Revenue Management @en

Good Practices in Online Distribution

7 comments

3 August 2012 at 10:00, by

golden-gate-fields

"Golden gate fields", Geraint Rowland. Flickr

Some weeks back the European Union’s Association of Hotels, Restaurants and Cafes, known by its acronym HOTREC, and in which participate members of CEHAT (Spanish Confederation of Hotels and Tourist Accommodations), published a manifesto addressing the problem of the hotel intermediary through multiple online channels.

Entitled Fair Practices in Online Distribution, the document lists 19 current practices that generate problems, risks or conflicts from the perspective of hotels and therefore require coordinated action by HOTREC and its associates.

The initiative as such makes absolute sense considering the evolution of electronic distribution in recent years and its consequences for the hotel industry.  In little more than five years the number of channels has multiplied, new technologies and trends have developed and new actors have emerged as others have repositioned themselves, making the already dynamic world of online tourist distribution even faster.  So fast that many small and medium businesses in the hotel sector cannot adapt to the continuous market changes, innovations and trends.

The main practices the association takes aim at are:

  1. Eliminate the unauthorized use of hotel brands by the intermediaries as part of their Search Engine Marketing (SEM) strategies, so that if a user types in a search for a specific hotel brand or hotel chain, a welter of results apart from his own official hotel web page does not appear in the sponsored results.
  2. Eliminate the obligation of the hotelier to adhere to price parity. Of all requirements, this might be the most difficult to achieve, mainly due to the dependence of the hotels on Online Travel Agencies (OTAS), consolidators and other online distributors. And in times of crisis, no businessman would risk losing a distributor, however small his contribution.
  3. Eliminate the contractual obligation to maintain on sale up to the last available room, or in hotel terminology, to not allow closed sales until the hotel is fully booked (last-room availability). A logical demand given the operational difficulty of making that commitment to each intermediary.
  4. Eliminate the contractual obligation on the part of the hotelier to honor a quota or to ensure a minimum availability for each room type or type of offer.
  5. Define objective criteria to sort the list of results on Web sites of distributors; for example: price, category of the establishment, distance from the hotel to the airport or guest ratings, thereby avoiding seemingly random listings, usually based on the economic interest of the seller. In the latter case, HOTREC demands absolute transparency by the distributor to the end user. A requirement that can be easily considered an intrusion into the trade policies of the distributors.
  6. Eliminate the fees charged in case of no-shows or in case of cancellation of services previously contracted on intermediary Web sites. In this same section, distributors are asked for looser deadlines to make necessary corrections or adjustments on invoices due to no-shows or cancellations.
  7. Eliminate any restrictions that the OTAS or other online distributors have defined in relation to the use of channel management tools by the hotel.
  8. Define at the time the collaboration agreement is signed which channels, Web sites and affiliate programs will sell rooms contracted by the intermediary. Along the same lines, eliminate the practice by dealers to load hotel offers on auction pages without prior permission of the hotel.
  9. Ensure the maximum visibility of organic results in search engines ahead of sponsored results, often highlighted for obvious economic reasons.
  10. Include the hotel’s official website in the results of searches performed through meta-search engines.
  11. Prevent possible fraud or manipulation of guest evaluations, and also allow the hotelkeeper’s reply.

While this HOTREC initiative may be justified because of the importance that the online intermediary has assumed in the economic performance of hotels and the fact that there currently is no shared code of conduct or ethics among online distributors, the overriding impression at times is that we are trying to put limits on the playing field.

On the other hand, continuous technological developments, changes in consumer habits and new trends that arise cyclically can soon transform this manifesto into yesterday’s news.

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