Online distribution strategies and competition: are the global hotel companies getting it right?

Abstract

Purpose -The internet has significantly changed the ways hotels distribute and price their products. The imminent success of online intermediaries caused financial problems for hotel chains since online travel agencies offered better prices than the hotel brand websites. The existing literature on hotel online distribution has focused on pricing strategies and room availability issues for different segments of hotels. This paper, however, aims to compare online room prices of global hotel chains across online distribution channels and their own brand websites. Design/methodology/approach -By using only the internet, 2,800 room rates were collected and analyzed. Descriptive statistics such as means and percentage were used to answer the research questions. Personal interviews with a CEO of an e-business company and an area revenue director of a global hotel chain were conducted to confirm our findings and to gain additional insights in the related issues. Findings -Descriptive statistics indicated that US properties are doing a much better job than their international partners in regards to "best rate guarantee," "rate parity," and room availability across online channels. Rate consistency still remains a problem within US properties. Research limitations/implications -A limitation of this study is the use of convenience sampling methods, sample size, and currency conversion instruments. Originality/value -Findings of this study would benefit revenue managers, general managers, hotel owners, and corporate brand managers to make decisions and to formulate new policies concerning their online distribution, revenue, and brand optimization strategies.

How economic crisis affects revenue management: the case of the Prague Hilton hotels

“…Findings in terms of product distribution in this research resonated with the literature in terms of main distribution channel usage, cost of distribution, and rate parity issues (Choi and Kimes, 2002;Mainzer, 2004;Gazolli et al, 2008;Vinod, 2009;Mourier, 2010). The emerging of social media was noted in the Prague Hiltons, but not to the extent that Carroll and Noden (2010) mention.…”

Internetization of selling hotel rooms in metropolitan area of Łódź (Poland)

“…Demirciftci et al (2010), and G. Gazzoli et al (2008) found that in the developed hotel market in the United States, distribution channels are not used as a common tool of price differentiation. Thus, there are no significant differences between prices of accommodation facilities offered in direct and indirect online distribution channels.…”

“…Using various business practices, online travel agents were able to provide lower prices than the rates offered by the hotels on their own websites. As the result, irrespective of price parity or disparity, hotel guests looking for a better offer are used to employing search engines of various intermediaries and reading the content of plenty of hotels' own websites (Gazzoli et al, 2008).…”

The moderating effect of cost orientation on RMO adoption in the hospitality industry

“…Considering both perspectives, one interpretation is that the effective adoption of RMO in the hotel trade hinges on the perceived trade-off between long-term performance and short-term objectives, since the short-term profit objectives prevalent in the industry may be inconsistent with the understanding that the lifetime value inherent to relational exchanges can take considerable time to realise a payoff (Tse et al, 2004;Wang, 2012). That is, while RMO may be perceived as widely adopted in the hotel industry, situations of poor business performance, as illustrated by OTAs putting competitive pressure on hotel room rates and eroding both hotel-room income and -customer allegiance (Christodoulidou et al, 2007;Gazzoli et al, 2008;Murphy et al, 2005;Rohlfs and Kimes, 2007;Tso and Law, 2005), suggest that failure to achieve effective performance outcomes needs examining, in order to improve the quality of management information, hence enabling better decision-making. Indeed, failure might be explained by a short-term profit orientation, implementation inefficiencies and inconsistencies that may characterise the impact of cost minimisation fostered by competitive pressure.…”