Key Challenges in Electronic Distribution Channels
By Natasa Christodoulidou Assistant Professor, California State University | March 13, 2011
In the travel competitive arena, hotel executives have to deal on an every day basis with various challenges of distributing their room inventory. These challenges include Internet-only rates, distressed room inventory web sites (such as Priceline and Hotwire) and an increasing number of OTAs and Meta sites such as Hotels.com, Kayak.com and others.
In order to distribute effectively the room inventory, a deep knowledge and understanding of the distribution channels as well as the impact of e-CRM and social media is required. One challenge is determining the combinations of distribution channels and the optimal number of hotel rooms to be offered for sale through each channel.
The hotel's channel management distribution strategy is vital in determining the various outlets for the inventory of the rooms. Hotel revenue managers are well aware of the costs involved in selling a room through one channel such as a consolidator. This cost can be quite different than selling it directly through the hotel's 800 number, the hotel's website, or the hotel's front desk.
The ability to manage and selectively use a multitude of channels is the new focus of hotel managers who now concentrate on how to best select and work with third party intermediaries and channels instead of attempting to eliminate them. The current key challenges that are described below are rate parity, inventory and rate management, and electronic customer relationship management (e-CRM), as well the social media impact.
Rate Parity and Inventory Rate Management
Rate parity refers to consistently maintaining the same rates offered across distribution channels. This is the primary reason why hotel properties prefer to offer the "best rate guarantee". If hotel operators can achieve that, then potential travelers do not need to search for hours on the web or on the phone for a lower rate. At the moment, there is no particular website that offers the lowest rate available.