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The future of hotel distribution, according to Amadeus

October 03, 2007 | Hospitality Industry

Selling a hotel room used to be simple; business would literally walk in off the street. No more. As the number of channels a customer can use to book a hotel room grows, hoteliers will be forced to take a more holistic view of their technological infrastructure.

by Bruno des Fontaines, Vice President Amadeus Hospitality Business Group

Selling a hotel room used to be simple; business would literally walk in off the street. No more. As the number of channels a customer can use to book a hotel room grows, (and grows, and grows…) hoteliers will be forced to take a more holistic view of their technological infrastructure, as Bruno des Fontaines, Vice President for Amadeus Hospitality Group Asia Pacific, explains.

The proliferation of channels

A once-simple distribution model has been complicated beyond recognition by the birth of countless booking channels. The phone, front desk and GDS have now been joined by a host of online travel agencies, internet consolidators and the hotel’s own website. And with metasearch upon us, the proliferation of bookings channels shows no sign of slowing. The Internet is also having a big impact on corporate travel. A recent white paper by the Association of Corporate Travel Executives shows that 96% of corporations with over US$100 million in annual air spend are already using an online booking tool at the workplace.

The hotel distribution challenge

Embracing the undoubted benefits of multi-channel distribution without falling prey to an increasingly convoluted snake’s nest of technology is the challenge faced by executives involved in hotel distribution. Just in terms of administration, the evolution in distribution has placed a severe strain on hotels. Vital man-hours are spent every day on the tedious job of inputting rates into various distribution channels and then ensuring that the resultant bookings are all correctly copied into the hotel’s Central Reservation System (CRS). The length of this process and the difficulty in reconciling the reservations from all the different channels can make it impossible for a hotel to have a firm grasp on how many rooms it has sold and for what profit, undercutting effective management of revenue and occupancy yield.

The growing complexity of hotel distribution also poses strategic threats. Customers switching to low-yield channels such as hotel consolidators erode average rates and drag the brand down-market.

Overcoming complexity

For too long, distribution, property, customer and revenue management functions have been handled separately by each property on distinct systems. Historically, these divisions by function have been imposed by the old legacy systems which still infest the industry. The time has come to sweep them away.

With recent advances in technology, we can start again from a holistic perspective, creating an integrated platform that will give hotels a single view of their inventory and the ability to manage it. Users will input rates once into a central distribution system and set the computer to re-enter them in various channels, across the business, at appropriately altered pricing. In the other direction, reservations will be accepted in real time and logged into a single, authoritative inventory so that hotels have, at all times, clear and instantaneous visibility on room availability. This inventory will also be tightly linked into revenue, customer and property management systems.

As each guest books, all known information on them will be recalled from a central database, available to all hotels in a chain. Fresh supplies of a guest’s favourite gin minibar will be ordered for the minibar even as the service staffs are automatically informed of the mint they like on their pillow.

In the back office, computers will analyse the booking, cross-referencing it with all the others to offer continually revised forecasts and recommendations as to pricing, ensuring optimal yield management. With a click of a button, these suggestions will be relayed through the central distribution system and take instant effect in every channel.

A joined-up approach to channel management

This unified system will be able to make sense of the complexity of multiple channels. It will be able to rationally compute the optimum pricing for each means of distribution, taking into account not just crude revPAR, but also drawing on information on each channel’s user personality. If a hotel’s website generates richer and more regular custom than an OLTA, then it will automatically receive the priority necessary to maximise its potential.

Similarly, if a bidding war is unproductive, the system will advise against it, recommending other avenues to growth. High-end clients will only be informed about high-end channels; more modest clients will be directed towards the cheaper booking modes. At last, computers will take care of the tedious calculation, storage and retrieval of information that they are so good at. Precious man-hours will be saved to focus upon strategy and customer care.

With technology bypassing the complexity of distribution, the new channels will serve, not hinder, the industry. They will allow hotels access to many more customers without rate erosion. This, in turn, will help the industry deal with oversupply and the fluctuations in demand the industry faces around major events. Well informed systems, driven by powerful revenue management programmes, will ensure that the channels used, prices quoted and room availability given will all react to ensure that the right clients are paying the right prices all the time, giving hotels consistently optimal occupancy and profits.

What about the guest?

As for the customer, an integrated system will mean a better experience. A consolidated database, accumulating all the information available on them from the point of first enquiry onwards, will mean that your business is better able to cater to their every preference. Knowing their past purchases and requests, while cross-referencing those of similar customers, hotels will be able to up-sell and cross sell to them appropriately (and profitably). If you know they like their golf, you can offer them balls and a cab to the course, if swimming, a map to the water park. The end result will be a happy customer, who associates your hotel’s good name with good value and efficient staff.

The time has come to throw away the disjointed machinery operating hotels, in order that hotels may embrace the future that the evolution in distribution offers them. The apparently bewildering array of sales channels will then become the tool, not the burden, of the hotel industry.

Bruno des Fontaines was appointed Vice President of Amadeus Hospitality Business Group in January 2006. He is responsible for the Revenue Management Division and Hotel Distribution Platform - new Amadeus IT CRS solution - worldwide.

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