Distribution channel and efficiency: An Analytic Hierarchy Process approach

Varini, Kate; Scaglione, Miriam; Schegg, Roland

doi:10.1007/978-3-7091-0503-0_44

Cited by 6 publications

(5 citation statements)

References 17 publications

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“…The approach is obviously based on the occurrence of transaction costs (Williamson, 1979), particularly with regard to analyzing, assessing, measuring and maintaining the profitability of each and every online distribution channel. Consequently, studies: discuss the dilemma faced by hotels that must sell large portions of their offers at discounted rates, often with high commissions through third-party intermediaries (Carroll and Siguaw, 2003); propose how to maximize net room revenues by steering customers to their own sites, rather than to OTAs (Toh et al , 2011); and address transaction cost efficiency in channel choice as a contribution to profit maximization (Varini et al , 2011). …”

Section: Literature Reviewmentioning

confidence: 99%

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Maximizing online bookings through a multi-channel-strategy

Beritelli

Schegg²

2016

IJCHM

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Purpose Hotel managers are being challenged by the increasing multitude of distribution and sales channels. Online travel agencies (OTAs) in particular generate a great deal of uncertainty: Which are the best ones? Which ones offer the best conditions? How many channels are optimal for my hotel? How can I evaluate costs versus benefits? These and other questions concerning the optimal online distribution channel strategy have produced different reactions in practice. The aim of this paper is to challenge the need for an over-optimization of channel strategy by proposing that the consumer, at the end, deals with a network of information presented on one networked environment, including the Web. Hence, the network effect of the numerous online platforms is what drives consumer choice and, finally, bookings. Design/methodology/approach A series of multiple regressions with representative samples of hotels in Switzerland from the years 2009, 2010, 2011 and 2012 was performed to estimate the importance of the number of platforms against other independent variables. Additionally, further multiple regressions with samples from the years 2011 and 2012 using the most important platforms (first-tier channels) shows again that the number of platforms is more important. Findings The analyses show that the estimated number of online bookings by the respondents in the hotels is a result of the number of channels, not the type of channel. This is particularly true for non-categorized establishments and one- and two-star hotels. The analyses do not confirm the billboard effect, according to which particular platforms (first-tier channels) increase the probability of bookings. Thus, the survival strategy is to maximize share of shelf and to build on interdependencies and network effects. Research limitations/implications The study looks only at online bookings. Additional research into the connection between online and offline channels, particularly from the viewpoint of the consumer, will provide further insights. The study looks at the booking volume per channel, not the monetary sales volume or the profit. A study that quantifies not only the volume of bookings but also the total profit or the contribution to profit per channel could quantify the benefits of the multi-channel strategy. Originality/value The multiple online channel strategy seems to be the more effective approach to maximizing bookings online, regardless of the platforms chosen. Results of the study challenge the current opinion among practitioners that the multitude of distribution channels forces them to choose among single online channels and, therefore, drives the search for criteria to assess these channels or even to disregard them. The consistent results across 2009-2012 show that even in the turbulent phase of the advent of OTAs in the travel industry, hotels can adopt a winning strategy. Finally, the results suggest that the intermediation of online distribution of hotel beds has approached the condition of perfect competition, causing the OTA business model to be cannibalized.

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Section: Literature Reviewmentioning

confidence: 99%

“…address transaction cost efficiency in channel choice as a contribution to profit maximization (Varini et al , 2011).…”

Section: Literature Reviewmentioning

confidence: 99%

Maximizing online bookings through a multi-channel-strategy

Beritelli

Schegg²

2016

IJCHM

Self Cite

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“…These largely fail to record distribution costs (direct or indirect) in a manner that can be used to evaluate either option at the transaction level. However, by making use of transaction cost theory and considering the overall financial bottom line, such data can be used to evaluate the net effect of participation, investigating whether OTA distribution results in a better net economic outcome from the perspective of the hotel property (Varini et al, 2011). Therefore, the following hypothesis was advanced: H1.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

The indirect distribution dilemma: assessing the financial impact of participation in Booking.com for hotels

Abdullah

Cauwenberge

Bauwhede

et al. 2021

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Purpose This study aims to assess if the benefits outweigh the costs of participation in online travel agencies (OTAs) such as Booking.com. Design/methodology/approach A two-step system generalised method of moments estimation of a regression model of firm-level return on assets (ROA) is used on a dummy variable indicating whether a lodging facility participates in Booking.com. The assessment contained various control variables, including size, age, leverage, liquidity and lagged ROA. The moderating effect of firm age and size was studied by including interaction variables between the Booking.com dummy and age and size, respectively. The model was estimated using participation and financial data of 775 Belgian firms over a 20-year period (1999–2018). Findings The findings indicate that participation in Booking.com is associated with higher profitability, with this effect more economically important and pronounced for smaller hotel properties. Research limitations/implications The study provides a broadly applicable empirical model to assess the impact of platform participation on the financial performance of tourism, hospitality or retail businesses. Practical implications The study provides empirical evidence that, from a transaction cost perspective, the benefits of participation in OTAs outweigh the costs, resulting in substantially higher profitability. The evidence can be used to justify the use of OTAs as distribution channels. Originality/value While prior studies have described and conceptually analysed the evolution and role of OTAs in the hotel sector, and speculated on the net effect of OTA participation, to the best of the authors’ knowledge, this is the first study to empirically assess whether OTA participation creates value for hotel owners and investors.

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“…It is difficult to quantify the overall effect of OTA-derived business on properties without a detailed analysis since there are many factors to account for, such as check-in/out times and cost for different booking methods and guest revenue during their stay, among others. In one study (Varini et al 2011), the researcher was present at the hotel, measuring times for check-in and check-out, additional revenue per guest, and allocated marketing and online costs that are often ignored. Close analysis of the transaction data demonstrated that OTAs generated the most profitable transactions and marginal revenue to cost.…”

Section: Value Proposition For Suppliersmentioning

confidence: 99%