The masters thesis examines the impact of modern technology on distribution services in the hospitality industry. It discusses how technology has changed distribution channels from early computer reservation systems to powerful online travel agencies and the growing mobile channel. While these changes provide new options for hotels, they also increase dependence on intermediaries and commissions. The proliferation of channels contributes to complex distribution management and price transparency empowers customers to search for lowest prices, negatively impacting hotel revenues. To succeed, hotels must optimize their direct distribution channel and choose profitable partners to secure long-term revenues through a coordinated multi-channel marketing strategy.

1. University of Zagreb Ivana Bulic Beckett
Faculty of Economics Masters Thesis
"Impact of Modern Technology on Distribution of Services in
Hospitality"
SUMMARY
The distribution channel landscape is ever-changing under the influence of modern
technology: from the beginnings of electronic distribution with the first computer
reservation system, to the increasingly powerful global online travel agencies of today
that shape and influence demand and the growing importance of the mobile channel in
hotel room reservations. For hotels, these changes bring new options in distribution
channels, as well as the opportunity to reduce their dependence on intermediaries.
However, despite realistic expectations that costs of distribution will decrease,
hoteliers face increasing costs, especially commissions of online travel agents. Global
consolidation processes have strengthened the OTAs’ market positions and have
helped in building extremely powerful players in distribution that determine the rules
of the game for hoteliers. The proliferation of the types, models and the sheer number
of distribution channels contributes to the growing complexity of distribution channel
management, especially in choosing distribution partners. Modern technology
changes the way in which consumers shop for travel products, with most of the
process for many consumers now being conducted online. Consumers are more
sophisticated and more demanding, but at the same time they search for the lowest
prices. The transparency of the online environment enables lowest price searches for
consumers. However, the resulting commoditisation of hotel rooms negatively
impacts on hotels’ revenues and profit, even if they implement strict rate parity and
resist discounting. Instrumental to the hotels’ success will be their ability to use the
advantages of their direct distribution channel and choose distribution partners that
will provide an optimal distribution mix. An analysis of each distribution channel’s
profitability is crucial to choosing distribution partners that will secure revenues for
hotels in the long run. The convergence of marketing and media channels, as well as
hyper-interactive consumers, emphasize the importance of a coordinated multi-
channel online marketing strategy in order to benefit from the synergy of the
marketing message and direct demand to the hotels’ direct distribution channel.