The great distribution debate

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Five distributors and four hoteliers gathered together to debate third party distribution policy at an exclusive roundtable discussion event organised by Arabian Travel News at the Hilton Dubai Creek last month.

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Five distributors and four hoteliers gathered together to debate third party distribution policy at an exclusive roundtable discussion event organised by Arabian Travel News at the Hilton Dubai Creek last month.

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Five distributors and four hoteliers gathered together to debate third party distribution policy at an exclusive roundtable discussion event organised by Arabian Travel News at the Hilton Dubai Creek last month.

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Five distributors and four hoteliers gathered together to debate third party distribution policy at an exclusive roundtable discussion event organised by Arabian Travel News at the Hilton Dubai Creek last month.

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Guy Epsom, regional director of sales & marketing – Arabian Peninsula, Hilton.

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Jeff Strachan, area director of sales & marketing, Middle East & Africa, Marriott.

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Andreas Plum, online distribution & field marketing manager, Middle East, Starwood Hotels & Resorts.

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As contentious issues go, the third party distribution policy of hoteliers is one that has been debated for many years.

At a time when competition is fierce and online travel bookings are growing, few hotel groups or independents can survive without the aid of third party distributors, whether they are tour operators, travel agents, wholesalers, online travel retailers or destination management companies, and the value they place on each of these outlets and what rates they give them is being constantly reassessed.

But as hotels look to attract direct online sales, cut out distribution costs and offer customers the best rate possible, their third party distribution policies are becoming more and more ruthless.

Perhaps one of the most aggressive perpetrators of a stricter distribution strategy is Hilton, which a few years ago announced plans to clamp down on distributors selling room-only rates that conflicted with Hilton.com prices. Hilton has said it was happy to give out net rates to distributors that package the product with other components and market it, but refused to give net rates for room only distribution unless the rate was pre-agreed and did not conflict with Hilton's best rate guarantee.

This resulted in some third parties refusing to sell Hilton products. Wholesaler Gullivers Travel Associates (GTA) for example still sells Hilton products B2B but not B2C (to its consumer web sites including Octopus Travel, ebookers and Orbitz).

In February, ATN interviewed both parties who conceded the current standoff was beneficial to neither party.

As a result, ATN and its sister publication Hotelier Middle East decided to organise a roundtable involving senior representatives of Hilton, GTA and seven additional hoteliers and distributors.

The group met at Hilton Dubai Creek on April 10 for a power breakfast followed by a two-hour roundtable discussion moderated by ATN.

Participants concurred that there was no one solution to the problem and all agreed both hoteliers and distributors need to develop the technology to connect seamlessly with one another.

Hoteliers emphasised the need for price transparency in the market and noted the trend towards "one global rate".

Distributors claimed they understood the hoteliers' strategy to control distribution but argued there was no ‘one rate fits all' strategy and that each relationship should be assessed individually in terms of net rates and commission offered.

The debate Shane Collier, regional manager Middle East, hotel division, Gullivers Travel Associates (GTA) noted despite ongoing disagreements over third party distribution strategies, "no one from the hotels' point of view has managed to find a solution to present to the industry and say ‘this is the way forward'".

He claimed some hotel groups were very direct about the way their rooms were sold on the internet, while others were sitting on the fence "to see which way the industry is going to go because they don't want to miss out on certain opportunities".

Collier also noted that distribution policies should be adapted according to market because "what would work in Europe might not work in the Middle East and what would work in Dubai may not work in other cities in the Middle East".

Guy Epsom, director of sales & marketing - Arabian Peninsula, Hilton, told Collier the issue was "far bigger than just the internet and far bigger than GTA and Hilton".

"This is about the way technology is moving forward," he said.

"What is happening is that the whole industry is moving towards seamless connectivity whereby there will be one deal made for the whole world for one company."

He stressed that his aim was to "ensure our rates are distributed fairly".

"The original model started many years ago where rates were offered to tour operators and wholesalers because they were creating expensive brochures and distributing those brochures and were actually marshalling people onto planes and ships, so we gave them an advantage in the rate - often as much as a 30% - because of the expenditure they were making to distribute our products. With technology as it is now, it is much cheaper to distribute our rates and market our products," he said.

"What we don't want to see is that rate with a 30% difference being sold cheaper than our best rate guarantee, or being marketed as room only online where we are losing our 30% for no good reason."

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