As the distribution landscape becomes more intricate, developing separate plans for each of the channels is an important ingredient for long-term success.
MEMPHIS—An overall strategy for managing a hotel’s distribution channel mix should include individual plans for each of the channels, according to several industry experts on the topic.
Experts said that while revenue management and channel management practices have become more technical over the years, neither of them should be considered rocket science.
“Looking at all these little … these different ways that we want to bring revenue into our property, you’ve got to keep it simple,” said Tom Negri, managing director of the Loews Vanderbilt Plaza Hotel in Nashville. “If we do that, we’ll be successful.”
“You really should have a marketing plan for each channel depending on your business mix and the profitability of each channel,” said Nolan Wrentmore, VP of revenue management and e-marketing for Aimbridge Hospitality. “Some hotels need to rely on (online travel agencies) more heavily than others. It’s really looking at your mix of business and understanding how you can mix your rate.”
Trevor Stuart-Hill, president and founder of Colorado-based Revenue Matters, said defining a channel strategy is critical, but “you have to track and understand where you are today, and then you have to decide where do (you) want to be and what do (you) have to do to get to where (you) want to be.”
Wrentmore said using a different plan for each channel while also individualizing those plans to each property is an integral part of a successful revenue-management program.
“We have a luxury hotel that is still very heavily on voice because they want that touch, their guests expect that touch of service and they want to speak to somebody,” he said. Call times for reservations can last 10 minutes because there’s so much to offer guests at the property. However, the “roadside hotels, that are just drive through, very much are OTA-driven or walk-ins. So it really does depend on that individual hotel,” he said.
Negri said his brand’s reliance to voice-driven reservations remains high.
“Voice in my business for Loews Hotels is still important to us,” he said. “What are the costs? Depending on what your property is, who your property is, where it sits in your market, that’s going to be important to you.”
Many Loews properties use a four-step approach for revenue management that helps bring the ever-changing distribution channel landscape into perspective, Negri said.
“Research, spend, track and modify,” he said. “The balance between those is really important.”
Negri’s revenue manager is on the hotel’s executive committee in part because the committee wants to stay abreast of distribution mix trends.
“We can have that conversation at least once a week with all the executive members, and we can discuss what is up there, what is being posted, what photographs are there, who’s posted what to whom,” Negri said.
Stuart-Hill said the gradual move to a distribution environment dominated by online and electronic methods has led to more distinct rates from each channel.
“Global Distribution Systems are fairly buoyant,” he said. “So you have a channel that’s growing, albeit at a fairly modest rate, and it’s got a fairly healthy average rate associated with it. So perhaps paying some attention to the global distribution channel would have some benefits for certain markets for certain properties.”
Meetings and the distribution mix
Managing a distribution channel strategy is as important in the meetings side of the business as it is anywhere else, said Cristy A. Peters, VP of revenue management operations for Marriott International’s southern region.
Peters said the mix of strategic meetings management software and online sourcing can be intimidating for sales managers and revenue managers because technology continues to rapidy advance.
Partnering with these online tools can be overwhelming, she said. “Sometimes the planner might think that getting more leads is better, but on the hotel side, I have to say … all (a meeting planner) needs to do is click your hotel and often they’ll send to 20 or more hotels. So (hotels) see a lot more ‘lead spam’ as we call it, and we get sourced on a lot more opportunities but potentially a lot less opportunity for us to close on those opportunities.”
Negri said “lead spam” is a problem that every meeting hotel has to address.
“Involvement with your local (convention and visitors bureau) will cut down on that,” he said, adding that building this foundation is important to help figure out what can be cut out.
Maintaining proper pricing
Placing the proper pricing structure for group room blocks and transient business in place is essential as hotel personnel need to do everything in their power to avoid having transient rates priced below group rates.
“In an ideal world that won’t happen, but in reality it does happen occasionally,” Wrentmore said.
Aimbridge has a strategy document in place for all of its sales managers, he said, so when they are quoting rates this type of things doesn’t occur. But if it does happen, sales managers explain to the client “that they are working with a designated group sales person that’s going to be detailing their event and is going to provide (them) with the services that they wouldn’t receive if they were booking just normally.”
“In some cases it is just a glitch, and we hop back in the system and change the rate back,” he said. “But hopefully that does not occur.”
Stuart-Hill said having that strategy can work if it is carefully implemented.
“Make sure the rates that are being deployed are fenced so that if you are going to be dropping below group rates there’s some logic behind it,” he said. “It can be a product that’s different than from what the group has purchased or it could be some sort of a deposit or cancellation policy that’s a little more restrictive than what the group is dealing with. That’s another good way to get around that.”