The (un)expected Call
Imagine you’re running a hotel. Suddenly, a big online travel agent calls you. They’ve found a cheaper price for your hotel room on a different website. They want you to match that lower price for a guest who’s already booked. Because of their huge influence, you feel like you have to agree.
But is there a better way to handle situations like this? Can you take back control of your hotel room prices online?
Selling hotel rooms online isn’t just about putting your rooms on different websites. It’s like conducting an orchestra with different musicians, including both traditional and online travel agents, tour operators, wholesalers, global distribution systems, bed banks, and comparison websites. Each of these players has its own challenges and advantages.
In this fast-changing situation, your hotel’s availability, rates, and inventory (ARI) are really important. This isn’t just about giving in to big online companies and their price requests. It’s about understanding this complex system, making strategic choices, and getting the most out of your hotel’s potential.
This article will help you understand this complex network, its different parts, and the issues hotel owners face.
How Guests Find Hotels in the Travel Industry
Let’s dig deeper into these distribution actors. Each player in the distribution landscape has a unique role in connecting your hotel and potential guests.
Travel Agents and OTAs: Travel agents in the real and digital worlds work on a commission-based model. They earn a percentage of the final sale, which they receive after the guest has stayed at the hotel.
Tour Operators: These companies create complete travel packages, including hotel stays with flights and other services, which they sell directly to guests. Because they buy in bulk, they can negotiate big discounts, giving them a lot of control over ARI.
Wholesalers, Bed Banks, and GDS: These players buy large quantities of hotel rooms to sell to various travel businesses, like travel agents or other OTAs.
Metasearch Platforms: These websites, like Google Hotels, TripAdvisor, and Trivago, compare ARI data from different sources in real-time. They send traffic to the platform with the best terms and conditions.
These players might seem different, but they have one thing in common: they all distribute ARI data. They’re all competing within their own parts of the market, trying to control the network that connects hotels with their guests.
Value Chains in the Travel Distribution Landscape
In the ever-changing world of the hotel industry, hotel owners and distributors don’t always play by the same rules, even though they’re on the same playing field. Understanding each player’s individual value chain can help hotel owners navigate this complex landscape more effectively.
The Distributor’s Perspective
To distributors, the hotel is a supplier, providing their platform with fresh, important content. Distributors often use various tactics to encourage hotels to continually update their property information. While this seems good for the individual hotel’s webpage, it also strengthens the distributor’s platform.
Imagine a scenario where a hotel’s attribute information on a third-party website is more detailed than on the hotel’s own site. While distributors might claim this is beneficial for the hotel, it also bolsters the distributor’s position against their real competitors – other distributors.
The Hotelier’s Perspective
For hoteliers, their viewpoint of the distribution landscape is quite different. They work within this territory to attract potential guests. They share their ARI content with distributors, who then compete with direct bookings. However, the primary goal for a distributor is not selling a specific hotel but selling a hotel on their platform. This situation creates an environment where hotels compete with each other regionally. Distributors compete globally for control over hotel ARI data.
The Challenge for Hotels
The challenge for hotels is magnified by the competitive dynamics of travel distribution. Distributors engage in a fierce battle on meta channels like Google Hotel, TripAdvisor, and Trivago. ARI data is updated and compared instantly. Distributors with more favorable contract terms can manipulate ARI data. By doing they can attract more traffic to their platforms. This is intensifying the competition within the landscape as all distributors and hotels battle for visibility and bookings.
Adding to the complexity is the difference in payment models between travel agents and touroperators. While travel agents earn a commission upon a guest’s stay paid by the hotel. A touroperator is paid directly by the guests. They often package hotel rooms with other services, such as flights and transportation. This payment model adds an advantage to Ota’s working on a merchant model. It gives them directly control over your rate.
In this complex interplay, a pivotal question arises for hoteliers – who is the supplier and who is the client? Understanding that distributors view hotels as their suppliers, rather than clients, can provide a new perspective for hoteliers and deepen their comprehension of the dynamics of their industry.
Strategies to Regain Control
Given the intricate dynamics of the travel distribution landscape, how can hotels regain control? Let’s explore some strategic approaches:
Understand Your Loyal Guest Base: The first step to regaining control is to evaluate your loyal guest base. Are these guests, who book directly with your hotel, increasing in number, stable, or declining? By identifying this, you can strategize to increase direct bookings.
Value Your Product: Your hotel should never offer a product at better conditions on a third-party channel than what is available directly. This undermines your product and weakens your direct booking strategy. Your direct channel should always offer the best conditions to guests.
Avoid Partnering in Distributors’ Loyalty Programs: Distributors often promote their loyalty programs as beneficial to hotels, sometimes disguised as “closed user groups”. While these might seem appealing, participation in such programs strengthens the distributor’s position in the battle over guest data.
Treat Distributors as Frenemies: Keep your relationships with distributors strong, but be mindful that their goals may not always align with yours. Navigating this balance is key for effective distribution management.
Prioritize Your Direct Channel on High Demand Days: When demand is high, consider limiting room availability to distributors. Instead, drive guests towards your direct channels, helping to boost direct bookings.
Ensure Content Updates across All Platforms: When you update your content on third-party distributor sites, ensure these changes are also reflected on your own website. Your direct site should always be as enriched, if not more, than third-party platforms.
Understand Your Position: Smaller hotels might find it beneficial to partner with distributors as the cost of sale may be lower than direct. However, it’s essential to understand your position and remember that distributors are not loyal. Stay competitive and remember the Three Rs.
The Three Rs – Rates, Ranking, and Reviews: To outshine your competition on distribution platforms, focus on the Three Rs. Ensure your rates are competitive, your hotel ranks high on search results, and you have a plethora of positive guest reviews. These elements will boost your visibility and appeal to potential guests.
Regaining Control with MinersRepublic
In this challenging journey, MinersRepublic can be your trusted ally. Our deep understanding of the travel distribution landscape equips us to provide the insights and tools you need to manage your market position effectively. Our dedicated team of professionals can help you strategize and optimize your distribution channels, offering a competitive edge and helping you secure more direct bookings.
At MinersRepublic, we recognize the dynamic nature of the travel distribution landscape and offer services tailored to your unique needs. Whether it’s leveraging data analytics to understand your loyal customer base, managing your relationships with distributors, or boosting your hotel’s rates, rankings, and reviews, our commitment is to help you regain—and exceed—your market position.
Are you ready to regain control of your distribution strategy? With MinersRepublic, the journey towards mastering the travel distribution landscape begins now.
