The Chesapeake Point of View

Changing the Channels

Changing the Channels

January 17, 2014

Although there are different ways to slice and dice the various distribution channels, they can be broken down into a few primary channels: direct hotel bookings, central reservation office (CRO), online avenues (through both brand and independent websites), Global Distribution System (GDS) of four major global channels utilized by travel agents, OTAs, and e-commerce.
For hotel owners and operators, a deeper understanding of what distribution channels are producing, where there are additional opportunities for growth, and what can be done to achieve that growth is at the heart of effective, efficient and impactful hotel management.

Back to Basics
The power of distribution channel management is that it gets to the heart of sound business principles. The fundamental priority of every management team when taking over a hotel is to look for opportunities to improve topline results—and recognizing where your business is coming from is an essential first step. It is the key to figuring out how and where improvements can be made going forward. Before creating a marketing plan and determining where your marketing dollars should be spent to get the most bang for the buck, every manager needs to ask and answer the following questions:

• What channels are producing most of your business?
• What are the costs/fees per reservation associated with each channel?
• What is the optimal mix that you want coming in through each of the major channels?

Channel Specific Strategies GDS The GDS is comprised of the four major global systems utilized by most corporate travel agencies to book airfare, hotel rooms and car rentals. Whether an agent is booking for individuals or for large national corporations, content must be current and regularly updated. The management team should make sure that the property is presented in an appealing and photogenic manner, and features accurate details with respect to room type, reservation cancellation policies and costs so that agents can utilize and convey up-to-date information to potential guests. One of the first things that any management team should do when taking over a new property is to audit all GDS screens and verify the accuracy of the information. Maintaining a consistent presence with accurate and updated information eliminates confusion and increases revenue.
Working with companies like TravelClick can also be beneficial in the GDS system, enabling you to participate in paid advertising programs that are good at targeting specific searches, getting preferred position (so that your property always appears on the first screen), or increasing visibility through pop-up ads and other mechanisms. Many of those same resources can also help you track production and impressions, and ultimately measure your return on investment. When you break it down, the GDS can be one of the most profitable channels: high average rates coupled with moderate fees can often lead to profitable margins. Because of this, GDS can be considered a premium channel, and any marketing dollars that can increase your awareness or position on the GDS will likely be money well spent. One important distinction to remember when optimizing your GDS marketing is that different GDS systems tend to be better for different types of business and different markets. Taking the time to understand which is appropriate for your property or properties is wise.

Property Direct
While many hotels utilize an off-site reservation call center, there are still many calls that are handled by the hotel directly. Assuring calls are being handled effectively and efficiently starts with answering some very basic (but very important) questions such as where do incoming calls ring, who answers the phone, and how are they received when the call is important. As with so many guest experiences, it all starts with the front desk, and making sure that the front desk has access to the latest information that the sales team is putting out there, and ensuring that those staff members are trained to capably and comfortably provide information and take reservations is essential.

Central Reservations (CRO)
The effectiveness of the CRO is largely based on several critical factors:

• Frequent and effective communication between the hotel and the call center.
• Property amenity and room descriptions that are accurate and informative.
• A committed working relationship with the CRO team.

Remember that they are answering calls on your behalf: using your name and representing you, your property and your business to the public. With that in mind, it is well worth your time and effort to clearly communicate your hotel’s top assets and customer benefits. In addition, make a couple of visits a year to the CRO center to make presentations and review information. These are opportunities to meet with your agent/representative, to familiarize operators further with your property hotel, and to make them, to the extent that you can, a true representative of your hotel. Here again, it is important to keep the CRO updated with the latest information about rates, descriptions and other relevant information.

