Distribution 101 2004 Resort Management Conference Greenbrier Resort
Distribution 101 2004 Resort Management Conference Greenbrier Resort Bill Peters Vice President Reservations & Market Development Outrigger & OHANA Hotels and Resorts Traditional Switching Companies Global Distribution Systems (GDS) Originally Airline Central Reservation Systems (CRS) Sabre Apollo Switch companies Pegasus WizCom Worldspan Amadeus
Resort CRS Pegasus and WizCom Circa Mid 1980s Switch companies bring to the table Single image inventory Instant confirmation Auto availability & auto rate update Electronic transactions, less paper Reduction in processing agents The 2nd Traditional Method of Distribution is the Wholesale Channel
Consumer Travel Agent Resort FAX Wholesaler Wholesaler Fax Server There is still a lot of paper! Resort PMS Resort Agent Paper, Paper and More Paper
Resort FAX Internet Cloud Arrived Circa 1998 Creating new Turbulence!!! Traditional Model Traditional consumer Travel agent commissionable rates Dot Com commissionable rates GDS Switch companies
Pegasus WizCom Resort CRS Internet consumer Merchant Model Circa 2001 Paradigm Many changes dotcoms became more like traditional travel wholesalers Net rates 25% to 35% below rack Multi-million dollar consumer advertising campaigns Tremendous volume when it was needed post 9/11
INTERNET CONSUMER Expedia.com Travelocity.com Orbitz.com Hotels.com Merchant Model and the mega dotcoms Traditional Wholesaler No Free Lunch! Merchant Model 25% to 35% below rack rates Resort ADR and RevPAR decline And it is a paper nightmare!
Resorts try to keep up with the Paper Faxes, Room Blocks, Net Rates and Staffing. 2003 -2004 Resorts Respond Millions of dollars are being invested to enhance resort Web sites regain control of the market The transactions on these sites will grow but the mega dotcoms are here to stay Speed bumps ahead! Speed Bump # 1 Mega dotcoms are way out spending the hotels in
consumer advertising and Web placement Speed Bump # 2 Traditional wholesalers are also out spending the hotels in consumer advertising and Web placement Speed Bump # 1 I need a Vacation! Joe Consumer Speed Bump # 2 I still need a Vacation! Joe Consumer Your hotel finally! Im going on
Vacation! Joe Consumer has run the Internet gauntlet and finally makes it to the resort Web site. How to improve ADR/RevPAR Focus on the amount of business you are willing to allocate to the dotcoms Carefully monitor all channels in regards to price and availability Invest in your Web site New Distribution Concepts
Rate parity in all consumer channels Live chat Electronic permission based marketing Convergence of voice, data & video over IP Links out transparent sites in Low price guarantee Low Price Guarantee Does it work? The jury is still out. According to PhoCusWright Inc, Marriott, Holiday Inn and Hilton have seen a significant increase in transactions on their web sites since the introduction of their low price guarantee.
