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What
the Changing Distribution Landscape
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Means
for Hotels in 2019
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By Kevin Duncan, Senior Director,
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Strategic Commercial Initiatives
at The Rainmaker Group
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Alpharetta,
GA – December 2018 / Newsmaker Alert / As
traveler behavior and hotel technology undergo momentous transformations,
the hotel distribution landscape is transforming right along with them.
Your hotel distribution strategy plays an important role in your business,
and understanding your true demand in light of dynamic distribution developments
has become more crucial to your profits than ever before.
Changing
Travel Shoppers = Changing Distribution Players
Guest
paths to purchase are changing as customer demographics transition from
Baby Boomers to Millennials. On the plus side, travel is showing itself
to be a top priority with Millennial
families driving that growth. And with regard to loyalty, a Deloitte
study, “Winning
the Race for Guest Loyalty,” found that Millennials will pay a higher
rate per night and travel up to 15 minutes out of their way to patronize
their preferred brands. In addition, these “digital natives” value mobile
capabilities and unique, exclusive experiences – a travel mindset which
has expanded into older generations as well.
This
changing audience behavior has led to seismic shifts among the major distribution
players. For instance, the rise of the experiential travel trend has led
to the growing demand we see today for alternative accommodations through
sites like VRBO and Airbnb. In 2017, more
than 330 million people searched the Airbnb website for accommodations.
This is leading B&Bs, independent, and boutique hotels to take advantage
of Airbnb’s marketing power, showcasing their properties on the platform
for fees that are significantly lower than most online travel agency (OTA)
commissions. Changes like these require hotel managers to view their business
from new angles and necessitates taking a fresh approach to their distribution
strategy. Let’s take a closer look at key factors affecting the distribution
landscape and how those factors impact hotels.
Factors
Impacting Distribution
Group
Business
After
experiencing a downturn in the wake of the Great Recession, recent data
shows group
demand is on the rise, with Millennials accounting for the largest
segment of business travelers. Savvy hoteliers are capitalizing on
this growth by implementing group sales enablement tools that allow them
to more efficiently prioritize requests for proposals (RFPs) and respond
quickly with instant, optimal pricing on group bids. This enables group
sales teams to optimize revenues by applying the same RM principles for
groups as their revenue teams do for transient and leisure business. Another
factor to consider with regard to groups and distribution is the trend
toward “bleisure,”
– with more than half of Millennial travelers combining business trips
with leisure travel.
Reputation
Management
Online
reputation management has emerged as a way for hotels to both increase
bookings and foster customer loyalty. Approximately 65
percent of consumers check online reviews before making a purchase.
And with 3.2 billion global users, social media has become paramount for
obtaining positive and negative feedback from guests. One study reported
in Harvard
Business Review showed that when hotels thoughtfully respond to
reviews – both positive and negative – they actually receive more reviews
and their overall ratings increase.
Beyond
Facebook & Twitter
In
addition, social media is being harnessed to build effective brand recall,
with 97 percent
of Millennials posting while traveling, and 75 percent posting at least
once per day. Many hotels understand the value of being active on Facebook
and Twitter, but are less aware of the importance of including Instagram
in their social media marketing plan. The Facebook-owned social network
has grown exponentially over the past few years and now has more than 1
billion active monthly users. Furthermore, U.S. consumers rank
Instagram as among the most influential platforms for travel advertising
(along with YouTube and Snapchat).
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The
Transformation of Search
Although
social media continues to be an important factor with regard to your distribution
strategy, search engines have actually overtaken
social media as the top referrer of traffic to content sites. Nearly
half of U.S. travelers begin trip planning via a search engine, with Google
ranking first for obtaining information and pricing. As a result, hoteliers
who master the nuances of SEO keywords and Google AdWords campaigns will
achieve more direct bookings.
Metasearch
Metasearch
engines began mushrooming not long after OTAs entered the distribution
game, and they now account for 45
percent of global unique visitors in travel. They’re popular with travelers
due to their comparative rate model. And hotels appreciate their ability
to nab the top spots in search engine results, driving direct and indirect
bookings. In addition, metasearch advertising is largely based on a pay-per-click
(PPC) model, so hotels with tighter budgets eliminate high OTA commissions,
only paying for their hosted ad when someone clicks on it.
Video
An
important development for hotels to consider with regard to search, is
the increased use of video to generate bookings. Hospitality has historically
been a great vertical for visual content, and by 2021, 80
percent of all Internet traffic is projected to be video. Travel content
is extremely popular on YouTube and 67 percent of hotel bookings are more
likely to occur when you have a video tour. Moreover, of the Internet shoppers
who view your video, an astonishing 89
percent are more likely to book.
