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All is not quiet on the hotel distribution front. Yes Amoma, one of the biggest culprits in undercutting hotel rates, may be out of the picture. And yes, the recent Marriott-Expedia tie up is being viewed as a groundbreaking move to redefine the wholesale redistribution model. Yet the cost of distribution continues to rise and the relationship between hotels and the platforms that distribute their inventory remains unbalanced. Throw the growth of alternative accommodation into the mix, and the fact that in corporate travel there are some worrying new developments, and it is easy to see why hoteliers are not getting much sleep. According to Joe Pettigrew, SVP Commercial Strategy at YOTEL, who is speaking at the upcoming Revenue and Optimisation Growth Summit in Amsterdam (Nov 26-27), all channels are converging to become more like one another in what is becoming a race to the bottom. “We will soon be in a place where every channel has the same rate, and that rate will be whatever the lowest rate is that the hotel distributed to a single partner,” he says. The wholesalers have, in addition to Booking.com and Expedia, already started to infiltrate the corporate booking tools (CBT) used by major traditional corporate travel agencies This is also a worry for Marco Corsi, who is responsible for the distribution of a hotel chain with approximately 50 hotels in northern Europe. In fact, he finds it very surprising that in any conversation about wholesalers, what is never mentioned is their impact on corporate travel. “The wholesalers have, in addition to Booking.com and Expedia, already started to infiltrate the corporate booking tools (CBT) used by major traditional corporate travel agencies,” he says. For some time, bookers have been offered OTA inventory and rates, alongside the hotels’ contracted corporate rate. Driving this trend, is the fact that business travellers increasingly behave more like leisure travellers and are booking an airline or hotel supplier of their choice – simply because they can. In fact, a study from American Express Global Business Travel and GfK finds that as many as 40% of US business travellers book outside of policy. This is not good news for hotels that still agree to static net rates, says Corsi, because as wholesale rates start to appear on the CBTs, these hotels will find their negotiated direct corporate rates undercut yet again! For this reason, he insists that in a multi-channel distribution environment it is more important than ever for hotels to shift to dynamic pricing. “By going dynamic with the wholesalers and setting reasonable margins, hotels may be able to secure their corporate contracted segment at least for some time ahead,” he says. Pettigrew agrees: “It’s very important for hotels to start migrating away from fixed wholesale contracts to protect their rate integrity.” Although the chains are already addressing this challenge, small chains and independent hotels must address the issue too. Laura Lo Mascolo, who is speaking in Amsterdam and is CEO of Interlude Hotels, has done so and explains why: “At Interlude, we moved to dynamic rates in order to avoid problems related to a fixed rate that inevitably can present the hotel with a non-coherent rate strategy – hence the Amoma effect.”  Playing hard ball Wholesalers and OTAs understand that the competition is intensifying, but neither is ready, yet, to give up on the net rate game. Jorge Cortes, Regional Sourcing Director at Hotelbeds, which recently acquired competitors GTA and Tourico, doesn’t believe this is necessary. “Every single rate is determined by the segment of the customer. Yes, the shift to dynamic is happening but this is not for everybody in every single destination,” he says, explaining that with 70% of its volume in overseas markets, Hotelbeds provides exposure and clients that would be difficult for hotels to otherwise acquire. However, Cortes does acknowledge that B2B companies like Hotelbeds have had to adapt to the changing online environment, and deliver true value to travel suppliers. Underlining how serious they are about being the “partner of choice,” the group has recently invested €250-million to close or restrict non-compliant OTAs, and ensure that rates are only found in the right channels. Meanwhile, in the OTA hotel distribution space, which is still controlled largely by Booking.com and Expedia, the battle for domination continues. Ctrip, for one, is said to be agreeing to offer hotels dynamic rates but only if they agree to provide some net rate inventory. What is becoming clear is that if the OTAs cannot get the lowest rate directly from the hotel, they will continue to source inventory wherever they can and sell it on Booking.com’s Booking.Basic product, which it surreptitiously launched in 2018, first in Asia and then in Europe, is a case in point. It offers non-refundable, no-frills reservations to be made by third parties from the main site, and bookers only find out the detail once they paid. Food for thought Pettrigrew argues that as rates are being undercut everywhere, including on corporate booking tools, and soon all global distribution systems, having a single trusted partner to maintain the integrity of onward redistribution of rates, as per the Marriott-Expedia relationship, can be “massively beneficial to hotels”. But while this recent partnership highlights that distribution is no longer what it used to be, it doesn’t mean that all hotels must ditch their wholesale relationships. Instead, argues Corsi, they must pick partners carefully and negotiate the right contracts. As food for thought, he wonders: “Why do we need the big OTAs - which are already selling wholesale inventory - if we can negotiate less complicated terms and conditions directly from the wholesalers?” Why do we need the big OTAs - which are already selling wholesale inventory - if we can negotiate less complicated terms and conditions directly from the wholesalers? Pierre Charles Grob, CEO of D-Edge Hospitality Solutions, believes that “Hotels must take a much harder and longer look when signing contracts and go back and renegotiate those they have. If they don’t move fast today it is catastrophic,” he says. Every hotel is different, and must plan carefully for its own needs. Although Interlude, for example, has shift to a predominantly dynamic strategy there are exceptions. “We agreed to use a fixed net rate only for small tour operators but in order to avoid problems near the arrival date we have a policy that manages availability according to the season, and invalidates the agreement when rates become non-coherent.” No excuses Today there are a huge and growing number of technology players that can help hotels to manage their pricing strategy better. But the next fundamental challenge, stresses Pettrigrew, will be for hotels to focus on delivering a consistently unique and differentiated experience to guests in order to strengthen the brand and ensure repeat visitors. Lo Mascolo understands this: “In a world where the main idea is to create tailor-made services or better still let the guest create his own travel experience, the ‘package’ solution is no longer realistic.” There can be no doubt that the customer experience will be where the battle for the next generation of hospitality is fought. Image: Channels: Distribution StrategiesTags: hospitalitymulti channeldistributionrelationshipsundercut rateshotelwholesaleredistributionhotel inventoryhoteliersaccomodationcorporate travellowest ratecorporate booking toolstravel agenciesOTAbusiness travellersairlinedynamic pricingrate integritycompetitionB2Btravel suppliersasiaeuropeusareservationsthird partybooking toolsnet ratesmall tour operatorsTechnologyguest experienceensure repeat visitorstailor-made servicestravel experiencecustomer experienceArticle type: Industry InsightPrécis: In a multichannel environment, only those that clean up their pricing strategy will survive, writes Pamela WhitbyPremium`: Freemium`:  #eyewear #glasses #vision_care #technology #design #table #electronic_device #gadget #desk #furniture

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