Hotel Electronic Distribution Channel Strategy Evolution Essay (Critical Writing)

Introduction

A hotel distribution channel is an independent platform that provides inventory services to companies operating in this industry. An efficient channel should allow for room reservations and payment within itself (Christodoulidou, Brewer, Feinstein & Bai, 2007, p. 92). The hotel industry has undergone tremendous changes in rate management and room allocation. The changes can be attributed to, among others, the application of distribution channels. The growth of the digital platform has prompted hoteliers to scramble for a share of the online market to sustain their growth into the future (Kaufman & Horton, 2014, p. 7).

In this paper, the author provides a critical analysis of a chapter from a guide published in this field. The chapter is titled “The Evolution of Hotel Electronic Distribution Channel Strategy”. It is the first chapter in the guide “Managing Hotel Electronic Distribution Channels: A Technology Primer”. The guide is authored by Christodoulidou, Cobanoglu, and Berezina (2012, pp. 1-4). The aim of this analysis is to provide a review of literature related to this field.

A Review of Literature

In the article, Christodoulidou et al. (2012, p. 2) describe how catering managers had to rely on supply and demand in the market to determine rates of room occupancy. The approach was unreliable given that it lacked empirical backing. According to Hensens (2015, p. 70), this trend is changing rapidly as more people embrace the internet.

According to a Google Travel Study conducted by Ipsos MediaCT on June 2014, the internet is one of the major sources of information for travelers. Eyeball tracking is a study carried out to help hotels understand how online consumers make choices. It is based on technology that tracks the pupil, collecting information on how long a person stared at a certain item. As such, it determines the interests of a person towards an object. Based on eyeball tracking, researchers determined that consumers usually browse a list of available hotels. They click on specific hotels only when they are interested in them (Noone & Robson, 2014, p. 8). The study classified the things that made consumers view an individual hotel into two categories. The first was firm-generated content. It includes names of hotels, offers made, prices, and stars. The other category is user generated content. It includes other consumer rating and reviews. The researchers were interested in the reviewers’ profile, text, and their rank in the society (Noone & Robson, 2014, p. 10)

The number of consumers consulting online review websites, such as TripAdviser, has increased over time. The online review platforms have also increased the number of comments a consumer views prior to booking. According to Anderson (2012, p. 7), it is estimated that 1% increase in online popularity of a hotel translates to 0.89% increase in price. The reports are based on measures of the hotel’s average daily rate (ADR). The 1% also leads to an increase of 0.54% in the occupancy of the hotel. It also leads to 1.42% increase in revenue per available room (RevPAR) (Anderson, 2012, p. 7).

Methods of hotel booking have changed over time. They have shifted from phone bookings to travel agents. The current large number of distribution channels has led to a rise in the look-to-book ratio for people trying to secure hotel rooms. Christodoulidou (2012, p. 4) describe how hoteliers incurred losses in the hands of online travel agencies due to variations between hotels and travel agents, who make profits by securing a percentage of what hotels earned from bookings made through their channels (Green & Lomanno, p. 3).

The variations between prices and reduced rates among agents prompted hoteliers to become innovative and the idea of single image inventory was conceived (Christodoulidou et al., 2007, p. 92). The goal of the single image inventory was to maintain parity between the rates offered by the hotels. In addition, it was aimed at setting standard prices for all rooms. Single image inventory is one of the elements that would characterize the future of electronic distribution channel strategies for hotels.

In spite of the insightful information provided by Christodoulidou et al. (2012, pp. 1-4), their article is characterized by a number of shortcomings. One of them is their failure to provide information on how hotels are tackling distribution challenges. In the late 80’s and early 90’s, the hotel industry was not prepared enough to deal with this problem. The main reason was the lack of empirical data to help managers make tactful decisions (Green & Lomanno, 2012, p. 4). However, technological developments in the recent past have helped hoteliers to exploit the online market. Most hotels are encouraging customers to reserve rooms from their home websites rather than through agents. The establishments are promoting this campaign through subsidized rates for online bookings (Hensens, 2015, p. 69). Players in the hospitality industry are now regarding distribution channels as a form of competition that lowers rates of hotels (Myung et al., 2009, p. 812).

Conclusion

A critical analysis of the chapter reveals that Christodoulidou et al. (2012, pp. 1-4) provide a fairly shallow account of the primer’s objectives, which is the evolution of hotel electronic distribution channel strategy. The authors highlighted the major stakeholders affected by the problem. However, they failed to elaborate fully on their concerns. The reader is left with questions regarding the functioning of global distribution systems. Furthermore, the authors fail to provide information on how players in the hotel industry plan to implement the single image inventory. As a result, the reader must refer to secondary reading materials to fully understand the topic highlighted.

References

Anderson, C. (2012). The impact of social media on lodging performance. Web.

Christodoulidou, N., Brewer, P., Feinstein, A., & Bai, B. (2007). Electronic channels of distribution: Challenges and solutions for hotel operators. Hospitality Review, 25(2), 92-100.

Christodoulidou, N., Cobanoglu, C., & Berezina, K. (2012). Managing hotel electronic distribution channels: A technology primer. New York: American Hotel and Lodging Association.

Green, C., & Lomanno, M. (2012). Distribution channel analysis: A guide for hotels. Web.

Hensens, W. (2015). The future of hotel rating. Journal of Tourism Futures, 1(1), 69-73.

Kaufman, I., & Horton, C. (2014). Digital marketing: Integrity strategy, tactics with value. New York: Routledge.

Law, R., Leung, R., Lo, A., Leung, D. & Fong, L. H. (2015). Distribution channel in hospitality and tourism: Revisiting disintermediation from the perspectives of hotels and travel agencies. International Journal of Contemporary Hospitality Management, 27(3), 431-452.

Myung, E., Li, L., & Bai, B. (2009). Managing the distribution channel relationship with e-wholesalers: Hotel operators’ perspective. Journal of Hospitality Marketing & Management, 18(8), 811-828.

Noone, B., & Robson, S. (2014). Using eye tracking to obtain a deeper understanding of what drives online hotel choice. Web.