We have more distribution and marketing channels for hotels now than ever, but at the same time there has never been such a general perception of so much limited control. And the problem, moreover, is that if those who define those limits are the Online Travel Agencies or OTAs (ahead of the tour operators), we run the risk of putting the fox in charge of minding the chickens.
If in the previous post we took note of the emergence of a new environment with enough disruptive potential to alter the paradigm of tourist distribution for the second time in 10 years, in this one we will propose how a hotel – as a sector and business area, regardless of its size, membership in a chain or capacities – can approach business management in the coming years.
A quick overview of the situation will reveal, with little variation between hotel businesses and others, the following scenario:
- An increase in intermediary channels. Both in number and in business model, distribution costs, expectations, access to markets and/or segments, etc.
- An increase in marketing tools and their basic focus on traffic, sales, brand, presence, relationship, etc.
- Increased business pressure to define both the real cost of distribution and the total costs per reservation through a direct channel (the hotel website).
- In an environment of semi-abundance (given the greater capacity of aggregation of demand through the increased use of such tools, yet still limited in large part by the air travel connectivity, whether by connections, frequency or price), one area of high priority is the development of price optimization capabilities combined with the optimal mix of distribution channels (Revenue Management) because of the immediate potential it can have for management focused on maximizing income.
- The perception of a compelling need for a framework of management references that makes it possible to integrate and give coherence to all the decisions related to optimizing the management of marketing and sales.
At this point, we are also beginning to deal with relatively new phenomena, based primarily on the combination of the elements SoLoMo (Social, Location and Mobile), in which we have to respond to the opportunities and the challenges that arise in the various forms of flash sale, or the growing possibility of finding demand in the ultra-last-minute, thanks to mobile access to rooms available for arrivals within the next 4 or 5 hours.
It is interesting to note that after the exit in the U.S. of the iPhone application “HotelTonight” and its European equivalent “Blink,” the response from Booking.com was not long in coming, much like their response to the rise in flash sale possibilities with “Lightning Offers.”
And all this indicates that it is only the beginning of a series of challenges and opportunities for both existing channels, from the pressure of innovation introduced by new players, and for the hotels, since in a relatively short space of time they face the prospect of even higher costs to generate and sustain demand for their products, or alternatively, they could benefit from the relative loss of hegemony of some intermediaries if they do not keep pace with the changes.
In any case, and as a basic reference, (which we will expand on in the next installment of this series with the contextualization of all these factors within the “Tourism Business Cycle“) hotels should retain the initiative and the absolute control of their prices, inventory and value of their brand to compete effectively, with a clear commitment by management to:
- The optimal management of transactional channels, with special attention towards the direct channel.
- The integration of online/offline marketing operations with their capacity to add flexibility to inventory and prices.
- Intensified focus on client management relations (both real and virtual). Also keeping in mind that this is the unique and most differentiating strategic tool in relation to the large intermediaries.