Distribution at a Crossroads

While over 80% of chain hotels get their business directly – 59% of online travel shoppers still stop at online agents, like Travelocity, first, presumably to comparison shop. The average consumer makes 12 searches and visits 22 sites before they book (Uptake, June, 2008). To be found you need to be seen, even if you don’t get bookings from the site you are shopped on.

95 percent of visitors to these sites do not buy on the site. In 2006, it was estimated that 70% of visitors to sites, like Expedia, ended up buying Direct from the supplier. This is why Expedia has moved into advertising, realizing that they do influence buying decisions at an important stage of the buying cycle. The GDS imposed minimum monthly billings as a way of charging for exposure.

Global Distribution Systems (GDS) are an important part of the market mix and are now affordable for small hotels. GDS is the largest travel distribution network in the world. Over 600,000 international travel agents use them. In addition, many Internet Distribution Systems (IDS), such as Travelocity, have traditionally pulled content from the GDS to offer booking for resorts not signed with them.

The GDS have acted, to some extent, as a channel management tool for thousands of IDS sites. This too is changing, as IDS favours direct contracts with resorts and always put their own direct contracts on top of the list. We expect that IDS will drop GDS content when they have a critical mass of direct-contract suppliers.

The issue, then, is how many systems will you, as supplier, be required to manage.

The role of marketing is becoming very much the role of controlling content, rates, availability and visibility on the Internet (Channel Management).
The new order is taking shape. New technology is driving direct business and making it easier to control and manage distribution. Technology is more accessible and affordable and Suppliers who use it are taking control.

Ian R. Clayton, AXSES

For the full article see blog:

1. PhoCusWright: “In fact, more than twice as many online travelers (36%) believe that the supplier-direct channel provides the best customer service compared to 15% who choose the online travel agency channel. Even offline agencies, which are coveted for their personal touch in a technology-driven world, did not fare as well, with 33% claiming they provide the best customer service….”more>>>