Hotel Revenue Management: Distribution Channels and Strategies

This report delves into the crucial aspects of hotel revenue management, emphasizing the strategic use of distribution channels to maximize profitability. The introduction defines revenue management within the hotel industry, highlighting its focus on pricing, distribution, and guest experience to optimize revenue. It then explores distribution channels, including Online Travel Agents (OTAs), retail travel agents, and direct selling, and their impact on revenue. A literature review examines the effectiveness of various distribution channels, emphasizing the role of technology and customer interaction. The report analyzes the link between distribution channels and revenue management, advocating for effective channel management strategies. Two case studies are presented: Four Seasons London's use of social media and InterContinental Group's reliance on its website for distribution. The conclusion summarizes the key findings, emphasizing the importance of channel management for corporate relations, sales optimization, and revenue maximization. Component 2 is covered in a PPT and the report concludes with a comprehensive list of references.

Hotel Revenue
Management
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Table of Contents
COMPONENT 1..............................................................................................................................3
Introduction to the assignment...............................................................................................3
Introduction to general topic of distribution channels within hotel sector.............................3
Literature review focusing on effectiveness of distribution channels to maximise hotel
revenue...................................................................................................................................3
Distribution channels and their link to hotel revenue management along with literature review
on best approach to managing distribution channels..............................................................4
Identification of two case study hotels and analysis of their distribution channel.................5
Case study 1 Four Seasons London use social media as distribution channel......................5
Case study 2 InterContinental Group of Hotels use website as distribution channel............6
Conclusion which summarises the main points of this report................................................6
COMPONENT 2..............................................................................................................................6
Covered in PPT.......................................................................................................................6
REFERENCES................................................................................................................................7
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COMPONENT 1
Introduction to the assignment
Revenue management can be referred to as the strategic course of action undertaken by
an organisation in relation to aspects such as pricing, distribution and more with an aim of selling
the perishable stock to appropriate guest at right moment for boosting overall revenues driven by
the company (Wang and Huang, 2020). This concept in context of hotel industry also takes into
picture amenities as well as food and beverage facilities. Each and every traveller has a
maximum amount that they can offer to the hotel organisation, revenue management is
concerned with capturing the maximum value possible. Usually this is done by way of
influencing the guests for booking directly, purchasing extensions, up selling and becoming
return visitors.
Introduction to general topic of distribution channels within hotel sector
Within the confines of hotel sector, it has been determined that distributions channels are
the set of intermediaries which are leveraged by accommodation service providers prior to its
reach to customers. Such chain may be short like direct selling from hotelier to customers or
longer like capitalising upon Online Travel Agents (OTAs), Retail Travel Agents, wholesaler,
information centres and many more (Kim, 2020). This encompasses management of booking
restraints, rates of rooks, assurance regarding constant up gradation of stock of hotels and many
other such activities.
Literature review focusing on effectiveness of distribution channels to maximise hotel revenue
It is essential for a hospitality company to gain effective success in its each operation and
process like any other kind of business. The activities which are being undertaken in day to day
business in a hotel are directly aimed at the maximization of its profitability. Thus it can be
understood that from numerous ways of executing the task the hotel is obliged to choose the
most distinct and effective approach to perform its function and to ultimately gain the enhanced
amount of revenue from its turnover (Anggani. and Suherlan, 2020). Thus the different channels
of distribution can be certainly evaluated to analyze and enhance the effectiveness of them within
the confines of a hotel with a view forward to achieve the organizational objectives and goal in
terms of profitability that could be seen as the maximization of the revenue. The contribution of
technology within the hotel and its procedural departments is very extensive. It can be observed
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as from past few years the technology and its uses in an hotel has evolved in a very quick and
influenced way The current phase of hospitality industry is highly dependent on technology and
its measures. The business was lacking some effective tools in its previous era that was of the
minimum resource to promote the brand, monitoring of overall premises in a significant and
single way, building strong and healthy relationship with the consumers and so on. Thus with the
adaption of current technological advancements in the hotels and its various channels of
distribution, it is certainly proving itself as the effective measure that is capable of fulfilling the
need and demand of the business. Along with that it does also provides multiple innovative as
well as attractive approaches to the hotel (Baumgart, 2020). This leads to the effective and
profitable growth of the business. The determination of effectiveness of any sort of distribution
channel can be evaluated as per the size of it and the level of customer interaction in the period
of its implementation and use. The significant performance of each and every channel ultimately
lead to the encouragement of hotel’s business and with that the firm will get the effectiveness
and highly measurable enhancement in the revenue.
