Mr. Hotelier, Four Signs It is Time to Change your Distribution Partner
For the hotel industry, distribution is at the core of revenue success. But the truth is that while technology, customer profiles and buying habits have changed dramatically, hoteliers have been sluggish in reviewing and revamping their distribution eco-systems.
NB: This is an article from RateGain
Many continue to remain dependent on Property Management Systems (PMS´), Central Reservation Systems (CRS´), old fashioned Channel Managers, Revenue Management Systems (RMS´), & with business intelligence tools that were deployed with great love & attention at the same time the hotel was opened, last refurbished or maybe the last time they changed ownership group! It is understandable why hotels have been lethargic. Many have signed contracts with partners up to ten or more years ago, invested years of blood, sweat & tears to build an understanding & flow that they feel works for them and now worry that they don’t have the time to go out, rip up all of that and potentially start from zero again. These hoteliers risk being left behind newer & tech savvy players like Selina and Oyo and are blinkered to all of what is truly possible in the market today.
Without doubt, the hospitality industry today is fast-paced. Innovative solutions are coming up all the time. There are new schools of thought challenging old industry tenets and processes constantly. Plus there is the almost “scary” new competition set to hotels emerging in the form of alternative accommodation, non-traditional players, & many disruptor businesses. The industry should recognize that given the circumstances it is normal to shop around for new distribution partners too —and that it is also an urgent need in order to cater for the new wave of traveller ahead.
Looking for new distribution partners can be daunting (a bit like considering open heart surgery for some hoteliers). Mapping new needs can be overwhelming, simplifying the contracting process can take time and the new partnership options can be confusing (often people “think” they are comparing “apples with apples” and risk finding out post agreement that they traded some delicious apples for a pack of seeds, from which, if they reinvest lots of TLC & time, could grow in to their own apple tree – the problem being they don’t have the time to do so). No one needs to live in the past through a fear of change and no one needs to be overwhelmed by the prospect of new. There are experienced organizations that can help manage the project of revitalizing your distribution partner (& avoid both the elements of panic & pain entirely).
To help you evaluate where your business stands, here are the top four signs that you need a new distribution partner:
Your partners are not updating you on new trends and best practices: New channels are mushrooming. Currently, there are over 400 OTAs, including all Global OTA’s, Meta-search Websites, OTA for hostels, vacation homes and properties, group bookings, business travel websites and many more[i]. There are new trends to exploit. The market is abuzz with fresh marketing best practices and new standard operating processes. But your current partners either don’t know of these changes or don’t communicate with you enough to call up and assess the impact of them on your business. This is a clear sign that you could be in trouble (maybe you feel that they valued your voice & thoughts more when you were in the sales process with them?).
The business environment in the hotel industry is driving major consolidation through acquisitions. Some of the biggest players are growing rapidly through innovative partnerships and buy outs implying the focus is on integration of services and solutions. Unknown to you, the consolidation and integration within our industry may unleash a sudden change in your business plans.
What you need is a distribution partner that understands the industry and is concerned about you. If your distribution partner is providing you with a trusted account manager, who has a finger on the pulse of the industry, & has time to regularly speak with you then you are in good hands. But our advice is to reflect on the following questions, “Is my distribution partner standing still with the rest of the traditional industry? Or is my partner moving forward in terms of building domain expertise, thought leadership and new technology adoption?” For example, RateGain’s acquisition of DHISCO, for end-to-end distribution, and BCV, that manages guest social media profiles to maximize their lifetime value, serves as a reasonable benchmark around a company not sitting still.
You have not re-negotiated partner fees or shopped around for new distribution options for many years: Many contracts with the “traditional distribution partners” have been signed a long time ago. Meanwhile, the cost of distribution has gone down dramatically in many areas. It´s imperative that you make sure you are not being over charged by your current distribution partner. Keep in mind that on some channels transaction fees that were not so long ago over €7 have now gone down to an industry average of around €3. Also consider if your PMS cost is competitive to the people you see at trade shows? And are GDS pass thru fees all equal? (or are some more equal than others? Do you have the chance to participate in great consortia packages to drive additional revenue?) The answer to many of these may result in a surprising reality check.
Metasearch traffic will continue to grow and account for more than 45% of unique visitors to travel sites[ii]. Does your distribution partner assist you with more than just a connection to them but also monitoring tools to help evaluate your performance against others on them? These are complex considerations which hoteliers must understand and leverage so that they can make their marketing dollars go the extra mile.
Your distribution partner is not doing quarterly business reviews with you: Human interaction is critical to healthy outcomes with distribution partners. One way of achieving this is through joint quarterly business reviews. But many hotels don’t even have a named account manager, let alone the practice of routine, calendared reviews. In many cases hoteliers are required to raise a ticket in their partner’s customer management system if they need assistance or to report that a system needs attention. Be sure, if your partner is not keen on doing regular reviews, you are missing out on several tricks that can improve distribution and revenue. Here is why: When you meet your partner, it is exactly like what happens in real life—you are able to express your problems & desires better, the partner is able to feel your pain, understand you even, and fix issues in a manner that work for you best, first time, every time.
It doesn’t make sense to work with someone where no one recognizes you at all. It is futile to continue with partners who aren’t listening to your business needs nor paying attention to your opinions because, instead, they are focused on the next big sales or resolving (trouble) tickets and ultimately attending to the people who shout (or complain) the loudest.
Your distribution partner has not shared their product roadmap with you: How can you be certain that your distribution partner is ready to back your future business plans unless they share the roadmap of their product with you? In reality, very few distribution partners do this. They don’t take feedback; they don’t always find it possible to keep their promises; you don’t know what they are going to do next and therefore cannot plan to leverage their product enhancements; and they don’t always have the key connections that would accelerate your business. If partnering with them causes more pain and stress than it would if you were not with them then this is obviously not a good sign. Just consider what you do in your personal life when a partner causes you more stress & strain by being with them than being alone, you leave them… – there´s no reason why you shouldn´t do the same when this happens in your work life either.
The trick for smart hotel executives grappling with the challenges of distribution is to look for partners who are significantly innovative, who are constantly trawling data to intelligently understand the channels that others like you are using (and then quickly pass along that information to you), that auto correct parity issues and proactively connect you with new channels seamlessly, are launching new services before you have even considered them, & invite your opinion to be heard proactively.
In summary, consider this:
Are you with your current distribution partner due to comfort or fear of new? Is your distribution partner ready with 100% their own systems to cater to your needs? (no white labels or need to plug in several other tools to achieve what others can already do today?), if your partner has a booking engine then can it work with metasearch? Do they understand the data behind reservations distribution & market conditions? If they have GDS connectivity, do they also offer consortia? if they provide channel management then do they have all channels relevant in your market? And are they able to communicate with you in your own languages? (plus speak multiple other key languages for your wider GEO?), Do you know the name of your account manager? When did you last meet your account manager? Do they invite feedback proactively? Ask your distribution partner these tough questions, shop around, and sign up new partners who are ready for your future today. If you are a victim of any two of the four signs, you are not alone and know that it is time to change your distribution partner.