The wholesale distribution channel has traditionally been a headache for hoteliers.
On one hand, they know they need it. Wholesale helps hotels to connect supply with new demand and gets many more eyeballs on room inventory. Running operations and agreements for a wide variety of channels can also be time-intensive for hotels, so using wholesalers can make sense to reach thousands of demand partners in one fell swoop.
On the other hand, wholesale distribution has caused many issues for hoteliers, earning itself a bad reputation. These issues are largely due to a lack of transparency and integration from some wholesale partners, resulting in hoteliers losing control of their inventory and room rates.
An ever-increasing web of channels
Traditionally, wholesalers buy rooms in bulk and sell them to travel agents and OTAs, in a static manner.
However, the market is evolving rapidly as the number of third-party sites and distribution channels looking to buy hotel inventory increases. One of the key drivers of this trend is API (application programming interface) technology, which enables a software interface to offer a service to other pieces of software. This makes it much easier for an airline, for example, to sell a hotel room via its own website.
Because of this, wholesale inventory is being consumed by a wider variety of b2b segments. Financial institutions that often have big rewards programs to drive customer loyalty. Airlines that want to offer more travel products to drive additional revenue. Membership organisations. Affiliates. An open API marketplace makes it much easier to distribute inventory to a wider variety of channels.
As the number of b2b distribution channels, so does the necessity of hotels being able to reach them. There are, for example, audiences that live in a “walled garden” with a unique currency that can only be spent in that environment, such as credit card loyalty programmes. Those credit card loyalty points are the only way that customer is going to buy your hotel room, so as a hotelier, if you can’t reach them, if you don’t exist in that channel, your competitors are going to get those room nights. Wholesalers are essential for being able to reach customers through these unique channels.
A real-time marketplace
As demand channels become more sophisticated, it is vital that hoteliers do the same. Real-time marketplaces operate successfully in many sectors, and many pockets of the travel sector have been too slow to keep up. For hoteliers to truly benefit from b2b distribution, they can no longer be reliant on the static pricing and upfront bulk buying of yester-year. Hoteliers need to get their inventory in the hands of the right demand channels, at the right price, at the right time. They need to benefit from a real-time marketplace that provides real-time pricing and real-time availability, giving hotels much better visibility and control over their inventory.
When hotels are working with multiple wholesalers, which are sometimes daisy-chained to one another, finding out where inventory has come from can be tricky. It is practically impossible to maintain control over pricing when bad actors are not adhering to accepted channel standards and are using multiple wholesalers to undercut the market. When prices aren’t moving in unison because of multiple relationships, testing price elasticity and making data-driven changes is highly challenging, and AI-driven demand channels will automatically move to where the cheapest rate is available.
Optimized Distribution – a model for the future of b2b distribution?
One model that tackles these issues of control and transparency of inventory is our Optimized Distribution Preferred programme, which gives hotels increased control of what will be sold across the wholesale distribution landscape by creating a single pipeline into the b2b space. Sell rates are distributed to our entire global distribution network of b2b demand partners, so the end rate must not be modified. Our compliance team uses test bookings and data science to ensure rates are being used appropriately.
The aim of the model is to reduce the complexity of maintaining disparate channels, by allowing hotels to adjust and manage inventory and rates through one single source of demand and supply. It ensures consistency of content, so customers aren’t seeing the same property or room presented in ten different ways. It saves hoteliers the time and effort of trying to figure out who has access to their inventory. And it drives up standards, because bad actors who don’t adhere to channel standards get cut off and won’t have the inventory. Marriott International, our program launch partner, has seen an 80% reduction in rate parity issues in metasearch. IHG Hotels & Resorts is the latest leading group to make Expedia Group a preferred distributor of its wholesale rates.
This is just one example of how technology can drive the wholesale ecosystem in a healthy way, benefiting everyone by improving standards, reducing costs, generating incremental revenue for hotels, and providing accurate content and better rates to travellers.
Real-time insights, rate parity and expanded reach
The traditional b2b distribution model is outdated, inefficient and expensive, and does very little for hoteliers. Hotels following these wholesale practices are severely limited in what they can do to control inventory and pricing. For hotels to make the most out of the wholesale channel, they must be able to make real-time decisions over different parts of their inventory, based on real-time insights; Ensure rate parity across the b2b ecosystem; and reach as many parts of that ecosystem as possible.
Technology has made these transformations possible, but hoteliers need to grasp them, or risk wholesale remaining a headache, instead of becoming a hero.
By Greg Schulze, SVP, Strategic Partners, Expedia Group