Distribution channels and their link to hotel revenue management along with literature review on
best approach to managing distribution channels
With the passage of time, hotel sector across the globe has been hit by a number of
complex changes. Such alterations have especially been noted within the domain of hotel
channel distribution system. In this relation, it has been acknowledged that distribution channels
can be seen as the intermediaries that are taken into use by hoteliers and other corporate sectors
before reaching to its customer base for the purpose of influencing them in an effective manner
to engage in repeat purchases. In this relation, a number of channels are being used by hotels
such as online travel agency, metasearch websites and global distribution system and so on. The
better selection of the distribution channel for the hotel may take a bit of time and other resource
to analyse the most possible and profitable structure but it does act well later in the future for
enhancing the effectiveness of hotel (Gupta and Sharma, 2020). As the good and effective
distribution channel is wholly responsible to cope with the high demands and certain fluctuation
in the market. Along with that the wide network of these channels the organization get the
capability to capture the more share of targeted market. The effective function of respective
distribution channel is to maintain the transparency of the hotel within its customer base so that
they can chose the options to reserve the rooms in hotel and to make the bookings for the visits
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as well as for the accommodation. The better the structure of distribution channel of the hotel
will be, the more the chances of customer drive will be increased. Thus along with that the
ultimate reputation and expansion of the business will see a growth and positive opportunities in
respect of the hotel. Online distribution channels such as social media, online travel agencies and
SEO are viewed as the best approaches to carrying out distribution within the confines of hotel
sector (King and Tang, 2020). The most common type of distribution channel which is used by
hotels across the globe is social media. This is leveraged looking upon its capacity to reach large
number of individuals in a comparatively short span of time. Also, it is a cost effective
distribution channel that can be used by the hotel industry to appeal to people in a lucrative
manner and convey the organisational content or message to them. This put a significant
influence over them and persuades them to undergo repeat purchases.
Identification of two case study hotels and analysis of their distribution channel
Four Seasons London and InterContinental Group of Hotels are two British hospitality
organisation engaged in provision of accommodation services to travellers. Both the hotels seek
to meet the needs and expectations of customers by providing them best in class services through
which they are persuaded to undergo repeat purchases (Minor and Bratec, 2020). Both of these
hotels make use of effective distribution channels so as to target the customers in a strategic
manner and retain them in the long run.
Case study 1 Four Seasons London use social media as distribution channel
Four Seasons London makes use of social media campaigns and direct booking ads as the
distribution strategy to gain the attention of large number of persons (Agents irked by Four
Seasons' direct-booking social media ads, 2020). These are direct distribution channels which
provide assistance in communicating the message of the brand among a wide audience in a very
short period of time so that they can be convinced to experience the services provided by the
organisation. These channels are selected by the respective hotel looking upon its extensive reach
and its effectiveness in persuading the people to experience the offerings provided by the hotel to
customers. Four Seasons especially make use of Facebook as the social media platform to run its
campaigns and gain the attention of people towards its impeccable and flawless customer
service.
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Case study 2 InterContinental Group of Hotels use website as distribution channel
Over the course of time, the major issue which was creating barrier in the booking and
reservations of the rooms in this hotel was the lack of technological means. Further, the manual
booking of the hotel room with the passage of time had become a complex and less reliable way.
