Last week a very interesting article by Shashank Nigam (Simpliflying) was featured on mashable.com outlining 5 ways hotels and airlines can drive revenue from social media. I am in complete agreement with Shashank, it’s time some of the more traditional travel businesses got on board with social media, it has become very clear this is more than a passing fad. What I found the most intriguing about the article was not what was said, but what was implied (Possibly Intentionally?) about the future of hotel inventory distribution.
“Ultimately, using real-time platforms like Twitter helps the airline circulate cheap fares and get people to fly more often, or even for the first time. Hotels could similarly post unfilled room inventory on Twitter. Ultimately this fills up the planes and hotels and drives more revenue”
The thought of hotels having direct control over distressed inventory without having to engage third party resellers will be a bit worrying for last minute websites like lastminute and wotif. Curious about the importance of different distribution channels, I managed to track down a paper called, “The future of hotel electronic distribution” by Peter O’Connor and Andrew J. Frew from 2002. In the paper, researchers and industry professionals gave a percentage rating to a distribution channel based on their opinion of its importance to the hotels overall revenue. Both industry professionals and experts gave the hotels own website 3% and 1% with the highest marks going to the CRS and GDS systems. Of course it would have been impossible for the study to include technology that had yet to be invented, but if we were to look in to the future and guess as to how Twitter and Facebook would affect the importance of the hotels website as a revenue generator, it would be safe to assume there would be a positive shift.
In my personal opinion, the playing field for smaller organizations and hotels is levelling thanks to the increased market penetration social media offers anyone willing give it try. Hotels are beginning to have access to consumers from around the globe, allowing them to engage in two way conversations centred around their brand and are essentially taking back control from 3rd party resellers. The industry has seen the beginnings of this trend in the declining commission levels being offered by suppliers. One of the best examples of this was seen last May when Singapore airlines refused to work with Flight Centre after their “Turn the Screw on SQ” campaign. Instead of crumbling to their demands and offering a higher commission rate, Singapore turned the boycott on Flight centre, refusing to allow the agency to sell their product.
The barriers between suppliers and their customers are very quickly coming down thanks to social media, for better or worse. With agents and wholesalers swimming in the same stream as suppliers, commissions will continue to drop, benefiting the consumer and consolidating the distribution network. At this rate the travel landscape of the near future could look a little foreign to us all.
Hotel distribution and the Twitter effect
Last week a very interesting article by Shashank Nigam (Simpliflying) was featured on mashable.com outlining 5 ways hotels and airlines can drive revenue from social media. I am in complete agreement with Shashank, it’s time some of the more traditional travel businesses got on board with social media, it has become very clear this is more than a passing fad. What I found the most intriguing about the article was not what was said, but what was implied (Possibly Intentionally?) about the future of hotel inventory distribution.
“Ultimately, using real-time platforms like Twitter helps the airline circulate cheap fares and get people to fly more often, or even for the first time. Hotels could similarly post unfilled room inventory on Twitter. Ultimately this fills up the planes and hotels and drives more revenue”
The thought of hotels having direct control over distressed inventory without having to engage third party resellers will be a bit worrying for last minute websites like lastminute and wotif. Curious about the importance of different distribution channels, I managed to track down a paper called, “The future of hotel electronic distribution” by Peter O’Connor and Andrew J. Frew from 2002. In the paper, researchers and industry professionals gave a percentage rating to a distribution channel based on their opinion of its importance to the hotels overall revenue. Both industry professionals and experts gave the hotels own website 3% and 1% with the highest marks going to the CRS and GDS systems. Of course it would have been impossible for the study to include technology that had yet to be invented, but if we were to look in to the future and guess as to how Twitter and Facebook would affect the importance of the hotels website as a revenue generator, it would be safe to assume there would be a positive shift.
In my personal opinion, the playing field for smaller organizations and hotels is levelling thanks to the increased market penetration social media offers anyone willing give it try. Hotels are beginning to have access to consumers from around the globe, allowing them to engage in two way conversations centred around their brand and are essentially taking back control from 3rd party resellers. The industry has seen the beginnings of this trend in the declining commission levels being offered by suppliers. One of the best examples of this was seen last May when Singapore airlines refused to work with Flight Centre after their “Turn the Screw on SQ” campaign. Instead of crumbling to their demands and offering a higher commission rate, Singapore turned the boycott on Flight centre, refusing to allow the agency to sell their product.
The barriers between suppliers and their customers are very quickly coming down thanks to social media, for better or worse. With agents and wholesalers swimming in the same stream as suppliers, commissions will continue to drop, benefiting the consumer and consolidating the distribution network. At this rate the travel landscape of the near future could look a little foreign to us all.