Here are some of your competitors! InterActiveCorp Ten Banana Rating Owns an operates the following companies: Hotels.com Interval International Expedia.com Ticketmaster Travelscape.com Newtrade Middleware TV Travel Group - UK Entertainment Book HSN USA HSN Europe Match.com Citysearch.com US Cable Travel Network
Udate.com Zero Degrees.com Anyway.com - France Tripadvisor.com (acquired 3/2004) (acquired 3/16/04) Activity World Hawaii (acquired 3/2004) Hotwire.com
Cendant Three Banana Rating Travel Distribution Services Galileo International Travelport Travelwire Lodging. COM Travel 2 and 4 Neat Group Wizcom Shepherd Systems
Cheap Tickets Cendant Travel THOR RCI Hotel Club.com & Rates to go.com Acquired (3/2004) Expedia.com Number One Market leader Air 46% (2003) was 36% (2002) Hotel 37% (2003) was 28% (2002)
Merchant Model PhoCusWright consumer survey % off lowest published public rate % is negotiable Agreed upon mark-up (margin) Inventory management Change at will via Extranet site Expedia.com Watch for:
Forward distribution of the Merchant Model Travel agencies. Corporate travel Loyalty club Over 1,100 actively booking companies Strategic emphasis on customer loyalty
Direct connect to CRS via Newtrade middleware Expedia hotel rating Improved dynamic packaging Travelocity.com Market share 2nd in Air and 2nd in hotel Air 44% (2003) was 59% (2002) Hotel 34% (2003) was 34% (2002) Merchant Model
PhoCusWright consumer survey % off lowest published public rate % is negotiable Agreed upon mark-up (margin) Inventory management Change at will via Extranet Travelocity.com Watch for: Loyalty club Forward distribution of the Merchant Model
Corporate travelers via GetThere.com *Sabre equipped travel agents* Dynamic packaging for Site59 Hotels.com Number three Hotel reservations Hotel 24% (2003) was 17% (2002) Merchant Model
PhoCusWright consumer survey % off lowest published public rate % is negotiable Agreed upon mark-up (margin) Inventory management Change at will via Extranet site Hotels.com Watch for:
Creation of a loyalty club. Dynamic Packaging Corporate Travel Forward distribution of the merchant model Conferences and Meetings Weddings and social events Airline sites such as Mexicana Airlines Latest news Provides hotel accommodations for Delta Airlines customers Bill me later service. Orbitz.com Market 3rd for air and 4th for hotel
Air 41% (2003) was 25% (2002) Hotel 18% (2003) was 10% (2002) Merchant Model PhoCusWright consumer survey % off lowest published public rate % is negotiable Agreed upon mark-up (margin)
Inventory management Change at will via Extranet site Orbitz.com Watch out for: Forward distribution of the Merchant Model The business traveler Traditional travel agents as an alternative to GDS connections Group Weddings Social Events
Loyalty club Latest news Cashing in with Las Vegas Casinos by offering packages for all Caesars Entertainment casino resorts Priceline.com Market share - 4th in Air and 5th in hotel Air 14% (2003) was 16% (2002) Hotel 13% (2003) was 7% (2002)
Opaque pricing Room rate offering at discretion of hotel No agreed upon mark-up but is minimum Over 15,000 distribution partners PhoCusWright consumer survey EBay, Amazon.com, Lowestfare.com, GoGo (static packages) Inventory management
Change at will via Extranet site Hotwire.com Market share - 6th in Air and 7th in hotel Air 6% (2003) was 14% (2002) Hotel 2% (2003) was 10% (2002) Opaque model
PhoCusWright consumer survey Room rate offering at discretion of hotel No agreed upon mark-up but is minimum Inventory management Rates and inventory delivered through Pegasus switch. Priceline.com Watch for: Dynamic packaging Private label booking pages to traditional travel agencies.
Merchant Model offerings Travelweb.com (HDS) Hotel Distribution System Owned by Hilton, Hyatt, Marriott International, Pegasus, Starwood, Six Continents, and also Priceline.com Merchant model B2B only Supplies merchant model rates to sites such as lowestfare.com, Orbitz.com, Neat Group and many
more small Internet travel sites. Sidestep.com New paradigm model Privately held Internet technology company. Commissionable Rate Program Core Technology Consumer focused Re-directs consumer to resort site or it intermediary
site. Can access all of the travel inventory available on the Internet, which conventional search engines, crawlers and shopping bots cannot. 5 million membership since 2000 US Best Hotels.com Direct to consumer hotel advertising firm Resorts pay annual fee per property One year of unlimited advertising through site Consumer can link directly to resort site and book a reservation
Resorts do not have to allocate rooms Lessening dependence of mega dotcoms. WorldRes.com Net rate program (merchant model) Distributes net rates on retail Web sites worldwide Set room night limits Rates based on seasonal or daily demands Adjust rates in real time No long term contracts and pricing The battle continues for market share
