1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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: -online magazine -research portal
Technology Strategies for the Hospitality Industry © 2005 Pearson Education, Inc
Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey 07458