BALTIMORE—When it comes to the room-distribution process for hotels, things aren’t always cut and dry for the hotel industry.
Dan Kowalewski, VP of revenue management services for Wyndham Hotel Group, said the hotel industry has to come to terms with the varying costs of the distribution channels and how to properly mix them.
.jpg) |
|
Dan Kowalewski
Wyndham Hotel Group
|
“Utilize them where you need them the most and pay for that,” he said. “Pay for strategic access to distribution where it may be difficult for that individual hotel or that brand to gain access. … At the individual hotel level, I think it is really about making smart distribution and pricing decisions. It’s knowing when or when not to follow that leader in the market down or make a last-minute pricing cut change in distressed inventory.”
Judging from a private roundtable conducted by HotelNewsNow.com with eight revenue management experts who attended the Hospitality Sales & Marketing Association International’s Chief Revenue Officer Executive Roundtable, there’s plenty of room for improvement and strategy when it comes to distribution channels, especially as the onus for changing the process falls to big brands.
Big brands set the stage
Sloan Dean, VP of sales and marketing for Interstate Hotels & Resorts, said that, for the most part, the distribution strategy for a branded hotel is out of the individual property’s hands because most of it is negotiated by brands.
“At the end of the day, if we’re going to fix distribution, the major brands need to do that,” he said. “That’s the starting point and what we maybe haven’t vocalized.”
 |
|
Greg Cross
Hyatt Hotels
|
Greg Cross, senior VP of revenue management for Hyatt Hotels, agreed. He said big brands do indeed need to set the tone.
“We’re in contract negotiations right now with several (online-travel agencies), and we’re actually looking at a lot of the points Sloan brought up here,” Cross said. “There is a gut-check time to figure out just how expensive we’re going to allow distribution to become for us. But I really can’t tell you there will be any easy answer.”
Kowalewski, whose company represents more than 7,200 hotels that fly the flags of 17 brands, said Wyndham’s strategy focuses on direct reservations because it costs less than other distribution channels.
“Hotels in a major brand will benefit greatly from those direct programs,” he said. “We see that as a value proposition, but it is a tap dance because you can’t flip that switch over night. So it’s a function of having better direct programs, better direct websites, and then having education about having the importance of supporting that direct channel as well as strategically using those OTAs when you need it. That’s a balance that goes all the way up from the hotel level to the corporate office.”
Understanding the customer
Jon Eliot, VP of revenue management for Premier Hospitality Management, said part of the responsibility of determining the proper distribution channel mix lies with the customers and how they want to book—and how transparent rate parity is across all channels.
.jpg) |
|
Jon Eliot
Premier Hospitality Management
|
“From an individual hotel standpoint, it’s play smart,” he said. “Understand the channels, understand the cost involved. Where I’ve seen a lot of properties through the years fall short is when maybe a third party comes to them with, ‘Hey, we have this great offer, it will get you this.’ And they go into it almost blindly because they’ve been told it’s going to have this great benefit when maybe it’s something really good for me over this short time period, but they’re insisting it’s over this long time period. So obviously it’s a big part of the distribution landscape and you need to be aware of it, but I think you need to play smart and understand what you’re giving and what you’re getting.”
Ash Kapur, VP of revenue management and distribution for Starwood Capital Group, said the hotel industry keeps losing ground to OTAs in the race for customers because the industry doesn’t improve its platforms as often or as quickly as third parties do.
“I don’t see a consistency in the amount of investments that a brand perhaps makes as compared to say a third-party intermediary,” he said. “We have these huge budgets and that will be a one-time spend. And then we will trickle into improvements the following year and the following year, whereas these distribution channels need to evolve. That’s what I think third-party intermediaries do very well. Whether they’re good or bad is not the question. The point is they keep reinvesting in the platform.”
