Home truths about hotel distribution

SSTH Editorial Team | 27 Jul, 2017

OTA's (online travel agents), Metasearch, reverse auction websites (like Priceline.com), Airbnb, Facebook and Instagram– it's hard to keep up with all the latest developments regarding the marketing and distribution of hotel rooms.

Meanwhile, some basic long-standing realities seem to be consistently ignored or forgotten.

Conveniently left out of the discussion, as well as from most hotel school curricula, is the basic fact that, for the great majority of hotels chains, the predominant customer segment (60% to 70%) is business travellers – or more broadly put –those travelling for professional reasons.

This category can range from construction workers deployed on a remote building site to independent consultants and entrepreneurs, to priests and investment bankers.

In fact, most travellers in this segment have little or no choice as to where they will spend the night when they are on the road, since the reservation will typically be made at the destination by a corporate subsidiary or in accordance with company travel policy directives.

Home truths about hotel distribution

For instance, it can be noted that studies by the widely-followed consultants, Phocuswright, who regularly track the rise in OTA bookings, explicitly state that their statistics apply only to 'leisure and unmanaged business travellers'.

Thus, the whole segment of managed travel of large organisations, including civil servants in many cases, is largely being ignored.

The fact is that the GDS (global distribution systems) channel, which should already have died out about a decade ago, according to many pundits, is still thriving and is about as important in value terms to major chains as the OTAs.


Corporate business travellers fill hotels

In any case, the client segment that is really important and crucial for chains is frequent corporate business travellers who are on the road for 50 nights a year or more.

They are the ones that represent true 'lifetime value' to a chain, not some casual infrequent leisure travellers, who may have read a favourable review about a hotel on some social networking platform.

Now, do you think that these time-pressed 'road warriors' have the time to look at or care a hoot about what's on a chain or hotel property's Facebook page or to spend hours poring over TripAdvisor reviews?

They mainly want efficiency – quick check-in, internet and plumbing that work, some 'grab and go' eats and a speedy checkout. 

Loyalty schemes still relevant?

So what about loyalty to a chain or brand?

According to present received wisdom, loyalty schemes are on the way out because Millennials reject them.

Sure, it's a mistake to believe that they engender 'loyalty' in the true sense of the word, since they are in reality 'rewards' programmes.

In fact, most frequent travellers will be members of at least several frequent guest programmes and will use the properties of whatever hotel chain are most conveniently located at any given time.

Home truths about hotel distribution

Location, location, location

Location, location, location - the old saw still rings true.

Has it been forgotten in all the discussion about brand loyalty and one-on-one marketing efforts that people choose or are obliged to travel to destinations, not to specific hotels.

As discussed in the blog post It’s the destination not the hotel, the choice of hotel, whether selected by the travellers themselves or someone else, is almost always part of a second-level decision process.

Therefore hotel chain loyalty programmes have been obliged to enter into a vicious cycle of one-upmanship, continually raising the ante in the hopes that the rewards offered will entice more travellers to choose their brand.

In fact, Marriott, which now has the industry's largest programme ‎with over 85 million members, following its merger with Starwood Hotels and Resorts, allows points to be 'burned' in scores of ways, including restaurants, retailers and theme parks, in addition to the regular travel-related options like car rental, hotel nights, air flights and cruises.

Home truths about hotel distribution

Would hotel chain managements like to get rid of these programmes?

Of course, they would, as they cost money (e.g. for the purchase of air miles), but they can't because that would leave a hotel group in a weak competitive position if they could no longer 'bribe' their guests with the prospect of rewards.


Look out for 'Big Brother'

What about using all that wonderful data from frequent guest schemes to deliver 'tailored', 'personalised' service to members – the Eldorado of 'big data' analytics buffs?

Now, think for a moment: do you as a hotel guest really want all your intimate personal habits to be tracked and recorded in a hotel chain's database?

Here we could be entering into the realm of 'big brother', as depicted in George Orwell's novel, Nineteen-eighty-four.

And besides maybe you will change your mind from one day or one trip to the next. Last Monday in London you had cappuccino for breakfast, but now in Paris maybe you want black tea.

Do we want travel to become a mechanical process with every minute detail planned out in advance?

What ever happened to serendipity?


 

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