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The Distribution Dilemma

New distribution channels are emerging seemingly every day. But are they relevant and do you need to be there? Here’s your answer.

Tuesday, June 29, 2010
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Yes, it’s come down to this. Distribute or die.

OK, so that may be a little dramatic but no one care argue the fact that consumers are seeking to book hotel rooms through new and emerging channels. And hoteliers that aren’t in a space the guest is in when he or she finally makes that decision to buy, well, then, you’ll be stuck on the sidelines.

Suddenly new channels seem to appear out nowhere and everywhere all at once. For example, did you know that Facebook pages are now linking directly linking to booking engines? Well it’s those making the smart shift to these new arenas that are capturing more reservations. Oh yeah, and they’re avoiding third party booking fees too. Now that’s a win-win.

At last week’s Hospitality Industry Technology Exposition and Conference (HITEC), there was a lot of talk about the possibilities and challenges afforded by new ways of connecting to guests.

Take Ocean Properties for example. Social media channels are yielding them the best ROI on marketing dollar spent to the tune of 10 to 1, according to Loren Gray, Ocean Properties’ Director Of E-Commerce. Some properties in Key West and Sarasota are getting ROIs of 25 to 1 or more.

“Social media has been a great distribution platform for us. We like to push through direct channels, which are the lowest cost channels,” said Gray. “When you have a few thousand people following a property it is critical mass.”

Gray said that through Facebook Ocean Properties is better able to communicate one to one with potential guests, typically those who already have an affinity for the brand. He said they start a dialogue with people where appropriate and convert them from lookers to bookers.

But it’s not as easy or straightforward as one would hope. Gray said industry wide guests are becoming confused because they have plenty of different channels to find the brand. The end result can be sending messages out that conflict with that guest’s specific interests. And that could backfire. “There can be too many options which are too many choices. It’s possible to create unrealized expectations based on the channel they come through.” He said.

“To me social media means there are a bunch of channels. [Hotels] will have to do their best to connect to all of them and see what works,” said Keith Cotton, VP, Supplier Solutions, Hotel Booking Solutions.

Meanwhile, Morgans Hotel Group is getting a full 25 percent of its business through its proprietary website. So they’re focusing on continuing to drive business through this channel. That means making the website a whole lot stickier.

“We recently launched a reimaging of website which creates a highly visceral and immersive experience for our customers. The time people spend on it has been raised significantly,” said Tom Buoy, SVP Distribution & Revenue Management, Morgans Hotel Group.

The biggest challenge Morgan’s personnel have is continuing creating a steady stream of relevant content for their guests.

In the economy sector Vantage Hospitality is looking to find ways to distribute their Americas Best Value Inn properties as well as its three and four star properties under the Lexington brand. But only if it makes sense, said Vicki Schell, Vice President of Distribution, Vantage Hospitality Group. “My goal is to grow brand awareness. If new channels are not relevant to my [brand] I am to play there. For us it’s not important to be the first ones out there. Let someone else test the waters. We continue to look where we should be especially if there is no cost attached,” said Schell.

Schell also said they are focusing on basic content. For example making sure all properties have standard high quality photographic images, an ongoing project for the company. It’s also critical for them to have updated content on the property and surrounding area.

Gray said that customers crave dealing directly with the hotel. One reason is they feel more comfortable everything will be right upon their arrival. And Ocean is seeing a real shift in booking behavior from the GDS and wholesalers directly to their reservations system.

“Our direct channel is our channel and that is where we want to drive business to. Right now the sense we are getting is consumers want to deal directly with property and that gives us a unique opportunity to have conversation with the guest immediately. The only channel we can control is direct so we try to drive them to there for better control,” said Ocean’s Gray.
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