Distribution Channels in Hotel Operations Management

This document provides a literature review on distribution channels in hotel operations management, focusing on their effectiveness in revenue management. It also analyzes the distribution channels used by Hilton and Marriott hotels, highlighting the use of online and electronic channels to increase sales and profitability. The document discusses the importance of distribution channels in the hospitality industry and their impact on customer loyalty and profitability.

HOTEL OPERATIONS
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Literature review..........................................................................................................................3
Analyses of distribution channels used by two brands................................................................3
REFERENCES................................................................................................................................1

INTRODUCTION
Distribution channels are the route that are used by companies as revenue management
strategy (Burningham and et.al., 2020). In the recent time competition is very high in hospitality
industry and many people are giving preferences to online bookings and reservations. Current
study will review literature of other authors on various distribution channels and their
effectiveness in revenue management. Furthermore, distribution channels of two hotels Hilton
and Marriott will be compared and proper analyses will be done of these channels.
MAIN BODY
Literature review
According to (Malik and Ullah., 2019)A distribution channel is the chain of the business or
intermediaries through which companies goods and their services passes until their product
reaches to the customers. There are different channels are included in this distribution channels
such as – retailers , distributor , wholesalers even the intranet. It is important for the business to
make look relationship with those distributors, so they can add some values in the product, and
they can make profit from selling of product and services. Distribution channels are the part by
which all the services and goods must travel to arrive at the intended consumer.
As per the view of (Vicky., 2020) It is important for the hotel's management to look for
their distribution channels to increase and enhance the sale of the hotel. Most of the online
system helps hotels a lot in attaching and attracting the guest to the hotels. This helps hotels to
increase their profit more , there are some hotel websites who are mediator and provide online
booking to the travellers. This makes easy for the hotels to guest in the hotels and people use
those sites to get accommodation services. Almost every hotel collaborate with those online
travel booking sides. Technology always helps to increase the revenue and this trend helping this
industry to take growth in the market. Distribution channels of the company have many
advantages which affect the business and company can show their presence in the market.
Distribution channels are an approach currently accepted by many hotels in this industry, so they
can increase their sales and revenue of the hotel. The matter of the fact is that the goals of the
hotels is to make better visibility on all the channels of distribution. So customers can find them
easily, and they can take accommodation services for them. It directly affects von the companies'
profitability, and they can show their presence in the market. Having good distribution for the
hotels means high revenue and reputation among the guest and their customers. They can

connect with the customers and gain customer loyalty. Some marketing distribution channels
who help hotels to provide their information to the trailers and guest which show the facilities
provided by the hotels which attract the customers to take their services. Reaching new
customers means increase in the profitability and reputation of the hotels so it is important for the
hotels to make good distribution network, so they can take competitive advantages in the
Hospitality industry.
According to (Rance and et.al., 2017) there are many distribution channels in Hospitality
industry which is helping hotels to earn high revenues and take competitive advantages in the
market. One of them is an official website – most of the people look for the hotel's website, so
they can know about the services provided by the hotels and it is important for them to make
their worn official website so customers can look and make booking in the hotels. Booking
engine- Ux is the most important factor which shows experience of the guest. It can be
determined whether potential guest bounce or book after arriving at the hotels booking engine.
Social media – this is one of the effective distribution channels who have provided high growth
to this industry. Companies run campaign on the social media platform to attract travellers. This
distribution channels helps to make new customers and also helps to increase profitability of the
hotel. Travelling sites- another most important channels which provide growth in the sector is 3
party applications.
Most of the common types of the distribution channel in this industry is official website.
Almost every hotel have their own website to attract customers to take competitive advantages.
When travellers look for the hotels the check hotels in the areas where they are going, it helps
them to know which hotel is best and nearby the destination. It has huge role to make this
industry successful and increase profitability of the hotels.
Analyses of distribution channels used by two brands
Distribution channel can be defined as path which is used by companies to deliver its goods
to end users. Firm can make direct distribution or indirect distribution channels. There are many
kinds of distribution channels such as wholesalers, retailers, online etc.(Malik and Ullah, 2019).
Hilton hotel
Hilton hotel is one of leading and well known hotel that is serving well to consumers
across the world. Firm is using online and electronic distribution channels to interact with its
guests and to manage room reservations. Company has around 2000 hotel properties globally

