ITB 2024 Special Reporting
What If A Hotel Brand Could Ask The Same Question Southwest Airlines Asks In Their New Ad?
By Doug Kennedy
Thursday, 16th December 2010
As a veteran hotelier who started in the industry long before there were OTA's and the proliferation of 'opaque' third party distributers, I remember well the days when hotel controllers would complain about having to pay the 'exorbitant' travel agent commissions that then were running 10%. 

I was a bellman back then and since it was my job to walk the outgoing mail from accounting to the front desk I could always tell it was the day to run travel agent checks by the weight of the outgoing mail bag.

Maybe if today's hotel managers had to actually print and sign monthly commission checks to their OTA's and other online distribution partners the industry would never have relinquished so much control over its distribution to these external partners? 

This is not to say that hotels should not work with their vendor-partners such as the OTA's and opaque websites, but when I see countless hotels relying more on these channels to fill their hotels than their own direct channels something seems terribly out of balance. 

In recent weeks I have been watching the new Southwest Airlines television commercial that reminds the viewers that there is only one place on the entire world wide web where you can purchase Southwest tickets, which of course is www.southwest.com.  What a clever ad campaign to simply ask ordinary people this question and then to have them state the website address. 

As I watch the ad I cannot help but wonder what went wrong with our industry that we ended up paying such exorbitant distribution costs, on top of what most properties are already paying for brand/franchise flags or affiliation/membership groups.  How did it become that for many hotels, the transient contribution from third party channels has outpaced  direct channels? 

While it's nice to look back, to wonder, and to reflect on what went wrong, more importantly today we as an industry should start thinking more and more about what we can do to win back the loyalty of our own customers.  Fortunately, travel marketing technology continues to evolve and hotel managers have more tools than ever to reach out and connect directly with guests and prospects. 

I concur with another recent hospitality industry columnist who wrote an article asking why it is that at least one of the major hotel brands has not had to confidence to take back control of its own distribution channels such as Southwest does.  If only a fraction of the funds currently spent on OTA commissions were invested in marketing of direct channels, it would seem to me that at least one of the  hotel brands could make this transition.  Some of the savings in commissions could even be passed along to the consumers in terms of lower-tiered and "well-fenced" rates, that while still being less than current selling rates on OTAs would still result in a larger "net" revenue per booking. 

Until then, smaller brands, independent properties, and even branded or franchised properties can take some steps towards taking-back control of their distribution channels and thus minimizing the use of OTA's and opaque websites. 

Here are some suggestions:

  • Continue to build your online community through social networking websites.  Although many hoteliers I know have not yet seem much of an ROI yet, remain committed to a presence in places like Twitter and Facebook, especially since the very new redesign of Facebook.  These are other terrific channels to offer "fenced" rates not otherwise available to the public. 
  • Strive to offer a best rate guarantee at your own website.  Consider special discount  offers for those who are members of the new OTA's "frequency" programs for booking directly with you. 
  • Make sure everyone who answers the phone is aware of "channel conversion" opportunities.  These days even those who mostly book online sometimes still call to double-check the rate offer; others have found they receive a better room location/view by booking directly.  When callers who are online pick up the phone, make sure your front desk, switchboard, reservations, and/or sales department knows the importance of converting these callers to booking directly where possible.
  • Look for "channel conversion" opportunities from in-house guests.  Corporate hotels, for example, can train the front desk team to offer return reservations for those guests who check-out in person to get their zero-balance receipt, thus eliminating distribution costs.
Founded in 2006, Kennedy Training Network (KTN) is the lodging industry's best source for training programs and services in the topic areas of reservations sales, hospitality and guest service, and front desk revenue optimization. Services including customized, on-site training workshops, private, individual hotel team webinars, and reservations/front desk mystery shopping assessment and coaching reports.

Additionally, KTN is also a resource for conference keynote and break-out sessions for management companies, brands, and associations.

For more information, visit www.kennedytrainingnetwork.com for details or e-mail doug@kennedytrainingnetwork.com
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