Distribution channels in hospitality refer to the pathways through which services or goods move from the place of production to a place of consumption enabling the producer and the consumer to bargain and sell the product. It is important to have a reliable distribution channel because it has many merits Firstly, it enables the hospitality landscape to access a vast audience exploring different market segments and geographical regions. Secondly, it enables one to increase occupancy rates and generate more income as it ensures that rooms are sold at an efficient price point. Thirdly, it allows businesses to maintain control over their brand image and pricing methods. Therefore, good management of a distribution channel is really important in staying competitive and profitable in the hospitality industry.
In the hospitality landscape, distribution channels play an important role in reaching customers and delivering services. The channels do vary in terms of their target audiences, characteristics, and how they enable the exchange of hospitality services
Different Distribution Channels and Segmentation
The hospitality landscape uses different distribution channels, each one of them dealing with different demographic segments and consumer preferences. These different channels can be categorized based on different characteristics such as electronic and non-electronic. Segmentation of distribution channels in the hospitality industry reflects the diverse preferences and needs of travelers, ranging from those seeking personalized service and direct booking options to those prioritizing convenience, variety, and packaged deals
Non-electronic distribution channels
Direct channels are a major example of non-electronic distribution channels (De Peuter-Rutten. 2021). This method is mostly preferred by luxury travelers who like direct booking to access parks, convenient rooms, and amenities offered by a high-end hotel. Walk-ins are another method where clients can just simply walk into the hotel and book a room on the spot. This method is more popular for smaller hotels or those in tourist-heavy areas. Thirdly is the phone reservations. Here, clients can call the hotel to book a room. This method enables the hotel to have personalized customer service and the chance to upsell additional services. Apart from direct channels, there are also wholesalers and tour operators in this category. Tour operators arrange accommodation, transportation, and other services into realistic arranged travel packages. They are sold through travel agencies in most cases. On the other hand, Wholesale Channels are where hotels can agree with wholesalers who will purchase rooms in bulk and later sell them to travel agents or package them into vacation deals.
Electronic Distribution Channels
Website is one of the major methods under the electronic distribution channels category. Hotels in most circumstances have their websites where the consumers of their services can book rooms directly (De Peuter-Rutten. 2021). There are also online travel agencies in that other hotels prefer an online platform where they can get customer reviews that will help them to showcase their performance, Such platforms include Booking.com, Expedia, and Hotels.com, among others. There is also the use of aggregator apps. Mobile apps like Trivago and Kayak aggregate hotel listings from various OTAs, allowing users to compare prices and book accommodations from different providers in one place.
Comparison of Electronic and Non-Electronic Distribution Channels
Electronic and non-electronic distribution channels share several similarities. First, is their booking convenience, both electronic and non-electronic distribution channels offer their clients a friendly way of making reservations. Second, they offer customer service, regardless of the way of booking, both electronic and non-electronic channels prioritize their client’s services. Third, both methods enable businesses to reach a vast range of audiences, hence increasing their revenues. Finally, they all operate in a competitive hospitality landscape, whether a business uses an electronic or a non-electronic distribution, they all are striving to be the best in their environs.
Differences between electronic and non-electronic distribution channels
In as much as electronic and non-electronic distribution channels share several similarities, they also have a lot of differences. Firstly, electronic distribution channels can work for 24 hours a day because they use online methods in almost all their transactions, but non-electronic distribution channels can be inconvenient as they will limit the number of working hours(Fredricks,2021). Secondly, electronic facilitate a speedy transaction, hence they allow the guest to get confirmations almost immediately, while the transactions of non-electronic channels are slower and can have customers queuing to receive confirmations. Finally, electronic distribution channels provide limited chances of personalized interactions, whereas non-electronic distribution channels tend to have more personalized interaction with staff.
Advantages and disadvantages of electronic distribution channels
Electronic distribution channels have a lot of advantages, they include: a wider range of audience, and instant confirmation, so the clients do not need to waste a minute of their time, they are cost-efficient as compared to traditional ways, they are easily integrated with technology, therefore they increase their incomes easily with assistance of the technology, among other advantages. However, electronic distribution channels possess some disadvantages as well, these include: they need a huge amount of capital to install and maintain, they have cybersecurity risks, they depend heavily on technology and they also have a massive reliance on online reviews, which the customers may not be ready to offer.
Advantages and disadvantages of non-electronic distribution channels.
Non-electronic distribution channels possess many advantages, First, non-electronic distribution channels have a good system of personalized interactions. They require less amount of money to run as compared with electronic distribution channels, and their data and privacy are more secure compared with the other distribution channels. However, non-electronic distribution channels have several disadvantages as well. Firstly, they have operating hours and time constraints. Secondly, they bear the risk of miscommunication and errors. Finally, they have a huge dependency on human resources.
Managing distribution channels to increase demand for hospitality.
There are various strategies for effective management of distribution channels to increase demand. Firstly, increasing the area of distribution channels by mixing both the electronic and non-electronic distribution channels. Secondly, is by Channel Optimization and Segmentation. Segmenting distribution channels based on characteristics and targeted audience to maximize their profitability. We can also use other methods, such as dynamic pricing strategies, collaborating with distribution colleagues, and enhancing online presence and visibility among other methods(Edwards, 2022).
Data-Driven Decision-Making in Distribution Channel Management
Managing data is very crucial for a good business. By harnessing data from different sites search as books, demographics, and market insights., hospitality enterprises can make profits by making informed decisions from different sources of data.
Technological Impacts on Hospitality
Technology has played a big role in the revolutionization of hospitality. AI helps optimize the price, and inventory management in hospitality. While IoT helps in the enhancement of guest experiences through personalized and good amenities(Berman,2023).
Adaptive Revenue Management Strategies
Adaptive revenue management is the dynamic pricing and inventory alteration according to market conditions, changes in demand, and the actions of a competitor(Vinod,2021). Enterprises in hospitality should apply adjustable pricing models to maximize profits and ensure optimal occupancy rates.
Conclusion and Recommendations
To conclude, it is important to have reliable distribution channel management and revenue optimization for a business to be successful. The hospitality industry should learn and evaluate and refine its distribution channels, invest in talent, development, and technological advancement. This comprehensive approach will enable hospitality businesses to thrive in an increasingly competitive and dynamic marketplace, delivering exceptional value to guests while maximizing profitability.
References
Raheja, K. (2024) Revenue Management. [PowerPoint slides]. Canvas@AC. https://canvas.alexandercollege.ca/courses/62/files/5615?module_item_id=2592
De Peuter-Rutten, J. (2021.). What are Hotel Distribution channels? Hospitalityinsights.ehl.edu. https://hospitalityinsights.ehl.edu/hotel-distribution-channels
Fredericks, L. (2021, May 20). Hotel Distribution Channels: The Complete Guide | Cvent Blog. Www.cvent.com. https://www.cvent.com/en/blog/hospitality/hotel-distribution-channels
Edwards, K. (2022, May 16). Dynamic Pricing Strategy – Tips & Examples + Pros & Cons. Pricefx. https://www.pricefx.com/learning-center/dynamic-pricing-strategy-tips-examples-pros-cons/
Berman, D. (2023). Revolutionizing The Hospitality Industry With Artificial Intelligence. Forbes. https://www.forbes.com/sites/forbesbusinesscouncil/2023/09/11/revolutionizing-the-hospitality-industry-with-artificial-intelligence/
Vinod, B. (2021). An approach to adaptive robust revenue management with continuous demand management in a COVID-19 era. Journal of Revenue and Pricing Management. https://doi.org/10.1057/s41272-020-00269-9
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