This document discusses distribution channels in the hospitality industry. It begins by defining distribution and describing how it relates to the marketing mix elements of place and price. It then discusses how distribution has evolved with revenue management and internet marketing. It describes different types of distribution channels and intermediaries involved in getting customers to products. It discusses challenges like costs, technology changes, and managing diverse inventory. The goal is to optimize revenue through selling the right product to customers using the right distribution channel.

1. Place = Distribution
 The 4Ps
 Product, Price, Place, Promotion
 What the “P” of Price is to Revenue
Management, the “P” of Place is to
Distribution

2. Distribution
Today “distribution” in the hospitality industry
generally references transient sales today
Revenue management and distribution merging
together
Internet marketing includes distribution issues

3. Distribution Channels
 A distribution channel - set of
independent organizations involved in the
process of making a product or service
available to the consumer or business user
 Used to move the customer towards the
product or the product to the customer
 Organic development of an industry

4. Distribution Channels
DISTRIBUTION CHANNELS
People and firms involved
in the transfer of title to a product
as the product moves from producer to
ultimate consumer or business user
DISTRIBUTION CHANNELS
People and firms involved
in the transfer of title to a product
as the product moves from producer to
ultimate consumer or business user
Producers Middlemen
Final
Consumer
Or
Business
User

5. Copyright 2007, Prentice Hall,
Inc. 10-5
Marketing Channel or Distribution
Channel
 A set of interdependent organizations
involved in the process of making a product
or service available for use or consumption
by the consumer or business user.
 Wholesalers
 Distributors
 Dealerships
 Retailers

6. Distribution also describes
 Locations for hotel brand distribution
 Franchising
 Ownership
 Management contracts
 The sales staff and system
 Group sales or volume accounts
 Reservations and transient sales
 National sales offices
 Representation firms, consortia

7. Distribution Channel Functions
 Information: consumer behavior “search
stage”
 Promotion: messaging
 Negotiation: price and other terms
 (how is this done online?
 Physical distribution: think e-tickets?
 Prospecting: finding, communicating, and
tracking prospective buyers

8. Digitalization and Connectivity
 Digitalization - converting text, data,
sound, and image into a stream of bits
that can be dispatched at high speeds
from one platform to another
 Connectivity - building networks
connecting people and companies;
social and mobile convergence

9. Direct versus Indirect Channels
 Direct Channels
 Employed sales staff
 National sales staff
 Brand.com
 Voice/CRS/Mobile
 Indirect – Intermediaries
 Why use them?
 Why so many of them?

10. Getting the Customer to the Product
 Reservation
services
 Representation
firms
 Consortia
 Incentive travel
organizations
 Corporate travel
management
 Global distribution
systems (GDS)
 Traditional off-line
travel agents
 Central reservation
systems (CRS)
 Internet channels
 Websites

11. Push vs. Pull strategies
 Pushing the product “down” through the
distribution channel TO the customer
 Incentives to travel agents and intermediaries
 Pulling the customer “up” through the
distribution to the channel
 Traditional media/private sales/CRM

12. Why Use Intermediaries?
 Selling through wholesalers and retailers usually is
much more efficient and cost effective than direct
sales
 Fragmentation of the travel purchase and travel
inventory, transportation (idea of “lift”), hotels,
attractions, meeting facilities, restaurants, and so on.

13. Travel AgentsTravel Agents Tour WholesalersTour Wholesalers
ConciergesConcierges Specialists:
Brokers & Junket Reps
Specialists:
Brokers & Junket Reps
InternetInternet Hotel RepresentativesHotel Representatives
Consortia & Reservations
Systems
Consortia & Reservations
Systems
Global Distribution
Systems
Global Distribution
Systems
National, State,
and Local Tour Agencies
National, State,
and Local Tour Agencies
Marketing Intermediaries
©2006 Pearson Education, Inc. Marketing for Hospitality and Tourism, 4th edition
Upper Saddle River, NJ 07458 Kotler, Bowen, and Makens

14. E-Commerce & E-Marketing
 E-commerce involves buying and selling
processes supported by electronic means,
primarily the Internet
 E-marketing is company efforts to
communicate about, promote, and sell
products and other services over the Intranet;
also web or Internet Marketing

15. E-Commerce Domains
 B2C (business to consumer)
 Branded websites
 B2B (business to business)
 Passkey
 C2B (consumer to business)
 User groups
 C2C (consumer to consumer)
 Blogs; review sites are blends of above

16. Internet Intermediaries
 History of the internet as a discount channel
 Price and convenience key drivers still
 Dominance about inventory allocation
 Consistency of all 4Ps by channel
 How Product is described
 Pricing parity
 Channel profitability
 Communication needs to vary by segment (channel)

17. Major Issues/Challenges
 Costs have risen as has competition
 Global differences in systems
 Technology also flattening this
 System hard to change and complex to manage
 Historical controls of GDS, OTA
 Diversity of travel “parts” makes all of the
distribution points part of the experience and if an
intermediary fails, so does the experience

18. Major Issues/Challenges
 Fragmented owner-manager relationships
 Capital costs for technology and talent
 Travel agents reinvention imperative remains
 Battle of the brands—brand channels that is!
 Big data: not new
 Proliferation: more more more more
 Mobile?
 Monetizing social media

19. Evaluation of Channels
 Control and cost of each channel
 Tracking of statistics to better negotiate
contracts in the future
 Understand when and why to use a channel
 Good channel management ensures
customer satisfaction AND revenue
optimization AND profit maximization

20. Goal for hotels in distribution
 Q: What is the definition of revenue
management?
 A: Selling the right product to the right
customer at the right time for the right (read:
maximum) price!…by the right channel!

21. Thank You