November 12, 2012

Tips for General Managers: Online Distribution vs. Online Marketing

A vast majority of General Managers don't make the difference between Online Distribution and Online Marketing. Reasons being in their hotels, they have a 24-28 years old e-distribution executive, that represents a minimum of 45% of their hotel business mix revenues (Online Market Segment). At first glance, it might be the best return on invest the hotel did in the last five years.

However here are my explanations for the e-distribution executive:
- This shift of market segmentation comes from the behaviors of new booking technology (internet, review site, smartphone booking, social media bookings, branded website). Historically clients used to go to travel agents, sit for 10-15 minutes, and choose a hotel, through a brochure (leisure clients), or send their dates, and the travel agents used to book as per client's choice (business clients),

- The Online Travel agencies are displaying one single rate structure, whereby hoteliers used to display a rate for GCC clients, a rate for UK clients, and a different rate for Asia clients, depending on their booking window, their length of stay, their room types....On an extranet you simply upload one rate per room type, then it goes to all worldwide clients, regardless of their booking type, origin of booking...etc. Therefore in the past, Hotel may have been organized with GCC Sales Manager, Rest of the World sales manager....

- Flexible allocation versus contracted allocation: in a traditional model, you attribute a fix allocation with the cut off date (2-5 days) and some blackout dates. On an online models, the e-distribution executive is given, an almost full access rights to manage the extranet. He can increase his rates, add rooms, or remove rooms allocation. In the Travel Agencies, they used to be the one controlling the margin when price and demand goes up.

E-Distribution Advise for GM:
Challenge your e-distribution to understand where your current bookings come from and how much they are costing you is vital to the success of your hotel business. Focus on 3 years strategies to leverage your brand website, and makes it best in class in your market.

With those 03 points, there are no surprises that the online market segment mix will still grow. It's natural and a bit of relationships with key accounts. The focus should be given on your own booking branded website (as, because with transaction costs averaging 1.5-3%, your profits will go very high, in comparison to the 20-25% cut given to / Expedia and Co.

Alternatively, if your hotels is engaged into business intelligence data (Market Vision, Travelclick), the e-distribution may take the lead to review those pricing reports, and distribute monthly reports analysis to the team.

However  the link between distribution and marketing need to happen with an online marketing strategy. Marketing focus on the development of your website, your online communications to find, attract and retain future clients. It has to do with the quality of your contents, photo gallery, your blog, your social media activities for your F&B and Spa facilities, your public relation skills, your search engine optimization development (keywords, results, analysis) and your overall analysis of your customer segments.

E-Marketing Advise for GM:

Technology continues to push the travel, tourism and hospitality industry forward and make it more dynamic than ever before. The KPI for the online marketing, should be metrics links to traffic statistics, guest engagements, guest comments, monitoring site reviews, and popularity in blogs and forums.

RSVP Hospitality Overall Notes:
Recommend for two different persons to handle those jobs, as the marketing functions is more creative and strategic focus, than the e-distribution one. The e-distribution could be linked to an entry level of Revenue Management executive, because he/she is only focus on one segment of the hotel, and understand the dynamic of the booking window.

If you need more information, contact us at and we can assist you in your structure organization.

Romain - RSVP Hospitality

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