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Understanding and Maximizing A Hotel’s Electronic Distribution Options

Understanding and Maximizing A Hotel’s Electronic Distribution Options

The number of reservations flowing to hotels through the electronic distribution channels – the global distribution systems and the Internet – is growing steadily. Once a minor contributor of bookings, they are now primary business sources and grow more important with every passing month.

This productivity growth has heightened emphasis throughout the hotel industry on using the electronic distribution channels effectively and maximizing their potential. Every Director of Sales & Marketing now faces the challenge of understanding, prioritizing and managing these electronic outlets on behalf of his or her property. 

How important is electronic distribution as a means of gaining reservations? The Hotel Electronic Distribution Network Association (HEDNA) reported that in 1999 the Global Distribution Systems delivered over 43 million bookings, with a value in excess of $12.5 billion. GDS booking growth continues at about 10 percent a year. Everyone has their own stories of the impact of the Internet. Some large chains are experiencing 200-300 percent growth annually. Some small, boutique properties report that over 75 percent of their bookings now come from the Web.

Regardless of the Internet’s current reservation production for your hotel, it bears only modest resemblance to the broader and ever-expanding impact it will have in the future. As the number of people who have Internet access approaches 100 million in the United States and 200 million worldwide, research repeatedly indicates that consumers are turning to the Internet for travel-related information. They may not yet book online (although they will eventually), but they are already comparing you with your competitors before they pick up their telephone to call your CRO or drive up to the front door of your property.

As a hotel sales and marketing professional your limited resources are allocated to presenting your property in the sales channels that will be the most productive for you - be they print ads, direct mail, public relations, sales calls or electronic distribution channel participation and advertising. You strive to select the most cost effective and compelling channels that in turn bring guests to your door and put heads in your beds.

This resource allocation process requires assessment of each potential business source’s target audience, opportunities for participation, probable production and costs. This applies to electronic distribution just as it does to your other sales options.

Narrowing the focus to the electronic distribution channels, we see that they split into the two broad categories are global distribution systems (GDS) and Internet Web sites.

The GDSs

The GDSs of which there are four major competitors including Amadeus, Galileo/Apollo, Sabre and Worldspan, originated as private networks for use by travel agents. In the 35 years since their inception, they have grown to serve a worldwide clientele who use nearly 500,000 access points. They have expanded from listing only air flights to presenting the full array of travel services. Recently they have moved to make their rich databases of travel service information available to Web sites – both their own and others managed by third parties. Key considerations in evaluating GDS significance for your hotel include:

  • Worldwide, 7/24 availability
  • Extensive use by travel agents
  • Most common booking mechanism for consortia and negotiated corporate rates
  • Expanding their leisure product offerings
  • Little maintenance effort is required – information provided to the central reservation system for your hotel chain or representation company is copied automatically to all four of the GDSs

An individual hotel automatically participates in the GDS as part of their membership in a hotel chain or representation company.  This "base level’ involvement provides display of available room types and the rates for those rooms, for any date(s) in the coming 12 months and display of an extensive description of the hotel.

To improve its presentation in the GDSs, your hotel has several options:

  • Ensure it is open and available for sale in your hotel or representation company’s central reservation system its (CRS) since the GDSs reflect the availability and rate data in the CRS
  • Provide a full spectrum of public rates – rack, corporate, senior citizen, government/ military, weekend and promotional
  • Participate in consortia and negotiated corporate rate programs
  • Ensure the room descriptions provided by the CRS to the GDSs are appealing as well as accurate
  • Periodically review the GDS property description for your hotel

The property description is frequently the only resource a travel agent reads prior to recommending a hotel to a client. Copies the property description that appears in the GDSs to describe your hotel can be obtained from the GDS Data Base Department of your chain or representation company. Use that same opportunity to request, review and revise your hotel’s property description in the CRS.

Two further levels of GDS participation and promotion are available to you, one free of charge, the other at a fee. In the first, no-cost bulletin boards are available in each of the GDSs for posting announcements about promotional rates, seasonal packages and important news about individual hotels. These bulletin board announcements can draw travel agents’ attention to your special offers. Contact your chain’s GDS or Electronic Distribution Department to inquire about displaying information about your hotel on these bulletin boards.