Voice
We’re
also seeing steady growth in voice search, with ComScore estimating that
more than half of searches will be voice based by 2020. This significant
change in search behavior has huge implications for hotels, particularly
with regard to SEO strategy. While a search query typed into a browser
delivers the travel shopper hundreds of pages of search results, voice
searches through virtual assistant technology such as Siri and Alexa deliver
far fewer results, sometimes only one.
Innovations
In Technology
Mobile
While
most hotel bookings still occur on desktop computers, mobile is catching
up. The number of smartphone subscriptions is forecasted
to reach 7.2 billion by 2023, making the ubiquity of mobile undeniable.
A study from HotelsCombined revealed that hotel bookings on mobile devices
increased 67 percent in the U.S. between 2015 and 2016. This, combined
with the facts that Google is beginning to prioritize mobile-first indexing,
and mobile apps are Millennials’
preferred method of interacting with brands, means that it’s becoming
essential for hotels to provide an app or have a mobile website that accommodates
these on-the-go travel shoppers. Even further, last-minute hotel bookings
are on the rise and up
to 80 percent of those are now made on mobile.
Artificial
Intelligence
Artificial
intelligence (AI), is impacting hospitality technology from revenue management
solutions to AI chatbots, which have proven themselves effective in boosting
direct bookings. Hotels benefit from a chatbot’s ability to provide an
efficient 24/7 concierge at a fraction of the cost of a standard support
team. And a HubSpot survey suggests that many consumers enjoy communicating
with chatbots because of their ability to respond instantly.
Blockchain
Although
still in a relatively nascent stage, blockchain technology is poised to
become an effective medium for hotel distribution. The technology is making
OTAs nervous because it eliminates third-party costs and commissions, encouraging
direct provider-to-consumer interaction. As an example, the blockchain
company, Lockchain, provides a platform where customers can book rooms
directly with hotels using any currency they like for a minimal fee of
1 to 3 percent. Or they can book using Lockchain’s special “LOC token”
and pay no booking fee at all.
The
ultimate takeaway from all these developments, is that in order for your
business to thrive in 2019, you must not become complacent. You should
continue engaging in established channels but consider investing in fresh
approaches such as creating visual content and becoming active on Instagram.
And it’s no longer a question of whether or not to adopt technology, but
rather what technology to adopt. Be vigilant concerning new developments
in the distribution landscape – consider the costs and returns expected
from each – and get a firm grasp of each catalyst. Then craft a sophisticated
approach in your distribution strategy, one that effectively drives occupancy,
engagement, and revenue.
About
Kevin Duncan
Kevin
Duncan is an energetic leader who has been an innovator of total revenue
management principles for the entire hospitality industry. His strategic
guidance at every hotel he has interacted with has helped increase profitability
and overall service levels. He brings over 20 years of hotel experience
and has achieved tremendous success through his hands-on approach of leadership
creating a positive working atmosphere. Kevin is currently the Senior Director,
Strategic Commercial Initiatives at The
Rainmaker Group. He has the rare blend of revenue management experience
combined with years of hands on knowledge of sales, marketing and operations.
He has volunteered his time for industry associations to ensure the education
of our future leaders. He continues to look at how to advance Total Hotel
Revenue Management for our ever-changing economy.
About
Rainmaker
Rainmaker
is the hotel revenue and profit optimization cloud. The company partners
with hotels, resorts and casinos to help them outperform their revenue
and profit objectives. Rainmaker’s cloud-based solutions for transient
and group pricing optimization, forecasting, and revenue-centric business
intelligence are designed to help hoteliers streamline operations, enhance
revenue optimization processes, improve lead performance, and drive guest
bookings. Recognized as one of the top privately-held companies in the
United States, Rainmaker has been named to Inc. 5000’s ‘Fastest
Growing Privately Held Companies’ for the last seven years and to the Atlanta
Business Chronicle’s list of ‘100 Fastest Growing Companies in Atlanta’.
Rainmaker serves hospitality customers throughout the world from its corporate
headquarters in Alpharetta, Ga., and from offices in Las Vegas, Singapore
and Dubai. To learn more about Rainmaker and its suite of hotel revenue
management and profit optimization solutions, visit www.LetItRain.com.
Facebook
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Company
Contact:
Dana
Glaze
Marketing
Manager
The
Rainmaker Group
470-440-2041
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