Does Your E-Distribution Strategy Have You Properly Positioned For 2005?
Guest Editorial for Blizzard Internet Newsletter
By: Aik Hong Tan – Sceptre President
As we transition to a new year, now is a good time to ensure that you have an effective electronic distribution and e-commerce strategy in place. Thankfully, demand for travel is strengthening and corresponding hotel rates are increasing.
According to PhocusWright, 2003 lodging gross bookings online in the United States represented $10.9 billion. While 2004 figures will not be as impressive as the 57 percent grown achieved in 2003, online penetration for hotel bookings should reach 42 percent, ending the year at a $15.5 billion market for online lodging bookings.
If you’d like to be a part of this equation, your electronic distribution strategy must be integrated into your overall sales and marketing plan. The percentage of reservations booked through various distribution channels can exceed 50 percent of a property’s room sales, and therefore cannot be looked at in isolation.
Be sure that your e-distribution strategy identifies key market segments, the behaviors and drivers of these segments, and the channels most frequently used by each segment. For instance, business travelers are more likely to come through the Global Distribution Systems (GDS) than leisure travelers. They are typically less rate sensitive than leisure travelers and have shorter booking windows. Your strategy should identify ways to increase business travel reservations through the GDSs.
You should review and update every description of your property in every channel. This would include your description on each of the four main GDSs, each of the major Internet travel sites (such as Expedia and Travelocity), and your own Web site.
Check to make sure that the information accurately and completely represents your property, as this may impact whether you are selected by a traveler, or even appear in their list of possible options. For instance, a travel agent using the Sabre GDS can limit his or her search to properties meeting certain criteria. It would be unfortunate if your property does not appear in a list of potential hotels because your description is incomplete. You also should routinely check to see that your information is consistent across all channels.
Web-Centric Strategy
Your Web site should be at the center of your strategy. This is the most important piece of the distribution puzzle and deserves careful consideration. It should be optimized for navigation and search. It should also provide consumers with the ability to make a reservation, since an increasing number of Internet shoppers want an immediate confirmation of their reservation; they do not want to wait for a response to a reservation request, nor do they want to pick up a telephone and call for a reservation.
These reservations also have an impact on profitability, as the cost of reservations booked through your Web site should be lower than the costs of any other distribution channel.
If you do not already have revenue and yield management processes in place, 2005 is the year to implement them. Properties with effective revenue management programs will increase bottom line benefits at a faster pace than the rest of the industry. Effective practices will ensure that you are properly using and closing discount rates, maintaining rate parity across all channels, and pushing consumers to the channels with better margins for you.
If you’re questioning whether your e-distribution strategy is strong enough to thrive, and not just survive, in 2005, the following “10
Keys To Electronic Distribution Success” will guide you on your way:
*Align your electronic distribution strategy with your sales and marketing plan
*Know your electronic distribution opportunities
*Ensure rate parity and availability across all channels
*Proactively review and refine your strategies and tactics
*Optimize your Web site visibility and deploy a booking engine
*Establish and deploy an electronic yield management strategy
*Use effective on-line descriptions and images to promote your property
*Maintain close relationships with your key distribution providers
*Conduct ongoing research of industry news and program opportunities
*Utilize a dedicated distribution expert that provides guidance and recommendations
Aik Hong Tan is President of Sceptre, a company that provides global-distribution system representation and channel management/advisory services to the lodging and timeshare industry. To obtain more information, go to www.esceptre.com or send an e-mail message to info@esceptre.com.