Websites
A high-quality independent website is something that every hotel should evaluate. Work with your brand to make sure that you are utilizing all the tools available to you to develop a dynamic, visually compelling and intuitively navigable website for your property. The web is primarily a visual medium, and investing in high-quality photography and video is imperative. Among the advantages of a great website is the ability to promote your property more specifically: an individual website allows you to personalize and promote its assets in a way that extends beyond just a cookie cutter extension of the brand’s online network. It also allows you more opportunities to market the website to specific markets and segments. At the Crowne Plaza Hollywood Beach Resort in Florida, for example, where nearly 25% of the property’s substantial leisure bookings are international, the hotel’s website is available in four languages (representing the top four international regions where hotel guests are coming from). You can also design specific packages tied to online search parameters and big local events, or provide links to local/ regional sites and attractions. Do not neglect to engage in search engine optimization (SEO) best practices for your site, as well.

OTAs
As hotels continue to rebound from a sluggish economy, there is a continued push to decrease dependency on OTAs and other opaque channels that tend to offer a much lower rate and take a larger commission. OTA booking costs can be as high as 30-35%. While properties are generally motivated to take more control of their inventory and not depend inordinately on OTAs, it is still important to establish and nurture relationships with market managers—with a special focus on relationship building and marketing to the top selling/ top producing and top-rated OTAs like Expedia and Travelocity. Work with them to ensure that your hotel is represented accurately—content, photos, information on amenities, etc.—and is updated regularly. With a well-trained front desk staff, OTA’s can be a valuable asset to expand a hotel’s reach and convert travelers to loyal repeat customers that book the hotel direct on their next trip.

Understand the Importance of e-Commerce
Because a large part of effective distribution channel management requires utilizing online tools and an exploding mobile segment, understanding e-commerce is an especially important piece of the puzzle. These days, all of the information about your hotel is not in a catalog or a book, it is online. And, because information is no longer coming from a single source, you need to be extra vigilant to make sure that your online presence is regularly audited, updated and monitored. One way to take control of how you are perceived across the web is to work with one of the many companies out there that specialize in providing you with the tools/resources you need to help you control your online presence. Everything from format to photos, and from captions to content is given a consistent look and feel. This is always important, but can be particularly helpful following a rebrand, renovation, or other major change.
The growing influence of sites like Trip Advisor is an enormously important paradigm shift that has taken off just within the past five years or so. Hotel management professionals must recognize that social media is here to stay, and should understand that what is being said about their property is vitally important; your reputation matters. Part of distribution channel management is understanding that, because so many bookings begin with sites like these, monitoring reviews, responding consistently, and addressing problems is essential. Remember that it all starts at the property level, and that a great guest experience will frequently manifest itself online. The better the reviews and the higher you move up the rankings in your comp set, the more you will see that it directly translates to more reservations and more revenue.

Specialized Tools and Valuable Resources
With distribution channel management, information is power. Resources such as Hotelligence360 and Demand 360 reports enable you to look at specific comp sets, target specific accounts, or sort data according to top-producing companies or agencies. Because you can look and compare your volume and your share of that business to your competitors, this is a tremendous tool to mine. It enables you to identify strengths and weaknesses and set specific revenue targets based on whatever number is appropriate and competitive given your product, location and competition. Take full advantage of your brand tools, especially the detailed reports and resources that are made available to you. Analyzing the data from those reports enables you to know where your business is coming from, and to adapt your operational model in a way that directs more business through the most profitable channels. Do not just gather information on the front end—make sure and measure results, paying close attention to small details and weekly/monthly reports, but also tracking big-picture trends by monitoring year-over-year movement. Incredibly as it may seem, some people do not even look at this invaluable information, much less utilize it to its full potential.
Identity and Channel Management
Ultimately, effective distribution channel management requires an understanding of who you are in your market: how is your product rated, how you are perceived, and who your competitors are. It requires a nuanced appreciation for market dynamics both regionally and on the national stage. It demands that you keep websites and systems updated, and that you closely monitor production/revenue rates relative to different channel-related variables. It requires you to rate yourself against your comp set in a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats), and to evaluate your advantages and disadvantages versus the competition. Fundamentally, it asks you to determine how business is coming in to your property, and to adjust accordingly to maximize your revenue through the most profitable channels.
The payoff for all of that hard work and introspection can be significant: a more efficient, effective and strategic marketing plan, a more robust ROI, and the ability to identify and capitalize on opportunities to build and sustain a more robust bottom line.