All is not quiet on the hotel distribution front. Yes Amoma, one of the biggest culprits in undercutting hotel rates, may be out of the picture. And yes, the recent Marriott-Expedia tie up is being viewed as a groundbreaking move to redefine the wholesale redistribution model. Yet the cost of distribution continues to rise and the relationship between hotels and the platforms that distribute their inventory remains unbalanced. Throw the growth of alternative accommodation into the mix, and the fact that in corporate travel there are some worrying new developments, and it is easy to see why hoteliers are not getting much sleep.
According to Joe Pettigrew, SVP Commercial Strategy at YOTEL, all channels are converging to become more like one another in what is becoming a race to the bottom. “We will soon be in a place where every channel has the same rate, and that rate will be whatever the lowest rate is that the hotel distributed to a single partner,” he says.
This is also a worry for Marco Corsi, who is responsible for the distribution of a hotel chain with approximately 50 hotels in northern Europe. In fact, he finds it very surprising that in any conversation about wholesalers, what is never mentioned is their impact on corporate travel. “The wholesalers have, in addition to Booking.com and Expedia, already started to infiltrate the corporate booking tools (CBT) used by major traditional corporate travel agencies,” he says.
For some time, bookers have been offered OTA inventory and rates, alongside the hotels’ contracted corporate rate. Driving this trend, is the fact that business travellers increasingly behave more like leisure travellers and are booking an airline or hotel supplier of their choice – simply because they can. In fact, a study from American Express Global Business Travel and GfK finds that as many as 40% of US business travellers book outside of policy. This is not good news for hotels that still agree to static net rates, says Corsi, because as wholesale rates start to appear on the CBTs, these hotels will find their negotiated direct corporate rates undercut yet again!
For this reason, he insists that in a multi-channel distribution environment it is more important than ever for hotels to shift to dynamic pricing. “By going dynamic with the wholesalers and setting reasonable margins, hotels may be able to secure their corporate contracted segment at least for some time ahead,” he says.
