Speakers at the Revenue Optimization Conference said distribution in the hotel industry is still behind the curve in terms of technology.
HOUSTON—The universe of hotel distribution is in a period of transition, according to a panel of experts speaking during HSMAI’s recent Revenue Optimization Conference.
Panelists speaking during the “Avoiding collisions in distribution’s fast lane” session said technology will have a profound impact on how hotels approach distribution going forward.
Lew Harasymiw, director of distribution strategy and connectivity for InterContinental Hotels Group, said investment in distribution technology is critical for hotel companies like his.
A lot of hoteliers “still function on spreadsheets,” he said. “We have this conversation every year, yet some still continue to use spreadsheets. … Now it’s about how we move to the next level.”
Arvind Bala, senior director of global distribution and channel management for Four Seasons Hotels and Resorts, said hotel distribution is clearly lacking in some areas.
“There’s an endless wish list (for tech improvements),” he said. “We spend a lot of money on the top of the funnel, but content parity and syndication are weak for us as an industry. That is an area we look for the industry to solve and our partners to solve.”
Innovation or hype?
One of the trending new technologies in hotel distribution has been blockchain, the underlying tech for several cryptocurrencies like Bitcoin.
Some in the industry are hopeful the technology can be used to create an underlying network of hotel inventory that could circumvent the existing system of online travel agencies and other expensive third-party platforms.
But Harasymiw said he’s not convinced distribution is the first place blockchain technology will be deployed in the hotel industry. He said the best approach to growing in a new technology like blockchain is to find smaller ways it can be useful before trying to revolutionize the industry.
“We’re trying to solve all our problems immediately, but the best approach I’ve seen is to be incremental,” he said. “Little by little, you can see where it fits and what makes sense. So maybe distribution isn’t the best starting point, but I do think the endgame will benefit (distribution).”
He said ultimately the technology will usher more players into the distribution landscape, and it could provide an entry point for tech giants like Amazon and Google, which have been playing around with hotel distribution to varying degrees for a while.
Bala said while it’s easy to dismiss blockchain as hype, it could be a “viable alternative” for the hotel industry.
“But it needs a real-world use case,” he said. “We need that product to be out in the market.”
He noted “a handful of players are not going to change it,” and the industry will have to grapple with its various legacy systems that might make integration more difficult. He said that piece will impact how much cheaper it ultimately makes things.
“If we start integrating with systems, we have to ask, ‘Is it still a cheaper alternative or is it just another channel?’” Bala said.
Tech and the Chinese traveler
Technology will play a large piece in trying to woo international travelers from China, panelists said. Consumers in that country are accustomed to working within their own ecosystem both in travel and broadly with platforms like Chinese OTA Ctrip and social media/payment platforms like WeChat.
Michelle Felton, corporate director of revenue strategy for Omni Hotels & Resorts, said it’s important to work with partners and vendors to make sure those travelers’ expectations are met.
“We partner with specific distribution partners (to lure Chinese travelers), and payment is a huge consideration you have to factor in,” she said. “One of the projects I’m involved in is (integrating) alternate payment solutions.”
Bala said those travelers lean on mobile payment options like Alipay and WeChat in China, and they expect to do the same thing when they’re traveling around the globe.
“There is an affinity to social e-commerce,” he said.
Harasymiw said that sometimes can be difficult for North American hoteliers to understand since similar programs in the U.S. like Apple Pay have not reached the same level of ubiquity.
“It’s nowhere near as comprehensive or part of our daily lives,” he said.
Airbnb as a channel
Hoteliers are still considering exactly how they want to handle Airbnb as a distribution channel after the company announced it’s opening up its platform to hotels.
While many are intrigued by a relatively low commission compared to OTAs, Bala noted the 3% number hotels pay can be deceptive when looked at in totality.
“There’s 12% to 15% passed on to the consumer,” he said. “So the cost of distribution is paid by someone.”
He said he expects Airbnb to continue to evolve as it approaches its initial public offering and seeks new avenues for growth.