HOTELS report from HITEC: Distribution’s uncertain future

Industry experts at the HSMAI Revenue Optimization Conference, held in Baltimore on Monday preceding HITEC 2012, pointed to the potential of mobile and social media to upend hotel distribution and the need to focus on total revenue management.

While online travel agencies transformed distribution over the past decade, the proliferation of mobile devices and social media could create a new set of players in hotel distribution.

“The OTAs came in and created a model that was based on the wholesaler model, but we’re due for more innovation,” said Cindy Estis Green, Kalibri Labs CEO. “The OTAs are now the old guys on the market, worrying that mobile, social and meta-search could eat their lunch.”

One potential outcome of this would be the dropping of the widespread industry practice of rate parity.

“The argument has been more whether we have rate parity with OTAs and,” said Scot Hornick, partner, Oliver Wyman. “If demand is soft, then rate parity will be considered important. If demand returns, some of the hotels I work with have a ‘Plan B.’”

In a panel discussion looking at new players in online booking, speakers and attendees expressed skepticism that relationships with “one-trick pony” sites primarily based on deep discounts would be sustainable. However, group-based buying is offered by sites such as Guestmob, which lets customers pick their price range and then bundles them for discounted group purchases.

“We get a bunch of individual travelers; it’s like group semi-opaque pricing. They take the risk for you, and they fund that difference if rate drops,” said Kurien Jacob, senior vice president of revenue and distribution, Highgate Hotels, New York. “They fund that difference if rate drops. For weekend leisure, it really prices in customers that might not have gone.”

Total revenue

Another topic delved into by panels was how to best tabulate and master total revenue management. Alex Gregory, director of sales and marketing at Sea Island, Georgia, said his resort gave customers cards upon checking in that charged on-site purchases to their room account. “I can pull that data of who is the highest spend and target sales efforts toward them,” Gregory said.

In addition to total revenue, revenue managers are also increasingly focusing on how to best maximize profit, rather than simply revenue. “It’s not really just the price, and it’s not the topline revenue anymore — it’s profit,” said Craig Eister, vice president of revenue management, IHG.

Editor’s note: More in-depth coverage of the HSMAI Revenue Optimization Conference will be featured in the September print issue of HOTELS Magazine.