The recent Hotel Electronic Distribution Networking Association conference brought together professionals from across the hotel ecosystem, from suppliers to revenue managers to third-party distribution partners, to discuss the realities of distribution in the hotel space.
The organization, a non-profit, is volunteer-organized and dedicated to facilitating distribution technologies in the hotel industry.
The conference had three main focuses, in addition to some smaller specific topic tracks, which highlights some of the key challenges in the space.
Payments
Discussions surrounding payments were most definitely the most robust and lively, given the many subtleties of this within a global footprint business like hotels.
Especially interesting was the panel on the emerging market of Brazil, where the culture is based on installment payments. Rather than pay up front on a credit card, the country usually pays off a large transaction in a series of payments. There's also an inclination towards cash payments there, which leads to a different logistic than other Western countries. These sorts of payment realities must be faced in every country, as each country has their own nuances.
One of the key drivers behind HEDNA's Payments working group is that there are over 200 different payment types across the world, which means that global businesses - such as hotels welcoming guests from all over - must consider how to best take whichever payment method a guest prefers.
This is a strategic advantage in travel, especially for companies looking to build local language versions of their products - getting payments right is a requirement for success, and thus is a key strategic consideration not to be overlooked when making moves globally.
In fact, the majority of developing countries are not even using credit or debit cards for the majority of their payments - especially important given that the so-called BRIC (Brazil, Russia, Indonesia and China) and MINT (Mexico, Indonesia, Nigeria and Turkey) are drivers of much of the global growth in international arrivals.
Especially for a country like Brazil, which has seen so much outbound tourism that hotels - like in Florida - are creating custom itineraries and services, such as shipping shopping back home, to target the demand.
Of course, one of the primary challenges in this ever-shifting and expanding payment ecosystem is also reconciling transactions from dozens of different payment sources within a hotel's books. Beyond accounting, this sort of payment structure also has wider implications when it comes to marketing efforts and cash flow management - all of which must be mitigated to ensure the successful continued operation of the hotel.
Payments must be seen as a competitive advantage, where improving business performance via payments is seen as a desired outcome. This improved performance is the result of reduced friction to pay, reduced payment processing cost (as payments are a major controllable distribution cost), improved ancillary sales and mobile wallets helping each of the previous points thrive.
This payments discussion also brought up the larger issue of the role of the hotel revenue manager. A relatively recent position, there was much discussion on the panel "United Distribution and Revenue Management" related to the potential merger of these two functions.
Could the siloed nature of the Marketing, Revenue Management and Electronic Distribution capabilities put hotels at an incredible disadvantage, and will these three functions be rolled into one - say with a Chief Commercial Officer responsible for all efforts that lead to increased revenue - such as marketing, developing and maintaining sales channels and ensuring the right advertising mix for the desired ROI outcomes?
Andrew Rubinacci, the VP of Distribution and Intermediary Sales at IHG, spoke about how this is panning out for them.
Brand marketing is back thanks to the social sites - that's the evolution of hotel marketing. Revenue management is proven and must be integrated with distribution. Distribution and Revenue Management must cooperate to to work successfully to get the right product to the right customer at the right time.
No answers were found, yet this discussion is already leading to some significant changes in hotels as they seek to enhance the cross-functionality of their teams. Only a few hands went up when asked if distribution management reports to a VP of Revenue Management - but several on the panel seemed to think that it was only a matter of time before hotels reorganize away from different departments and place all revenue-generating capabilities, such as revenue management, marketing and distribution, under one leader.
Another main issue discussed is payment security, where hoteliers were reminded of some essential best practices: not storing the CVV2 code prior to a reservation, not requiring faxed reservations with credit card numbers, and not assuming that the credit card processing system of a franchisor will be liable for any security breaches.
Connectivity
Connectivity continues to be a serious issue for hotels - the general consensus is that the increasing complication of connecting to the myriad distribution channels is leading both to frustration and confusion as far as the best way to connect one's inventory to the worldwide plumbing.
The Connectivity working group at HEDNA is dedicated to streamlining standards that can lead to more consistent inventory across channels, while also allowing hotels to update their related content once to be pushed out across whatever platforms they use.
Greg Cross, the SVP of Revenue Management for Hyatt Hotels & Resorts, spoke in general terms about startups in the space and other challenges they face connecting to customers.
We don't have a lot of money to put people into business. Especially as they won't give us any new customers, but might help us keep the customers we already have. Keeping up with all of that can be taxing. Keeping up with the extranet shows how the Wild West took over the industry when it comes to online. The next big thing will be offline - somewhere along the line we will realize that we have overfed ourselves with information.
This excess of information is a common refrain, especially when brands are considering what distribution channels to participate in. It's not only related to limited financial resources, but more so human - there's only so much time to manage these distribution channels with different layers of connectivity.
The debate regarding the push vs pull vs hybrid models of getting inventory out to the cache systems of distribution channels was also animated - again, no answers here, but the hybrid model seems to be a preferred means for many.
The Working Group also provided an update related to getting consistent hotel content distributed in a more seamless fashion: it's called Automatic Product Management, and it's a standard that attempts to automate content and create consistent messaging across platforms regardless of connection type.
Another working technology on the connectivity front is dubbed Change Discovery System, which will allow for reduce loads on equipment, thus reducing the load factor cost and need to purchase more equipment to handle peak traffic times while also reducing lost bookings due to availability issues. This system works by pinging the inventory supplier to see if there's been any change in status over a specified time period. Inventory can then be updated accordingly, rather than having to send each individual request down the pipes.
Devices and Technology
This being an "electronic distribution" association, devices and technology were top of mind for many attendees. Of particular interest was a presentation by Google's Nicola Simionato, who gave a comprehensive overview of the latest iteration of Google's Hotel Finder, including the product's integration with Google+.
Simionato made a point to show the availability of "Room Bundles" on the product, which allows hotels to showcase the various room categories and offer combinations to entice guests.
By moving beyond the commoditized Best Available Rate, the company aims to reduce a primary criticism of meta/OTA online shopping: that price-over-choice is too prevalent. By diminishing the commodification of travel, hotels and airlines are striving to create a customized, bundled experience for their travelers.
Beyond Hotel Bundles, Simionato introduced a concept that stood well with attendees: the device-less nature of the consumer experience. The reality is that consumers now expect seamless integration across devices, and brands such as Google, Apple and Expedia are delivering the ability for browser tabs and past searches to be shared across devices. This means that the consumer basically stops seeing a device and simply sees the cohesive, shared experience that the brand delivers.
The device-less reality is a shift in perspective that has far-reaching implications, as it's no long ok to simply create an experience for one device and neglect another. Every single product that can be consumed on multiple devices must now be designed for the complete ecosystem in a holistic approach to the consumer experience.
Travel brands, especially hotels, must grapple with this reality as they look to engage customers wherever they are looking to book hotels - last minute or otherwise.
Frictionless commerce was also a common refrain throughout, and not just in the payments sessions. The ability for devices and technology to decrease steps to pay, reduce friction and simplify the payment experience via multiple linked accounts is all the next reality that hotels and travel brands must embrace to improve business performance and customer satisfaction.
NB: Connected world image courtesy Shutterstock.