or is it dominance ? The battle continues for market share or is it dominance ? Airline against airline Destination against destination Mega dotcom against mega dotcom Traditional wholesaler against mega dotcom Travel agent against mega dotcom and traditional wholesaler Internet sites The battle rages Traditional media advertising against Internet advertising Traditional hotel distribution channels against the new Internet distribution channels Traditional challenge of resort against resort
for occupancy, ADR and RevPAR. Who Will Win? 1. 2. 3. 4. You will, after you listen to the next three speakers It is your product that the consumer wishes to purchase You control your sales and inventory strategies You make your resort and destination stand out among all others 3 Key Issues in Hotel Electronic Distribution John Burns Hospitality Technology Consulting
Web Now Drives Travel Decisions Most travelers research their options on the Web prior to booking either Search on or off-line engines play a key role optimization is a top priority Do you know where you display? With various phrasings? In each engine? Web Now Drives Travel Decisions
appealing presentation of the resort is decisive Informative, decisions are based on Web content; you wont get a second chance Resort travelers seek experiences, fond memories can you help them? do you say so? sell benefits, not features! Mega Agencies are Reshaping our Environment InterActiveCorp
(Expedia, Hotels.com), Travelocity, Orbitz, Cendant (Lodging.con, Cheaptickets, etc.) Merchant Model produces approx. 5% of bookings influence of MM rates extends far further; impacting ALL rates Mega Agencies are Reshaping our Environment Initially targeted individual leisure traveler Now active in: corporate Expedia Corporate Travel, Orbitz for Business,
Travelocity Business tour Expedia dynamic WWTE, Classic Custom Vacations packaging Neat .. + .. TicketMaster, etc. Mega Agencies are Reshaping our Environment The Future? meetings and convention, groups...
All based on MM rate structure Our initial attitude: They are the enemy Our first reaction was denial some softening in approach movement (slowly) toward partnership Mega Agencies are Reshaping our Environment Think about a wholesale-based rate structure Remember, you have what the Megas
need most: Content A Footnote: role of representation companies in jeopardy The Challenge to Manage Electronic distribution is re-testing every resorts skills and processes in: pricing inventory allocation distribution management The
average hotel attempts to maintain inventory in 7 electronic outlets Res 5 managers say they can effectively manage The Challenge to Manage Begins with a thorough (highly detailed) forecasting process may utilize revenue management technology Includes consideration of daily potential of each channel -- including
cost overhead and guest profitability who are your most valuable guests? The Challenge to Manage Competitive robots intelligence is vital are coming to our rescue Single point of management options - via CRS and dashboards - are emerging Options are changing and evolving review often
- and revise - your processes In Summary: 1. Powerful presentation: essential 2. Understanding, working with, and anticipating the Megas: imperative 3. Effective inventory management processes: a necessity John Burns Hospitality Technology Consulting Resort Management Conference Greenbrier Resort Dwight Gould US Internet Households Will Reach 84M by 2008 Internet usage 120.0 US Households (millions)
Per AOL, Moms spend up to 17 hours, per week online Moms time constraints account for increased Internet usage TV time is diminished Advertisers should consider increased online marketing to reach women 25-54 ( per Harris Interactive Study -May2003) 2 3 4
5 6 Television campaigns reach the law of diminishing returns Internet Branding Effect Television (The Web can give you incremental reach -especially if your target is higher income, better educated, etc Frequency of ad exposures 1 2 3 4
5 6 Why The Internet? Efficiently Targeted Mass Reach 1 2 3 4 5 6 Effectiveness of Online Advertising
Key Findings Across Industries Adding online advertising to media mix expands reach and coverage Reallocating budget produces better overall results by increasing the ROI from advertising Optimal results are achieved when online advertising is 10 to 15% of the marketing mix 1 2 3 4 5
6 Thank you 1 2 3 4 5 6 Time for Q & A ! Web drives travel decisions Mega agencies reshaping environment Challenge to manage
Online vs. radio / television marketing Growth of media usage Marketing on the Internet Revenue management and the Internet
ETEINDRE LE FEUPaola DeCicco, BSc, NDwww.naturopathmontreal.ca. AVERTISSEMENT. Je n'ai aucun lien financier à divulguer. Le contenu de cette présentation, en collaboration avec l'ASEQ-EHAQ, est disponible à titre informatif seulement et ne constitue pas un avis médical.
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