hence it is very difficult to deal with large consumers manually hence entity has used online or
direct distribution channel. One of the great benefit of this tool is its price integrity. Hilton has
developed its standards for brand (Dieck, Fountoulaki and Jung, 2018). Company is providing
quality and luxurious services to wide range of consumers hence it charges that much amount
and all this detail are clearly written on its website and other online sites. Individual can also use
third party online channel to confirm its rates of rooms and other services. Hence customers
always get value for money in Hilton hotel.
Direct distribution channel through online site aids Hilton in brand enhancement. As
consumers can view its website to make their purchase decision, they can get upgraded benefit if
they use online booking. Online reservation process of Hilton is very smooth and it easily fulfil
needs of consumers. When individual search for best hotels online then individual can find the
name of Hilton along with its all features. Hilton HHonors members can make their profile and
can sign any time to re-book their past reservations (Eriksson and et.al., 2020).
Figure 1revenue to cost ratio analyses
(Source: Distribution Channel Analysis, 2020)
Hilton has recently entered into online merchant model program with Expedia Inc, now
participants can get all details of room prices, availability of room on its central reservation
system. Cost of using online sites or electronic distribution channel is quite low as compare to
indirect distribution channels (Rance and et.al., 2017). Hence Hilton is taking advantage of it and
managing its revenues in effective manner. Hilton uses OTA system (Online travel agents) for
booking of rooms. Statistical records show that more than 64% hotel bookings are done through
this system.

Figure 2Conversation rate
(Source: Distribution Channel Analysis, 2020)
Marriott hotel
This is the global brand that serves its guests well and ensure to make them satisfied with
services of hotel and resort. It is using GDS system (Global distribution system). This is the wide
network that generally used by big companies that are having strong position in market. This
distribution channel helps the firm in getting connected with wide range of customers
internationally. This tool aids hotel in making balance in room rates by this way enterprise can
maintain healthy relationship with its consumers and can enhance revenues of organisation. This
GDS system allows hotel in increasing sales and remain in competition. Many tour operators are
using this GDS system and they book hotels for travellers online, as compare to 2010 there is
8.3% demand hike in hotel bookings by using global distribution system.
(Source: Distribution Channel Analysis, 2020)
Major GDS are such as Sabre, Galileo etc. This aids Marriott hotel in making close connection
with the travellers and enhance their reservation rate for rooms. This is helpful tool and its
average cost in the year 2010 was 20% whereas in 2015 it reached to 15%. In the year hotel

room revenues was 300000 (Vicky, 2020). Hotel can manage large data through this channel
easily and it needs not to worry about services to consumers. As consumers can search about
room separately and hotel services. Being a global brand, Marriott hotel always maintain
automated connection with suppliers. This is beneficial application to raises profitability of
company and also support in enhancing occupancy rate of hotel rooms.
CONCLUSION
As per the above report has been provided literature review of the distribution channel
and it has been included effectiveness of those channel on the Hotel revenue. This section has
been analysed approaches of the distribution channel and most common approach amongst all. In
the other analysis and discussion section of this report has been analysed distribution channels of
Hotel Hilton and Marriott. It has been compared both the hotels on the bases of their distribution
channels.

REFERENCES
Books and journals
Burningham, W.J. and et.al., 2020. Recomposing survey questions for distribution via multiple
distribution channels. U.S. Patent 10,547,709.
Dieck, M. C. T., Fountoulaki, P. and Jung, T. H., 2018. Tourism distribution channels in
European island destinations. International Journal of Contemporary Hospitality
Management.
Eriksson, T.A. and et.al., 2020. Wavelength Division Multiplexing of 194 Continuous Variable
Quantum Key Distribution Channels. Journal of Lightwave Technology.
Malik, A. and Ullah, K., 2019. Distribution Channels. In Introduction to Takaful (pp. 121-127).
Palgrave Pivot, Singapore.
Rance, P. and et.al., 2017. System and Method for Distributing Web Events via Distribution
Channels. U.S. Patent Application 15/237,509.
Vicky, K., 2020. Exploring the Essence of Gastronomic Tourism and Its Distribution Channels
in Greece. In Cultural and Tourism Innovation in the Digital Era (pp. 101-110). Springer,
Cham.
Online
Distribution Channel Analysis. 2020. [Online]. Available through:
<https://clients.theygsgroup.com/hsmai-uploads/DCAbook_Full.pdf>
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