Faculty & Research
Evolution in Electronic Distribution: Effects on Hotels and Intermediaries
Vol 3 No 5
By: Bill Carroll Ph.D. and Judy Siguaw D.B.A.
Executive Summary: With the migration of hotel-room distribution to the internet, a host of
players old and new are vying to gain (or retain) control of distribution channels.
In addition to the hotels and chains themselves, the operations that distribute
hotel rooms include global distribution systems (GDSs), distribution service
providers (DSPs), third-party websites (e.g., Expedia, priceline.com), and
traditional travel agencies. Many of these channels use price as a principal
parameter. Hence, a strategic problem for hotels is to avoid having price be
customers' main (or only) consideration for a room booking. One chief way to
offset the trend toward commoditization is to provide customers with considerable
information to distinguish properties based on their provision of services.
While hoteliers seek to drive bookings to their own proprietary websites,
the third-party sites (notably, Expedia) have created strategic approaches to
encourage hoteliers to distribute rooms on their sites. As a practical matter,
hoteliers almost always use some kind of discounted distribution to clear their
inventory of unsold rooms. To gain hotel-room listings, some intermediaries,
such as travel agents and GDSs, have developed a value-added strategy of
providing additional services to their customers and packaging hotel rooms as
part of travel packages. One reason that travel agencies have become so interested
in distributing hotel rooms is the demise of airline commissions. All
intermediaries are attempting to provide services or incentives to encourage
customers to book through their channel. One competitive advantage that
third-party intermediaries can provide is to shift market share toward a particular
hotel or chain.
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- Evolution in Electronic Distribution: Effects on Hotels and Intermediaries By: Bill Carroll Ph.D. and Judy Siguaw D.B.A.
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