How well do we understand Hotel Distribution and do we work with the right distribution partner?

Every hotelier today wants to ensure that their hotel property or chain is visible as well as bookable by their end customers. A customer here for a hotel would be a direct guest, who would book a hotel room by either calling the Hotel Reservation office or by booking his / her room via the hotels website booking engine. Other types of customers here are those that we in the industry call B2B clients i.e. Travel Agents, Free Lancers, or Corporate Houses. These types of customer always demand a better negotiated rate or a commissionable rate. 

Today Technology to drive operations and sales for a hotel plays a major role. A hotel uses two types of Sales Solutions or rather Inventory and Rate Management Systems. One of course is the PMS (Property Management System) and the second is the CRS (Central Reservation System). Yes, and both of them although server more or less the same purpose of Inventory and rate management, they are both used for direct segment of the hotels operation. A PMS is completely in-house or rather works good to receive and record guest details for a hotel, mainly used by the Front Office or Reservation Office, at the Hotel Premises. Where are CRS does also help is sales & marketing of the Hotel Inventory but targeted for customers outside. This would mean that the objective of the CRS is mainly to cater to customer reservations does via the hotels website, the GDS (Global Distribution System) or Internet Distribution Partners or Online Travel Agents (OTA’s). 

Hoteliers who opt for GDS connectivity presume that by doing so they would start receiving 20% of their reservations via the GDS. Well, this is not true, as GDS is only a medium to reach out to Travel Agents connected across the globe. Today there are over 600,000 travel agents connected via one GDS or another. Yes, it is important to make sure that the service provider is able to connect you to all four major GDS players, namely Amadeus, Sabre, Galileo and Worldspan, of which the last two have now merged into one company called Travelport, however are still know by their own individual brand names.  So going back it is important to understand that to generate good volume of reservations / revenues via the GDS the right rates and commissions need to be offered to Travel Agents. Nevertheless it is important to also note that Agents who book hotels are mainly consortia’s. What do you mean by Consortia’s you may ask? Well, Consortia’s or also known as TMC (Travel Management Companies) are Travel Agents located in multiple locations across the globe and manage large corporate houses located in multiple countries / cities across the Globe.

There a handful of them i.e. American Express, Carlson Wagonlit, HRG, FCm etc.  Now since these consortia’s mainly work with large corporate houses, with these corporate houses we also do have a Travel Manager. These Travel Managers negotiate a rate for their Corporate House with multiple hotel chains or Independent Hotels. These Rate Negotiations are done on a Global Scale also know as RFP (Request for Price) which is managed by a solution called an RFP Tool. Here too we have various suppliers, i.e. Lanyon, Nexus, RFP Runner etc. 

Well, you must be thinking now this looks more complex that you though when you started reading this article. Well, it really is not. It is first of all very important to understand that does your hotel property fall under the bracket that of a corporate or leisure hotel. If you are a leisure hotel then GDS is something that may or may not really bring in the numbers you would be targeting to receive. This channel then certainly is a dead channel to even invest time in managing. Therefore it would make much more sense in opting for a solution that would provide you a Content Management System / Website and a booking engine that would be available on a transaction percentage value.  It would make more sense to dedicate your time and effort managing a B2B Booking Engine powered from your website.

If you are a hotel located in a Metro city as well as support a lot of Corporate / MNC business with RFP Rates, then it would be necessary to have GDS connectivity with an RFP Solution as well. Remember RFP and GDS complement one another. If you don’t have either of them you would lose out on a complete solution to drive corporate business.