Hotel Global Distribution Systems and Channels Chapter 8 Interview Main challenge is onward distribution Difficult to track Introduces new intermediaries Revenue (yield) management is difficult Most of the key developments in hotel distribution are happening on the Internet front. Next development: open connectivity between key hotel systems Brand shielding or opaque distribution – incremental business Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Interview Doug Anderson Hotel Analyst Hotwire.com Understanding and uniting different distribution channels is key More and more entities are selling hotel rooms The Internet is giving the consumer more options Hotels are facing brand integrity and rate integrity issues Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

1. Introduction Tradeoffs between reach, richness, and effectiveness or conversion Right product in the right place at the right time at the right price and under the right set of conditions or circumstances Objectives The ability to easily and quickly search for products and services Means to conduct the transaction with immediate confirmation Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Requirements Clear strategy Dedicated resources Effective management Sound information technology infrastructure Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Outcomes Access to new customers Better and faster service Sophisticated rate and inventory management Economies of scale Reduced overhead Lower transaction costs Enhanced buyer and supplier relationships Cross-selling and up-selling Unique capabilities Superior channel performance Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Complexity Technological prowess Complicated business logic and rules Numerous interfaces to connect heterogeneous systems (within and outside the company) Volume of transactions and processing speed Uniqueness of room inventory and attributes Individual guest needs The sophistication of the underlying database and search engines that power it Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Utility/Transaction Based 2. Importance Strategic Value Utility/Transaction Based Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

3. Developing a Distribution Channel Strategy Transaction Processing Customer Information Capture Data, Information, and Knowledge Management Relationship Management Demand (Revenue/Yield) Management Strategic Alliances Brand Management Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

3. Developing a Distribution Channel Strategy (cont.) Supply Chain/Channel Management Franchisee/Owner Relations Capacity Planning Systems Integration Speed Agility and Flexibility Electronic Commerce Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Electronic “Shelf Space” Criteria The new distribution channel is more cost-effective than other channels and can shift enough volume to recoup the initial investment. The new distribution channel attracts untapped markets and generates new demand. Difficulty The degree to which a channel influences the booking decision. Additional Criteria See Figure 8-3: Page 165 Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Cost Implications “Have” vs. “Have-Nots” Costs can represent 20% to 30% or more of a hotel’s daily room rate Yield by Distribution Channel Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Share of Distribution Quality and their linkages to GDS Ability to capture information regarding its impact Redundant vs. Complementary Look-to-Book Ratio Channel usage can vary by: market segment accommodations needed purpose of travel comfort level Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

Loss of Control Inadequate GDS technology infrastructure Inventory and rate management issues Commissions and transaction fees eroding profit margins Rise in number of electronic intermediaries Shift in balance of power from supplier to customer New models of distribution and pricing Accelerated rates of change Relinquished control of the customer relationship Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

4. Trends Disintermediation and Reintermediation Digital Divide “Cybermediaries” Digital Divide “Know-how” vs. “Know-not” Transparency Bypassing Airline GDS Lowering Distribution Costs Internet and Technology Advances Shopping Bots Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458

5. Summary GDS one of the most important “strategic” applications in Hotel Technology GDS in transition More distribution options available Comprehensive Distribution Strategy needed Additional Resources: www.contextmag.com -online magazine www.corporateinformation.com -research portal Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458