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The evolution of online hotel rooms distribution

” Currently, the one with better e-commerce connections will be the one with the best possibilities of doing business for their hotel “

The online distribution of hotel rooms, rates and availability has drastically changed – in recent years – the channels that clients use to make their reservations. Years ago, the commercial executive who had more contacts or knew more people in the industry was the one having the longest coffee chats at fairs. Currently, the one with better e-commerce connections will be the one with the best possibilities of doing business for their hotel, expanding distribution boundaries and enabling more and better business possibilities. The most remarkable development is that the reservations that used to come from travel agents and call centers are now arriving online by (direct) individual customers and business travelers.

As hoteliers face the implementation of different distribution strategies to optimize their budget, scope and results, the development of direct and indirect channels add new challenges.

According to a research from Phocuswright’s US Consumer Travel 2018, hotel reservations through OTAs increased considerably during the 2010-2016 period while direct reservations decreased from 55% to 49%, allowing OTAs to acquire 51% of the market share.

” little by little hoteliers have taken advantage of the benefits of having a booking engine on their website connected to the most used metasearch engines. “

The use of Metasearch engines such as Trivago, Tripavisor, Google Hotel – among others – increased by 8% in 2018 and has directed most of the reservations to OTAs. However, they can also facilitate direct reservations for hotels and little by little hoteliers have taken advantage of the benefits of having a booking engine on their website connected to the most used metasearch engines.

All these changes have generated rate wars in many markets due to the fact that – Internet in addition to hotel’s direct and third party online distribution channels – have made prices so transparent that it is very easy to know a hotel’s rate strategy and issues such as “parity” prevent them from competing in a better way. It is clear that hotels have adopted winning strategies that focus on “adding value” to clients who decide to book through their direct channels such as booking engine or contact centers.

” Today, having a PMS integrated to a Channel Manager that is able to connect with multiple OTA’s in two ways and with the website’s booking engine is a must. “

This dynamic in the distribution channels has led to the development of alternative tools or systems that facilitate hotel’s connectivity. Previously it was necessary to have a great sales team and have the best relationship with the most important travel agencies and clearly larger hotels with bigger budgets had an advantage; nowadays this competition has been balanced out a bit since the online channels are widely available. However, managing more and more alternative OTAs, metasearch engines, booking engines and even online reviews has increased the operational burden by large. This is where systems such as channel managers, revenue management systems, rate shoppers, payment gateways and the property management systems or PMS have become essential tools for hotels that want to be successful. And not only that, it is also very important to integrate all these systems together so that hotels can benefit 100%. Today, having a PMS integrated to a Channel Manager that is able to connect with multiple OTA’s in two ways and with the website’s booking engine is a must. Additionally, if they also have a Revenue Management System and an integrated Rate Shopper, much better.

But not everything has changed. Some hotels still work with old-guard sale channels depending on their location or their target market. For example, corporate segments still relay on GDSs where TMC and the consortia are still used by large companies with the only difference that they can now connect to their channel manager thus allowing reservations to be centralized.

Meanwhile, OTAs consolidation continues and new ones are emerging every day to take a share of the pie, just that they are now targeting special interests and specific geographical markets to compete with the larger ones that are increasingly stronger through acquisitions. Currently there are 2 main actors operating in the world: Expedia Group and Booking Holdings. The first one includes expedia.com, CheapTickets, HomeAway, Hotels.com, Hotwire.com, Orbitz, Travelocity, Trivago, Venere.com and CarRentals.com; the second one includes Booking.com, Priceline.com, Agoda.com, Kayak.com, CheapFlights.com, Rentalcars.com, Momondo and even the OpenTable restaurant application.

” The latest data shows that new generations will book online more and more “

On top of keeping an eye on OTA trends hoteliers must keep up with changing demographics which are increasingly important and influence online research and reservations either through computers or mobile devices. The latest data shows that new generations will book online more and more and not only that; Millennials tend to investigate more through search engines and metasearch engines which opens up a real web sale possibility for hotels through their booking engines. Additionally, both Millennials and Gene Gen X that follow are more dependent or “influenced” by recommendations of friends or acquaintances, which is accelerating the tendency to include social networks within marketing strategies and direct distribution. That’s why connectivity with networks is also important and we can increasingly see hotels that include their own booking engine on Facebook or create a direct link from their Instagram.

Along with the above, the comments or “reviews” take on increasing importance and it’s something hoteliers should take very seriously. Trying to respond to these comments and really working to solve the problems your customers request is a “must” if you want to be competitive.

Conclusions

Connectivity is essential for a Hotel to distribute and sell its rooms. Nowadays it is not only important to publish on OTAs but it is much more strategic to use systems that facilitate your online distribution management such as a channel manager, a PMS and a booking engine which connects to the main metasearch engines. All these solutions are key not only to increase exposure and sales but to try and direct part of those sales to your own website.

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