OTA Vs. Direct Relationship

How to Re-align Your Distribution Strategies to Capitalize on the Upturn - By Gina Baillie

For many hotels, recovering from the economic downturn has been tough but the good news is there is light at the end of the tunnel. According to new Statista 2014 data, room occupancy levels in the US have now returned to what they were back in 2007. As was highlighted at EyeforTravel’s recent conference in London however, it’s important that hoteliers re-visit their distribution strategies to adapt to an evolved marketplace.

EyeForTravel During the downturn, hotels were forced to fundamentally re-evaluate their distribution and marketing strategies.  Now the upturn has arrived many hotels need to do the same to avoid the pitfalls of over-discounting, poor channel management and risk of potentially eroding the value of loyal customers.

Graph - Hotel occupancy United States 2001 to 2014

Distribution, mobile, marketing, all cost hotels huge amounts of money.  If a hotel brand fails to demand generate then even in an upturn it will fail.   In an insightful presentation by Charles BeeBee, Director of Distribution, EMEA, Hilton Worldwide, 3 key areas for hoteliers were highlighted for hoteliers to re-visit to ensure they get back on track: 

1)     Retail rules

2)     Distribution principles

3)     Culture of customer centricity

Presenting at EyeforTravel’s Travel Distribution Summit 2014 in London, BeeBee, highlighted the importance of managing the OTA vs. direct relationship to ensure mutually beneficial demand generation.  

There are certain rules that need to be set around demand generation so that everyone wins based on how the customer wants to buy.  BeeBee reminded the audience of the importance of checking the clauses in your third party contracts and to also ensure teams have a clear understanding of how SEO really works.

When managing SEO and third parties, a reminder to the importance of always being ethical in approach was also emphasized to the audience of senior online travel professionals.

One of the biggest industry changes since the recession hit in 2008 is that of mobile.  Customers want to research and book hotels via mobile and a hotelier’s approach to the platform needs to be clear.

BeeBee erred on the side of caution when discussing the idea of discounting via mobile. At Hilton Worldwide they operate a multichannel strategy and they charge the same price across all platforms which he felt was important. 

When looking at the rate dilution scenario, once a necessity in the downturn, BeeBee encouraged the audience to consider re-visiting their approach to closed group sales and daily deals.

“Daily deals – is it an addiction?” he asked.  “I think once the drug is in the arm it’s very difficult to take it out.”

He advised that hotels should consider if they will lose the business if they don’t offer them.  They need to think about where the daily deal is featured, it’s positioning and if the money would be better spent elsewhere.

He also questioned the advantages of closed user groups which are now advertised on TV.  He advised that a brand needs to have a clear idea of the closed user group.  A hotel should consider: is the target customer new to the hotel?  Is the target customer unique?

In addition, it’s important to consider the loyal customer.  Is the person in the closed user group receiving a bigger discount than a loyal customer?  The same question arises with cash back sites.  

Last but by no means least, BeeBee gave a final reminder that focusing on the customer should always be paramount.  “The key piece in this is consumer centricity.  It’s all about the customer, rather than how we sell it, it’s all about how the customer buys it”. 

At Hilton Worldwide they do the best they can to ensure customer feedback is fed back into the product.   BeeBee highlighted how important it is to listen to customers and make the necessary changes to a property and customer experience.

This topic will also be widely covered at EyeforTravel’s North American Summit in New York September 11-12.

Charles BeeBee’s full presentation can be watched here

Image from Charles BeeBee’s presentation



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