The second level offers a wide range of paid advertising options. Each of the GDSs have sign on messages displayed to travel agents as they begin their day as well as numerous on-screen advertising opportunities tied to specific cities. All of these advertising options are now offered by a single a company – TravelCLICK.   It represents all four of the GDSs, allowing convenient one-stop evaluation and selection. TravelCLICK has negotiated special corporate-wide purchasing discounts with many hotel companies.

Internet Web Sites

Directors of Sales often tell me they receive an average of a solicitation a day asking them to list their property on a Web site. Evaluating the validity and value of those offers is often difficult. 

Ask yourself the following questions as you determine whether to participate or not:

  • Is the site up and operating? Or is it just vapor?
  • Is it a stable business or in jeopardy of failing?
  • Does it target a market segment that is important to my hotel?
  • Who would maintain the data about my hotel on the site?
  • What are their initial membership fees and on-going costs?
  • What other properties use the site?
  • Is it likely to actually deliver bookings? What is my return on investment?

Who would maintain the data about my hotel on the site?

Web sites, like the GDSs, require several types of information in order to sell lodging – availability, rates and product description. In some cases Web sites link to existing sources of this information and need not be manually maintained by on-property staff. This is true of Web sites for which data is provided by – or "powered by" – the hotel chain or representation company’s central reservation system (CRS), a switch company or one of the GDSs.  

Often the decision to participate in a CRS-, switch- or GDS-powered site is made at the chain or representation company level. In other cases, no arrangement or permission is gained. In some cases the information is redisplayed by an associated onward distribution site.

Onward distribution describes the process in which Webs sites repeat data maintained in another system or site. In most cases this repetition is agreed to by  the provider site. One example is Travelocity and its redisplay of Sabre’s hotel and travel services data. Another is TravelWeb, who supplies its hotel data and booking capability to over 200 sites including CNNtraveller.com, Lastminute.com and Travelscape.com. In another much less desirable case, without permission, a site "screen scrapes" information (sometimes doing so only infrequently, resulting in out-of-date information being displayed) from a source site.

While individual properties have little control over whether they appear on these sites (since participation decisions are made at the corporate level), there often remains the opportunity to correct or enhance the data displayed. Periodically reviewing these sites will allow you to attempt to correct data displays that do not do justice to your hotel.

Does it target a market segment that is important to my hotel?

Web sites are no different from any other distribution or advertising medium in that they have specific user demographics. Site sales representatives should be able and prepared to describe those demographics to you. You in turn need to decide if that constituency matches a priority market segment for your hotel.

If a site is not powered, i.e.  does not draw its availability, rates and descriptive data, from a CRS, switch or GDS, then the responsibility falls to property staff to maintain the information on a day-to-day basis. This commitment cannot be taken lightly. Even the simplest of systems takes more time to maintain than the sales patter for the site generally suggests. Some hotel staff take the position that only occasional maintenance need be given when occupancy begins to build they turn off these sites. In doing so, they shortchange a valuable opportunity for last room sale. This is occurring more frequently than most General Managers and Directors of Sales are aware.

The Web site maintenance situation is improving, but widespread relief is months, and for most hotels, years off. PMS vendors are adding functions to allow a direct link to property Web sites, so that a hotel can use its PMS as the real-time booking engine on its Web site. Elsewhere, Web site operators are beginning to develop PMS interfaces, to allow automated downloading of Internet reservations to the PMS, and later, uploading of availability data. Additionally, master databases are in design, which will allow one-time updating of a single master data file those updates will be instantly communicated to all of the Web sites on which the hotel is displayed.

Web Site Promotional Opportunities

Difficulties in first evaluating and later maintaining your hotel’s information in travel Web sites do not diminish their importance and a hotel’s need to participate in them. The Web is quickly becoming a mainstream promotional and sales medium. It is essential to have a strategy for the extent and manner in which your hotel will participate in the Web and then the processes to ensure that strategy is applied on a day-to-day basis.

Once your have chosen to list your hotel on a site, that and every other site on which you are listed should be reviewed on a regular basis to verify that the data for your property is accurate, complete and compelling. If it is not, correcting the deficiencies needs to be a top priority. Next  comes a commitment to maintain the same rates and availability data in the Web sites as in all of your other sales vehicles – the Front Desk, the Reservation Office, the chain’s reservation centers, the GDSs, etc.

