Connectivity & Distribution Strategy – Trends Impacting Your Hotel In 2023
The hospitality industry continues to evolve and set new standards of excellence. Technological innovation is accelerating, with breakthroughs in AI, machine learning, and automation.
Trends that were influenced by Covid 19 remain relevant today. These include contactless technologies, smart room systems, cloud computing and even virtual and augmented reality. In 2023, things that may impact the industry include higher costs of travel, inflation, purchase power parity and new trends - some which spilled over from the Pandemic (i.e. Digital Nomads/ Staycations)
TRENDS IN 2023
Cloud Computing: Cloud computing is poised to revolutionize the hospitality industry, streamlining operations and improving efficiency. Cloud-based PMS and channel managers will provide hotels with real-time data and insights, enabling them to make informed decisions to manage their properties from remote locations. Cloud-based solutions have been helping reduce on-going costs associated with hardware and maintenance, making them an attractive choice for hotels seeking to enhance profit margins in an inflationary environment.
Digital nomads – New Travel Segment: The concept traveling and working from a different country is extremely popular and is likely to become more mainstream. With
16 million digital nomads in the US alone its only likely to get more popular. Then there’s the pool of Russian citizens that have become digital nomads, having left their country in search of safety and freedom in countries that would welcome them.
Several countries, like Brazil, have begun to introduce visas designed to appeal to the digital nomad. Savvy Hotel owners may want to recognize this as a new or alternative market segment, reconfigure their rooms or devise rate packages that appeal to those travelers needing a home away from home.
Staycations – New Market Segment:
Most countries in 2022 have been impacted by inflation and the high cost-of-living. For different reasons, the Staycation Holiday is evolving from being the holiday of choice (during the Pandemic) to an attractive holiday option for Families and Friends during inflationary times. Staycation holidays brought the travel community out from hibernation during the pandemic by making it ok to travel locally within driving distances from home, compared to taking a trip to a far-off destination on the other side of the world. Staycations look to become mainstream in 2023 as inflation impacts prices and peoples affordability. By staying local, the Staycation gives you a currency advantage by not having to convert one currency into another which may be less valuable and more costly than your own.
Differences between Hotel and Short-Term Rentals, move Closer:
In 2023, the differences between hotels and short-term rentals will became less obvious as both types of accommodations start competing for the same guests. During Covid 19 as more traditionally minded hotel-goers began to look at the staycation holiday, the less formal short term rental become a popular alternative to a traditional hotel room. Travelers who wouldn’t have opted for a vacation rental before may prefer this option now having tried it during the pandemic when many hotels were closed or not available. Looking ahead, it’s likely that hotels will probably want to pitch their rooms more competitively with the rental market, forcing each to adopt elements of the other, like self check-in, in-room kitchenettes, luxurious amenities, and more.
VR - Inspiring New Hotel Bookings:
According to Booking.com’s latest survey, 43% of the respondents said their travel destinations were inspired by places they visited virtually. While VR is predominantly used as a source of inspiration for now, it’s possible to see travelers going on full virtual vacations in the not-too-distant future. Virtual Reality is expected to become a new source of inspiration for many travelers in a few years time.
With the tourism industry moving more fully into recovery (after Covid 19) – many pandemic trends like some of the one’s mentioned will evolve.
One of the key elements that determine how successful you are at selling rooms, to take advantage of the rising prices, inflation and new trends will almost always come down to your connectivity and distribution strategy. Achieving higher occupancy, better rates and rate yields across different markets should be a priority in a highly competitive landscape and makes good business sense. But how do you do this ??
IDENTIFY CONNECTIVITY AND DISTRIBUTION GOALS FOR 2023
With dynamic rates, and real-time inventory being pushed to agents and wholesalers through the Channel Manager or Property Management System, its easy to outline a strategy to prioritize what you want from your Connectivity and Distribution.
Identifying GOALS and BENEFITS sets the framework for choosing the right Agent and Wholesaler.
EXAMPLE - GOALS & BENEFITS:
Goal – Get better online visibility
Benefit By connecting with multiple agents and wholesalers (distribution channels) the hotel should get better online visibility to reach a wider audience. The hotel can also benefit from the billboard effect of signing up with more Agents
Goal - Improve Workflow and Eliminate Repetition and Transaction Handling
Benefit: Get the job done with the help of a Distribution system (like the Hotel Channel Manager) which allows hotels to pool inventory and rates and show this information across many different channels at the same time reducing manual input and minimizing the risk of errors that occur with overbookings.
Goal - Manage Revenue Intelligently:
Benefit - Leveraging real-time data, through a channel manager or the property management system the hotel can be flexible in adjusting their prices and availability dynamically to optimize revenue yield according to different market environments for each room rate category being sold.
Goal – Want a bigger Market Size:
Benefit – Sign up more agents, and manage your distribution relationships better (rates and inventory) by pooling all your inventory using the Channel Manager as a tool to do the work for you so you can expand the market, attract new customers and sell your hotel in different regions.
Goal - Increased Revenue Streams:
Benefit - By signing up more Agents and Wholesalers and leveraging the strengths of multiple distribution channels, the hotel can diversify the revenue stream and reduce dependence on a single market or channel giving you access to a much broader choice of where you sell your hotel.
The best way to sell more rooms, whilst optimizing revenue opportunities to reach a greater targeted audience, can be done using the right distribution platform and choosing the right connectivity partners.
SELECTING THE RIGHT CONNECTIVITY CHANNEL?
Factors to consider:
Target audience: Identify your target audience and the channels they use to book hotels. For example, business travelers may prefer to book through corporate travel agencies, while leisure travelers may use online travel agencies (OTAs).
Market reach: Evaluate the reach of each channel and its ability to attract new customers from different segments and regions. Consider the market saturation of each channel and its competition.
Commission fees: Understand the commission fees charged by each channel and their impact on your revenue. Negotiate commission rates where possible and ensure that the ROI justifies the cost.
Brand exposure: Assess the visibility and branding opportunities offered by each channel. Consider the branding guidelines and the quality of the user experience on each channel.
Technology and support: Evaluate the technology and support offered by each channel. Ensure that the channel offers a user-friendly interface, reliable connectivity, and responsive customer support
Data insights: Understand the data insights provided by each channel and their usefulness for revenue management and decision-making.
Contract terms: Review the contract terms and conditions of each channel, including the cancellation policies, payment terms, and restrictions on promotions.
Selecting the right channel(s) needs to align closely with the connectivity and distribution GOALS to achieve success and ensure you’re executing within the framework established.
In 2023 as the Tourism Industry recovers from Covid 19, there will be many new trends that emerge, some of which we outlined. Travel will be more expensive in 2023 which is being impacted by inflation and cost of services.
Outlining your Connectivity and Distribution GOALS, and the anticipated BENEFITS, sets the blueprint for selecting the right distribution systems (channel manager or Property Management System) and choosing the right connectivity partners to achieve success.
It should come as no surprise that executing your Connectivity and Distribution strategy can best be achieved with help of the Hotel Channel Manager or the Property Management System. Both are tried and tested systems.