wbe.travel conducted an extensive research regarding the challenges faced by the Travel Wholesalers and Destination Management Companies targeting a global audience with a special focus on the APAC region and presented its findings at this year’s ITB Asia travel trade show.
We have started our paper by defining the industry scene, market particularities and trends and then came up with practical solutions for each of the main areas of their business.
Defining the industry scene
- Hotel Wholesalers are companies that specialize in reselling hotel rooms in bulk to other travel companies on the B2B market and do not work directly with the end-customers on the B2C market
- GDS systems (GDSs) are companies that specialize and are often synonymous to flight booking systems which have combined hundreds of airlines under their portfolio, but more recently have started to become marketplaces for hotel bookings as well (AMADEUS, SABRE, GALILEO, WORLDSPAN)
- Digital Travel Sales are bookings made online (via PCs or Mobile Devices) for airlines, car rental, cruise, hotel, accommodations (including Airbnb) and transportation
- Technology Marketplaces are IT companies that serve a large number of hotel B2B wholesalers thus becoming an Amazon like platform where wholesalers can thrive and sell at their own rates in the same ecosystem
- Channel Managers are IT companies that allow hotels to distribute their rates to a large number of websites, including GDS and major OTAs
Old business vs. New business – The dominance of OTAs and GDSs in hotel bookings
OLD BUSINESS. In the not so distant past, hotels used OTAs for selling excess or last-minute inventory while GDSs were used exclusively for booking flight tickets.
NEW BUSINESS. Right now, as we speak, OTAs account for more than 70% of APAC hotel bookings in 2018 and in the meantime, GDSs have handled 68 Million hotel bookings in 2017.
APAC – the rise of a new leader in digital travel sales
As we stated in the previous article , according to e-Marketer ASIA-Pacific countries have surpassed and will dominate the Digital Travel Sales from 2017 onwards.
How can Hotel Wholesalers survive and grow in this environment?
There are 4 major directions the hotel wholesalers should dedicate their efforts and investments in:
This can be done by choosing to target and work in markets where traditionally people cannot use OTAs or are reluctant to use them and prefer cash transactions. Another way is to offer more than just hotels, expand the accommodation inventory, make exclusivity agreements and build up branded websites for B2B partners who have been supporting their business.
Copy the 4 most important pillars of the OTA B2C models and apply them to B2B channel:
1. Choice: partner up with a local Destination Management Company so as to increase the product offering and dominate the region of interest.
2. Service: try improving your services and instil performance targets for your support team.
3. Convenience: another successful way that large OTAs use is to adopt multiple payment options like instalments or loyalty points-based systems.
4. Trust: Gain more trust from clients and business partners and open up a 24/7 support chat system to give them the help and attention they need.
By choosing to distribute your contracted rates and inventory with a GDS you should know that GDSs actually have huge investments in travel technology on a yearly base. For example, you can integrate your own unique properties with multiple GDS systems – such as AMADEUS LinkHotel and use their immense investment in market share to your own advantage. Only Amadeus alone invested 5,4 Billion USD in their Research and Development since 2004.
You can manage the entire chain and thus remove the headache of configuring and using complex technology systems – like the extranets of each GDS or the relationships with multiple channel managers, as hoteliers still lack the skilled manpower necessary in working with multiple engines.
Take a consultative approach – Handle data mapping, content, prices, rate plans and the pushing of prices to any type of the meta search engines like HotelsCombined, Trivago, or Google Hotel Finder.
Attend all relevant industry travel shows and meet the main Technology Platforms which are exhibiting as well find out what IT houses are powering the major wholesalers in your desired markets.
Create a welcome pack and a list of benefits of your portfolio when pitching IT houses and find out if they are running a Preferred Hotels Wholesaler program inside their platforms.
Think about setting aside a budget and IT resources necessary in order to support the integration process for each of the Tech Marketplaces.
Have in mind that many potential corporate clients actually have their own negotiated rates with hotels and try offering them a solution so they can book their own rates on your B2B across multiple hotels.
Travel Policies – Corporates need to control and standardize travel spending across departments. By offering them an engine which allows the Management department to have their own rules simplifies their day to day work.
Try out an expense Reports & Business Intelligence. Offering up insights about yearly travel budgets can make your offering more valuable to corporates.
The challenges of scaling a hotel wholesaling business can be overcome with a use of modern mix of distribution channels. wbe.travel has a proven track record of helping DMCs and Wholesalers become true leaders in their markets and successfully transition into online distribution.
Paper by Radu Ciubotaru, Director of Business Development
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