Hotel distribution is technology-intensive and speed and accuracy are essential ingredients for success, otherwise business opportunities can be missed – sometimes without even knowing it. Knowing which are the right key performance indicators to watch is half the battle and tracking the right metrics across distribution channels can pinpoint operational or business inefficiencies that impact revenue. This article looks at the role of hotel distributors and introduces the 5 simple data sets (readily available as part of normal operations) that can help hotel distributors identify unnecessary operational blockages or business revenue leakages. This is a view expressed by Matthew Goulden, MD at Triometric, a company that specialises in performance monitoring and business intelligence for online travel companies.

Hotels, in spite of their desire to grow direct sales, often remain dependent on intermediaries to sell rooms quickly enough. Although a world dominated by giants, there is plenty of room for specialists and discerning distributors. So hotel distributors play a pivotal role in linking accommodation supply to demand, especially with regards to diverse travel agents or niche tour operators. The distributor is focused on getting the right inventory deals from the supply side for the right prices and sell them on to their clients for the best prices achievable.

To be successful requires solid relationships with the hotels (so the right deals can be contracted) and a robust system architecture capable of handling heavy search and response traffic, largely using standard XML formatted data. Direct connects in the shape of APIs between suppliers, intermediaries and customers provides the plumbing for millions of messages flowing between providers and consumers. Beneficiaries are largely travel agents, metasearch engines, tour operators and even other wholesalers. APIs streamline the many to many connections that exist today. It means inventory and reservation systems can be linked up enabling real-time inventory management and instantaneous booking confirmations.

Optimising performance across the different distribution channels used in this 24/7 online world is all the more important given some of the sweeping changes on the distribution horizon, such as OTA consolidation, entrenchment from Google and the growth in mobile.

With online travel and Look-to-Book ratios still growing, enormous system and network capacity is required. Distributors such as wholesalers and bedbanks have these assets in abundance, but to keep on top of competition – they need to manage the performance of each of the supply chain links within their control. The necessary decision making needs data translated into insights. And of course the costs associated with distribution also play a role since not all channels are equal when it comes to delivering returns. Choosing the right mix of channels capable of yielding sustainable profit streams is a critical balancing act.

The complex task of hotel distribution brings with it three critical operational demands:

  1. Monitoring the infrastructure (connectivity, capacity, responsiveness)
  2. Managing the supply (inventory, availability, rates)
  3. Measuring channel contribution (relevance, margins)

So what does the hotel distributor need to effectively optimise his operations to be competitive? Having good systems and processes in place is just part of the answer. We believe there are 5 critical data sets that are an essential part of every distributor's toolkit when managing daily distribution challenges:

  1. Timeouts– how and why they occur and their financial impact
  2. Response Times– measuring and manging responsiveness to opportunities
  3. Inventory– managing what's available against market demand
  4. Margins– understanding impact of cost and prices on profit
  5. Search metrics– using search metrics to measure channel value

These five key insights are based on the raw data that is part of every distribution operation. So it's not a question of the data not being available but a case of harnessing it for best use. This is where a platform that not only measures operational performance but is also capable of extracting wide ranging intelligence from XML messages is an important competitive differentiator.

Let's take a closer but high level look at each of the insights we have listed to appreciate its significance to the daily life of a hotel distributor. (Each section links to a longer article on the topic on our blog).

  • Timeouts – It is almost inevitable that sometimes networks, servers, applications and even errors in requests cause timeouts which means offers to customer requests can't get through thus missing the sales opportunity. The bigger the business with the channel partner, the higher the lost opportunity costs especially if poor response times cause a 'lock-out' for a period. To mitigate the adverse impact of timeouts distributors need to be alerted to when a timeout happens, pinpoint why, where and how it happened and then fix it as quickly as possible. 
  • Response Times – Measuring speeds and feeds from end-to-end is a critical indicator of the health and performance of the systems (as well as the end-user experience). Persistent poor response times costs money. The distributor needs to know how long it takes to process requests, or how often timeouts occur. With the latter, just taking the average of these events across a time period isn't really accurate enough for this speed driven business. Using percentiles to look at data rather than just average ranges becomes more meaningful. For example, a 90% percentile view can capture more of the timeouts that occurred over a given period than the average view, where a number of timeouts disappear from the graph, and end up literally off the radar. Not great when timeouts can prove to be so financially damaging.
  • Inventory – Distributors need real-time visibility into what the market is looking for and what they have available. Getting the wrong balance or running out of popular products can be very costly. Indeed it is all too common for distributors' to show no availability to a request, when they do have availability, or to genuinely run out of a popular product before taking action to replenish the stock. Monitoring system performance, error checking XML messages and analysing real-time search to keep inventory levels in line with demand are three simple data gathering steps that can save a distributor millions in annual revenue. Analysis of inventory performance, not only helps distributors manage inventory but also has the double benefit of arming marketers with data for campaign RoI and gives contracting departments the right insights to take to their negotiations
  • Margin Management – When contracting with many different suppliers, dealing with different room types and destinations, a range of costing and pricing structures apply where different margins prevail. When returning rooms in response to a request distributors need to take account of the margin variations between their buying price and their sale price, especially when the same room is sourced via different suppliers. Optimum margin management is all about getting the right rooms for the best cost prices and securing fulfilments at the best sale prices – all within the usual parameters of real-time accurate pricing, and optimum speed. Not really possible without an analytics platform delivering an array of insights into system performance, product prices, product availability and relevance to demand.
  • Revenue per Search – Look-to-Book is the way the industry measures activity levels between trading partners, but is a poor indicator of overall channel contribution. Searches continue to rise, as does the overhead of managing them, so it is important for distributors to know not only who is hitting their systems with requests, but the quality of those requests in terms of delivering revenue. Measuring the financial contribution of searches is a much better way of working out who is loading systems with high request volumes but few bookings or delivering high value bookings for relatively few searches. Evaluating channels according to their revenue per searches is a more accurate barometer of channel performance. Such data-driven insights helps distributors manage their partnerships.

Being successful in online travel is all about measuring and understanding distribution performance in real time. These five data sets can help distributors get the optimal channel mix in an optimised operational environment. Without this insight, distributors will continue to fall short of their potential and sadly remain unaware of the cost of these missed opportunities.

To read more about each of the data points together with concrete examples visit our website to request the white paper. 

About Triometric

Triometric helps online travel distributors meet the challenges and opportunities of today's fragmented distribution landscape using XML analytics. Built to the highest industry standards for business and IT professionals, Triometric technology is a powerful end-to-end API analytics platform that helps customers manage their complex distribution environment by giving them deep insight into their search and booking traffic. This actionable intelligence enables online travel intermediaries and suppliers to optimise their business performance by improving choice, increasing revenue and reducing costs.

Triometric customers include some of the leaders in the travel industry including GTA, Hotelbeds, Destinations of the World (DoTW), Miki Travel, and Bonotel..

Sonja Woodman
Marketing Manager
01784270404
Triometric

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