Distribution Strategies - Emerging Challenges for Revenue Managers
By Trevor Stuart-Hill President & Founder, Revenue Matters | June 23, 2013
Smart operators recognize that that the role of revenue management is critical to overall financial results, not just top-line performance. In addition to being responsible for the functional aspects of forecasting, pricing and inventory management, today's revenue management professional is often accountable for managing the distribution efforts for their respective organizations. This poses some challenges, and also brings with it some interesting opportunities.
What is Distribution?
Distribution in the lodging environment is about making our products and services available for sale to potential guests through various means. These means (or channels in hospitality industry vernacular) could either be direct or via 3rd party intermediaries. In the classical definition of the marketing mix consisting of 4 P's: price, product, promotion and place surrounding a single "C": consumer, the concept of distribution sits squarely in the place category. It answers the question – How? How will consumers buy our products or services?
A Historical Perspective
Not too many years ago, managing distribution was relatively straightforward proposition since the number of channels to consider was very low. Property-direct (phone, telegrams, telex or fax), central reservations (800# calls) and global distribution system (GDS) were the most common means. Then – the Internet happened.
Following the events of 9/11, the industry was struggling and the OTA's were viewed as a simple way to move excess inventory at a substantial discount to a "fenced" audience. Similar in concept to offering an AAA discount where a guest needs to be a member to receive the savings, the OTA fencing was derived from the lack of widespread public adoption levels of Internet as a means for booking travel. How quickly things changed.