Electronic Channel Distribution

Hotel Inventory

Pearl Brewer, Ph.D.University of Nevada, Las Vegas

Channel Distribution Terms

• Merchant Model– Intermediaries negotiates rooms at net rates with

suppliers and then sells them at a marked-up price.

• Opaque Site– Brand opaque

• Hotwire.com

– Price opaque• Friendlyplanet.com

– Auctions or Name your own Price• Priceline.com

Distribution Channels

• The Hotels Website

• Chain Website• CRS links to travel

agent websites or travel agents

• Auctions or other opaque sites

• Airline sites • Online

intermediaries– Affiliates

• Tour Operators• Brokers

Distribution Channels Handout

Issues for Hotels – A Study Of Hotel Operators

Profitability

22%

Control

37%

Technology

3%Data

2%

Corp

Restriction

3%

Focuses

customer

10%

Mgt ability

14%

Cost

8%

Control Issues• Ability to control inventory

– manipulating black out dates and allotments– inability to close out inventory – manipulating availability

• Ability to control Rates– maintaining rate parity – not able to change rates as needed

• Power in the negotiation of Contracts with large companies (Expedia, Travelocity etc.)

• Control property descriptions across the web.

Profitability Issues

• Revenue• Yield• Reduction in Margins due to

discounting• Collecting Payment• Transactions costs

Ability to Manage Channels

• Time• Knowledge of the channels

– Ease of use of each channel from the management perspective

– Data received from channels

• Skills needed to manage channels– Who should be responsible

Customer-centric Issues

• Visibility of sites to the target audience– Do they reach the intended market?

• Market positioning– visual ranking of the channel on the user’s search engine display

• Purchase of keywords

• Purchase Sponsored links

• Usefulness of the sites– Ease of use for the customer

– Availability of information

• Image of the channel in the mind of the customers

Corporate Restriction, Technology, and Data Issues

• Chains and Corporation may place restrictions on their individual properties

• Technology to control channel management is either not known or understood by management

• Data collection an use in minimal and difficult

Channel Management StrategiesMost Hotels did not have an official strategy

11.48% 8.13% 7.18% 6.70%

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

Rate Yield Mgt. Search engine Selectiveparticipation

Those strategies in use:

Channel Management Strategies

• Best rate guarantee– Rate parity is a pricing strategy

• Yield management strategies including regular yield meetings, to maximize revenue by establishing rates and availability or driving rates over high occupancy dates.

• Search engine strategy • Selective channel participation

Still a “hot” topic for Hoteliers