution partner in place, the hotel rooms will fill, maybe at a slightly higher cost than if booked direct (although, when adding the cost of SEO and PPC is that really true?). But with the right property technology and up sell strategies in place while the guest is staying at the hotel, I believe the cost of distribution can easily be recovered from.

Such a strategy should include a strong PMS connection with self service and social staying apps!