Distribution Channel Management

1. Distribution Channel Management Chapter 7

2. Distribution Channel Overview • Intermediary: An entity authorized by a guest to make a hotel reservation on the guest’s behalf. • Travel Agent: A hospitality professional that assists clients in planning travel.

3. Distribution Channel Overview • History of distribution channels: • THISCO: Short for “The Hotel Industry Switch Company.”

4. Distribution Channel Overview • Travel Wholesaler: An entity that purchases blocks of hotel rooms and, in turn, sells them to travel agents. • Step 1: A hotel sells rooms to a travel wholesaler. • Step 2: The travel wholesaler sells rooms to a travel agent. • Step 3: The travel agent sells rooms to an individual guest (or group). • Step 4: The guest or group stays at the hotel.

5. Distribution Channel Overview • Fiduciary: A relationship based upon trust and the responsibility to act in the best interest of another when performing tasks.

6. Distribution Channel Management • Walk-in • Telephone • Fax • E-mail/traditional mail • Hotel sales personnel • GDS • Chain or brand central reservation system • Internet

7. Distribution Channel Management • Net ADR Yield: The rate (ADR) actually received by a hotel after subtracting the cost of fees and assessments associated with a room sale. Room Rate - Reservation - Generation Fees Room Rate Paid

8. Distribution Channel Management • Walk-in Specific steps to help maximize walk-in rate acceptance: • An immediate welcome and friendly “acceptance” • Attractive and clean lobby area • Special discounts for “last minute travelers” • An upgraded room assignment from a standard to a higher-level room type • Use of a logical fade rate

9. Distribution Channel Management • Telephone Important areas for potential improvement: • Telephone etiquette • Qualifying the guest • Describing the property • Presenting the rate • Overcoming price resistance • Up-selling • Closing the sale (making the reservation) • Re-capping the sale

10. Distribution Channel Management • Fax To maximize effectiveness: • Provide guests with a designated toll-free fax number • Train reservation staff to respond to a reservation request immediately upon its receipt • Consider purchasing software that allows the use of the hotel’s e-mail system to reply to reservation requests • Keep adequate supplies on-hand • Use professional cover and content sheets

11. Distribution Channel Management • E-mail/traditional mail To maximize effectiveness: • Reply to all mail inquires within 24 hours • For e-mail – use the hotel’s name in the “response” message title line • For traditional mail – use professionally printed stationary and prohibit use of photocopied “fill-in-the-blank” letter replies • Use automated spell-check software • “Sign” all mail clearly

12. Distribution Channel Management • Group sales department: Attrition: The difference between the original room request and the actual purchase of a group.

13. Distribution Channel Management • Global Distribution System (GDS) To maximize effectiveness: • Monitor the number of reservations received from each GDS • Establish a relationship with 1+ contacts from each GDS • Establish a relationship with 1+ travel agents • Consider travel agents as a unique and important “market” • Consider joining and becoming active in the American Society of Travel Agents

14. Distribution Channel Management • Central Reservation System (CRS) typically consists of: • Toll-free telephone call center • Chain operated website • E-mail/traditional mail reservations division • Group sales division

15. Distribution Channel Management • Central Reservation System (CRS) To maximize effectiveness: • Ensure that all hotel-related information supplied to the brand’s call center is accurate and current • Conduct periodic shopper calls to the CRS • Consider an annual visit to the brand’s call center • Ensure that all information listed on the website is accurate and up-to-date • Supply attractive photos and creative site copy • Follow up promptly on any group business leads provided by the CRS

16. Distribution Channel Management • Internet E-wholesaler: A room reseller that obtains reduced (wholesale) room prices and inventory commitments directly from a hotel or through an agreement with the hotel’s corporate brand managers. It then publishes “retail rates” on its websites, usually at a markup of 20% to 40%.

17. Distribution Channel Management • Internet Principles to consider: • Ensure accuracy • Update regularly • Monitor placement • Manage search engines • Maintain rate integrity • Monitor results

18. Distribution Channel Management • Internet property websites: Factors to consider: • Written content • Visual and audio content • Reservations device • Appropriate links

19. Distribution Channel Management • Internet chain websites: Lowest Rate Guarantee: A program that assures travelers the lowest available rate for a specific room type on a specific date will be found on the franchisor’s website.

20. Distribution Channel Management • Internet third-party websites: Merchant Model: An Internet sales method in which hotels sell or commit rooms to Internet site operators. These sites, in turn, allow consumers to enter requested location and arrival dates. The consumers are then presented with a choice of specific hotels and associated rates available for immediate purchase on the website.

21. Distribution Channel Management • Internet third-party websites: Opaque Model: An Internet sales method in which consumers “bid” an amount they are willing to pay for a room on a specific arrival date, and the third-party website operator matches that bid with a hotel willing to sell a rooms at that rate.

22. Distribution Channel Management • Internet To maximize effectiveness: • Seek rate parity across all distribution channels • Show the hotel on as many sites as is realistically profitable • Keep all information current • Promote the use of lower-cost (higher net ADR yield) sites over higher-cost sites • Use the information found on competitors’ websites to compare and evaluate the hotel’s own rate-management decisions

23. Distribution Channel Management Challenges • Inventory ownership • Website access control • Guest- and sales-related issues: • Rate consciousness • Group block management • Occupancy tax liability