Differentiating the Web from the GDSs is the presence on the Internet of not only traditional style "shop and buy" travel sites but also specialty sales sites. These sites, whose use may be appropriate from time to time by your hotel, specialize in selling distressed inventory. They operate using several models – discounted prices, auctions, reverse auctions and consolidators. Examples of each appear in Table A.

Like the GDSs, Web sites offer supplemental promotional opportunities. Preferred placement of your listing in sites or search engines, banner ads and additional on-screen graphics are just a few of the extra cost options. As you decide to list your hotel’s inventory on a site, inquire about the site’s promotional possibilities. For the sites where participation has been arranged at a corporate level, ask the individual in your corporate office to provide you with a description of the opportunities offered by each of the sites.

Electronic distribution and, in particular, the Internet is a complex and quickly changing sales environment.  In the end, the powerful and productive sales tool called electronic distribution can be effectively employed because fundamental marketing principles apply to it just as they do in every marketing decision.

Table A

Electronic Distribution Options

Global Distribution Systems

GDS

Distribution Cost to Hotel

Audience Sign-up Procedure

Maintenance Process

Amadeus

Galileo/Apollo

Sabre

Worldspan

GDS fee of approximately $4.50 plus switch company fee of approx. $.45 plus hotel chain/ representation company processing fee (when applicable) plus 10% travel agency commission (usually applicable)

Travel agents and corporate travel planners who gain access to these private data bases/networks on a subscription basis

Hotels participate at the chain level or, if property is an independent, via their representation company (i.e. relationship is between the chain or rep. company and the GDS)

Availability, rate and other information that the property maintains in the chain or representation company’s central reservation system is relayed onward to the GDS

Internet Sites – Maintained Directly by Property Staff

Distribution Channel

Sample Participants

Distribution Cost to Hotel

Affiliated Sites/Agencies

Property’s Own Web Site

Bluecreekinn.com

None unless hotel chooses to pay travel agent commission

Possible hyperlinks to CVB site, local attraction sites and local news media sites

WorldRes

Commission

1,000 sites

GotRooms.com

(Worldres)

Commission

American Hotel & Motel Association

Distressed Inventory Sites – Discounted Rates

Lastminutetravel.com

Listing Fee

 

Distressed Inventory Sites – Auctions

Bid4travel.com

Bid4vacations.com

Goinggoinggone.com

Lastavailable.com Luxurylink.com

Travelbids.com

"Net" rate – site’s profit is difference between hotel rate and rate that buyer pays

 

Distressed Inventory Sites – Reverse Auctions

Expedia.com’s Hotel Price Matcher

Priceline.com

"Net" rate – site’s profit is difference between hotel rate and rate that buyer pays

 

Distressed Inventory Sites – Consolidator

HRN - hoteldiscounts.com

"Net" rate – site’s profit is difference between hotel rate and rate that buyer pays

2,000 sites

Meeting Planner Sites – RFP and/or Registration

Allmeetings.com

b-there.com

Eventsource.com

Event411.com

Passkey.com

Plansoft.com

Starcite.com

Transaction fee for business that materializes

Meeting broker sites

Internet Sites – CRS Powered

Distribution Channel

Sample Participants

Distribution Cost to Hotel

Affiliated Sites/Agencies

Chain/

Representation Company Web Sites

Bass.com

Hilton.com

Ramada.com

Carsandhotels.com (VIP)

Bookhotel.com (Utell)

Reservation processing fee plus commission if travel agent is involved

Often serve as the booking engine for their members’ own web sites

Internet Sites – Switch Powered

Distribution Channel

Sample Participants

Distribution Cost to Hotel

Affiliated Sites/Agencies

Switch company web sites

TravelWeb.com

Booking Fee (up to $7.50) plus commission if travel agent is involved

200 sites

Distressed Inventory Sites – Discounted Rates

Lastminute.com (Pegasus)

Commission

 

Internet Sites – GDS Powered

Distribution Channel

Sample Participants

Distribution Cost to Hotel

Affiliated Sites/Agencies

Expedia.com

(Worldspan; Pegasus for hotel data)

Earthlink, Washington Post, Worldnet.,

Travelscape.com (net rate), Vacationspot.com

Travelnow.com

(Sabre & Worldspan; Pegasus for hotel data)

 

Travelocity.com

(Sabre)

Previewtravel.com, AOL Travel, Yahoo Travel

Trip.com

(Galileo)

 

Biztravel.com

Commission

 

Carlsontravel.com

Commission