Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Hotel Global Distribution Systems and Channels Chapter 8

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Interview Doug Anderson Hotel Analyst Hotwire.com Understanding and uniting different distribution channels is key More and more entities are selling hotel rooms The Internet is giving the consumer more options Hotels are facing brand integrity and rate integrity issues

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Introduction Tradeoffs between reach, richness, and effectiveness or conversion Right product in the right place at the right time at the right price and under the right set of conditions or circumstances Objectives  The ability to easily and quickly search for products and services  Means to conduct the transaction with immediate confirmation

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Requirements Clear strategy Dedicated resources Effective management Sound information technology infrastructure

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Outcomes Access to new customers Better and faster service Sophisticated rate and inventory management Economies of scale Reduced overhead Lower transaction costs Enhanced buyer and supplier relationships Cross-selling and up-selling Unique capabilities Superior channel performance

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Complexity Technological prowess Complicated business logic and rules Numerous interfaces to connect heterogeneous systems (within and outside the company) Volume of transactions and processing speed Uniqueness of room inventory and attributes Individual guest needs The sophistication of the underlying database and search engines that power it

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Developing a Distribution Channel Strategy Transaction Processing Customer Information Capture Data, Information, and Knowledge Management Relationship Management Demand (Revenue/Yield) Management Strategic Alliances Brand Management

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Developing a Distribution Channel Strategy (cont.) Supply Chain/Channel Management Franchisee/Owner Relations Capacity Planning Systems Integration Speed Agility and Flexibility Electronic Commerce

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Electronic “Shelf Space” Criteria The new distribution channel is more cost-effective than other channels and can shift enough volume to recoup the initial investment. The new distribution channel attracts untapped markets and generates new demand. Difficulty The degree to which a channel influences the booking decision. Additional Criteria See Figure 8-3: Page 165

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Cost Implications “Have” vs. “Have-Nots” Costs can represent 20% to 30% or more of a hotel’s daily room rate Yield by Distribution Channel

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Loss of Control Inadequate GDS technology infrastructure Inventory and rate management issues Commissions and transaction fees eroding profit margins Rise in number of electronic intermediaries Shift in balance of power from supplier to customer New models of distribution and pricing Accelerated rates of change Relinquished control of the customer relationship

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Trends Disintermediation and Reintermediation  “Cybermediaries” Digital Divide  “Know-how” vs. “Know-not” Transparency Bypassing Airline GDS Lowering Distribution Costs  Internet and Technology Advances Shopping Bots

Technology Strategies for the Hospitality Industry© 2005 Pearson Education, Inc Nyheim, McFadden, & Connolly Upper Saddle River, New Jersey Summary GDS one of the most important “strategic” applications in Hotel Technology GDS in transition More distribution options available Comprehensive Distribution Strategy needed Additional Resources: -online magazine -research portal