However, with the use of current technologies in the booking and reservation such as the use of
internet and online portals for the room booking, InterContinental Group of Hotels has found out
a distinctive solution to this. The online booking over the organisational website gives more
assurance and reliability to the consumers as well as it does help the organization to get the
boundless reach of its consumers (Hodari and et. al., 2020). Further, it is certainly more helpful
with the international consumers as it encourages them for tourism and travel and choosing this
hotel organization for the hospitality service and their accommodation. This makes the hotel
more popular as well as it ultimately helps in increasing the shares of its revenue in the long
term.
Conclusion which summarises the main points of this report
As per above discussion, it can be said that revenue management circumscribes the measurement
of what customer belonging to diverse set of segment intend to incur. This can only be executed
through constant monitoring as well as measurement of supply and demand statistics of the
rooms within a hotel. In addition to this, distribution channel management in context of hotel
industry can thus be seen as the process of effectively carrying out the management of diverse
channels used for the purpose of distribution by hotels. Thus, effective hotel channel
management strategy can be viewed as being relevant as well as significant for maintenance of
corporate relations and partnership which are essential for optimisation of sales and
maximisation of revenue figures of the hotel industry.
COMPONENT 2
Covered in PPT
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REFERENCES
Books and Journals
Klein, R. and et. al., 2020. A review of revenue management: recent generalizations and
advances in industry applications. European Journal of Operational Research, 284(2),
pp.397-412.
Haynes, N. and Egan, D., 2020. The perceptions of frontline employees towards hotel
overbooking practices: exploring ethical challenges. Journal of Revenue and Pricing
Management, pp.1-10.
van der Rest, J.P., Wang, L. and Miao, L., 2020. Ethical concerns and legal challenges in
revenue and pricing management.
Buhalis, D. and Yen, E.C.S., 2020. Exploring the Use of Chatbots in Hotels: Technology
Providers’ Perspective. In Information and Communication Technologies in Tourism
2020 (pp. 231-242). Springer, Cham.
Leung, R. and Wong, E., 2020. Will you pick me again? International Hotel Chains Brand
Loyalty Reflection from User Reviews. E-review of Tourism Research, 17(4).
Sota, S., Chaudhry, H. and Srivastava, M.K., 2020. Customer relationship management research
in hospitality industry: a review and classification. Journal of Hospitality Marketing &
Management, 29(1), pp.39-64.
Wang, T.C. and Huang, S.L., 2020. Benchmarking tourist hotels performance for strategies
development. Current Issues in Tourism, pp.1-18.
Kim, Y.R., 2020. The impact of spatial clustering on the labour productivity of the UK tourism
and hospitality industry (Doctoral dissertation, University of Surrey).
Anggani, M. and Suherlan, H., 2020. E-reputation Management of Hotel Indusrty.
Baumgart, P., 2020. Digital Pricing. In Entrepreneurial Opportunities. Emerald Publishing
Limited.
Gupta, N. and Sharma, J.K., 2020. Fuzzy multi-objective programming problem for revenue
management in food industry. Journal of Revenue and Pricing Management, pp.1-6.
King, B. and Tang, C.M.F., 2020. Training Hotels in Asia: An Exploration of Alternative
Models. Journal of Hospitality & Tourism Education, 32(1), pp.43-54.
Minor, K.B. and Bratec, M., 2020. Management and Implications of Daily Deal Promotions in
the Hospitality Industry: Toward Their Holistic Understanding. In Digital Marketing
Strategies for Tourism, Hospitality, and Airline Industries (pp. 156-178). IGI Global.
Hodari, D. and et. al., 2020. The role of hotel owners across different management and agency
structures. International Journal of Hospitality & Tourism Administration, 21(1), pp.92-
113.
Online
Agents irked by Four Seasons' direct-booking social media ads. 2020. [Online]. Available
Through:<https://www.travelweekly.com/Travel-News/Travel-Agent-Issues/Agents-
irked-by-Four-Seasons>.
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