Distribution all over map, but change might come soon
Distribution all over map, but change might come soon
05 OCTOBER 2017 8:45 AM

The distribution and cost-per-guest-acquisition landscape remains complicated and ever-changing, hotel owners and operators said during a panel discussion which touched on direct-booking campaigns versus outside booking channels. 

LONDON—Navigating the hotel distribution landscape isn’t getting any easier, but hoteliers are becoming more skilled at it, and as a result, Brand.com might be gaining some ground, sources said.

Central to success are realizing that consumers think about booking in radically different ways than hoteliers, and acquiring different types of leisure and group business require different strategies based on market location and company profile.

During a panel titled “Hotel owners and operators speak out” at the Hotel Distribution Event 2017, panelists praised and damned both brands and online travel agencies, while admitting that consolidation with hotel firms and OTAs provides scale and benefits for both.

Still, they said, education and a continued push in direct-booking campaigns might help Brand.com regain some footing within the next few years.

Bottom line, cost-per-guest-acquisition strategies remain complicated, and distribution partners can best be described as “frenemies.”

“We want our sellers to talk in a brand voice. Everyone in the hotel firm understands those brands, but that is not always the case with sellers, and the recipient often might not be as familiar,” said Geneviève Materne, regional VP of distribution strategy for Europe, Asia, Middle East, Southwest Asia and Asia-Pacific at Hyatt Hotels Corporation. “Within the hotel company, there is a lot of pride in regards to brands, but more customer awareness is needed.”

Strategy and the ability to spot trends are vital. Flexibility is the key.

“Branding and selling should be separate,” said Simon Teasdale, managing director at Lapithus Hotel Management, which operates 21 hotels in the United Kingdom. “Estates often tend to push the two together too much. (Meetings, incentives, conventions and exhibitions) is somewhat a local sale, while transient business obviously is not. You have to see what the gaps are.”

Thomas Magnuson, co-founder and CEO of Magnuson Worldwide, added that “you have to be flexible and operate at a low cost, which we can then push to owners. The fastest growing network will be the most effective.”

Horses for courses
Materne said hoteliers have to realize where their brands and firms sit in the ecosystem; it might be the case that working with OTAs is the fastest track to acquiring the guest.

“We cannot be everything to everybody,” she said. “Hotels do tend to be obsessive in regards to being competitive with OTAs, rather than concentrating on providing a warm welcome and stay to guests and then working on having them then come direct.”

Magnuson said he sees Magnuson Hotels and its in-house brands and represented hotels as one brand, and his company’s role is to provide the lowest-cost, highest-value platform for owners.

“We take a holistic view, rolling branding, distribution and revenue management down to a local level,” he said. “The fastest growing network will be the most effective. You have to be flexible and operate at a low cost, which we then can push to owners.”

Teasdale said that while direct booking for the bigger hotel brands might catch up, “at the moment OTAs are very important for my business.”

“Yes, brands and direct have pushed back against OTAs, but that is not always seen in the cost base,” he added.

Teasdale reiterated the OTAs’ speed and suppleness.

“It took the industry five years to bring duvets into hotels. We are slow. We have to accept (the OTA world) as what it is and accept it as very strong distribution costs, along with resultant costs,” he said. “Booking.com is a phenomenal brand, and it challenges you to question your own model.”

Magnuson noted that “the consolidation of OTAs has seen direct booking on Brand.com falling to below 40%.”

Converting unbelievers
The idea of enrolling guests into loyalty programs at check-in, and pushing them to book direct from then on, is complicated by consumer confusion, increasing numbers of brands and different guest demand and profiles in different markets.

“Most brands do not have the recognition with consumers,” Materne said.

Lapithus’ Teasdale said he does see changes coming due to regulation, consolidation and direct-booking initiatives—perhaps within two years. He added that there is currently enough space in the market for a variety of strategies and distribution models.

“But even the simple task of getting (non-loyalty program guests’) email addresses has to be done efficiently and on a global basis. In terms of (cost per acquisitions), OTAs still are the cheapest of the lot,” he added.

Materne said brands need an “initial hook” to get guests onto Brand.com channels.

“To loyalty members, we are selling the umbrella brand, as not every market has each of our brands,” she said. “Brands develop because the hotel firm is looking for a certain type of guest and needs a brand to fit that guest.”

“If you are an iconic property in London, yes, you can go it alone—also if you are a branded property in, say, Kerala (India), a rural asset, where the consumer is looking for the security of an international brand.”

Magnuson said a lot of the hotels his company works with are outside of the Top 25 markets, “so we throw every line out there. There is nothing more expensive than an unsold room.”

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