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Hoteliers' Voice S3E8 - Key trends in hotel distribution

Updated: Nov 29, 2023

Today's Hoteliers' Voice takes on our guests specialist topic, as we explore the world of distribution. Joining us is Vineeth Purushothaman, Regional Director, Commercial Planning & Distribution EMEA, at Wyndham Hotels & Resorts. We will be discussing the key trends to watch in distribution in 2023 following his article published on LinkedIn, see below. In this episode we cover:

  • The Bleisure market

  • Regulatory challenges

  • Cybersecurity

  • Fintech


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Programme Notes


This episode has been automatically transcribed by AI, please excuse any typos or grammatical errors


Ryan Haynes:

Hello and welcome back to Travel Market Life, Hoteliers’ Voice season 3. In today's episode, we are featuring beneath Paris Hoffman, Regional Director, Commercial Planning, and Distribution EMEA for Wyndham Hotels and Resorts. We'll be talking about distribution following his article ‘18 Trends to Watch in Hotel Distribution 2023’ and Beyond from His LinkedIn, which you can find in the link below. In the description, we'll be covering our conversation, the pleasure market, regulatory changes, cybersecurity and FinTech. But before we do, I'd like to thank you very much for joining us on this journey with Travel Market Life.


Ryan Haynes:

It's been an incredible three years and we've really grown the last six months have been phenomenal with nearly double the growth in audience. So, if I could just ask you, please, if you could leave a review, give some ratings to the podcast, share it with your friends, your colleagues, your peers across LinkedIn through email, and just basically recommend us, you know, we are on a fantastic road ahead, And I, really hope to also meet some of you. Now, coming up over the next few months in September, I'm going to be hosting the ACE Hotel Tech Summit in London. I will also be at the Independent Hotel Show London, where I'll be moderating a technology discussion on AI as well as hosting three separate sessions at the social business space.


Ryan Haynes:

So, check out the program for more information. I'll also be back at the International Hotel Technology Forum 2024. Thank you ever so much again. I've really enjoyed serving you these last three years and cannot wait for the coming few years ahead of us.


Ryan Haynes:

Vineeth, thanks ever so much for joining us today to look at distribution now it's an area that has completely changed over the last 10 or 15 years. Why is there such an art to distribute today?


Vineeth Purushothaman:

Hey Ryan, great to be here. Thanks for having me. So, distribution, I've got to sort of maybe reference it a little bit to what revenue management used to be probably about 20 years ago where it was a real dark art where people said, oh, revenue management, you know, this is something mysterious, we don't know what to do, how to do it, et cetera. And then, you know, 20 years fast forward, you know, you have a more sophisticated environment, you have revenue management systems, trained revenue managers or revenue management courses at university. Distribution suddenly has, you know, appeared as a sort of next wave of where the industry needs to be.


Vineeth Purushothaman:

And if you think about it, revenue management can only optimize and maximize once you have the top line revenue coming in. So where is your top line revenue coming in? And that's where distribution comes in. So, the distribution channels are, are key to driving that revenue that, you know, needs to flow into our, into the hotels and for the revenue managers to maximize it. So, I feel it's a turn of distribution to hold the limelight now, and there's lots to do. It's a messy business.


Ryan Haynes:

I mean, it's quite interesting what you say there because I mean, there are channel managers, can't you just leave them to do the job?


Vineeth Purushothaman:

Yeah, I mean, you could, channel managers have been around for a while. However, I think there is a better understanding of what, what needs to happen within the ecosystem. And also, it's constantly changing because it's not just the technology. So, if you look at property management systems originally that was just doing property management, whereas now they do, you know, channel managers are blended in, but then if you look at large hotel companies like Wyndham, channel managers are just not adequate to handle the volume of business and, you know, checks on ARI availability rates, inventory checks that are required. So yeah, I mean, it's far more than channel management is, is sort of the simple way to, to address and there are so many ways, so many parts of the ecosystem that that needs to be looked at.


Ryan Haynes:

Now within your article, you identified a number of key trends and factors that need to be considered when looking at distribution and optimising it. So, I want to look at some of those in our conversation, and I'm only going to pick up some of them because otherwise, this podcast will go on forever if we look at the whole 18. But for a summary for anyone, head to Bernice’s profile on LinkedIn and you can find his article ‘18 Trends to Watch in Hotel Distribution 2023 and Beyond’. So, the first one is pleasure. Now this is a market that everyone's been talking about really since the pandemic. I think we've seen the wheels really get into motion. Now what are you noticing and what are the key aspects that need to be considered from a distribution perspective?


Vineeth Purushothaman:

I think, Kevin, what a lovely word, right? Pleasure. We came up with it delightful, but guess what I mean, you know, said it does a job. So, we don't have to be fans of the word, but the reality is I think post covid and you know, over that period it's evolved quite a lot. It isn't particularly new. The word was if you think about the phrase was coins many years before, before that, but I think it has taken additional prominence because you know, Bleisure came very much back, business travel completely dropped out, and business travel is now picking up, but then the Bleisure continues to be important. So, there's a bigger blend of that business and Bleisure coming through.


Vineeth Purushothaman:

So, I mean, part of the challenge of course is when that blending has increased, how are we as hotel companies satisfying that, that requirement? And so there, there are different perspectives. So, product, the product, does it serve the mixed customer that we are getting? So, could it be a business traveller who's travelling and then wanting to stay, add on a couple of days maybe a family joins the person and that's sort of increasingly happening and also even the individual staying for longer? So, then you think, okay, now is the hotel room set up for both work and play?


Vineeth Purushothaman:

What does the product need to do? What, what kind of, you know, amenities do, do you need to have, do, do you need to have better coffee than just in esca granules? you know, so there's all kinds of questions even for regular hotels, let's say regular business hotels that you know, need to, need to sort of answer. So that's sort of from the product side, but also in the distribution of booking side of things, it becomes also challenging for travel management companies. So obviously travel management companies are there to serve a purpose, which is to capture and process the business travel requirements. But are they then in turn set up for capturing the Bleisure business?


Vineeth Purushothaman:

You know, does it go through the same channels? Do you book business travel for the first part of your trip through the TMC and then the rest of it through, I don't know, am I not OTA or through the hotel direct channels? So, those are sort of some of the distribution conundrums that need to be addressed. And, and obviously, it's not fully there yet because it's still evolving. So, I think that's, that's the distribution side. So, you know, you asked me earlier on saying, you know, why is distribution so important? Because how do we answer this, how do we set up the product? How do we set up rate plans? How do we set up, you know, all of these things in our systems and have our business structures evolving to meet that new requirement or additional requirements?


Vineeth Purushothaman:

So that becomes quite challenging cause it's not easy to address.


Ryan Haynes:

Yeah, because I mean the conversations that I've had with a lot of Hoteliers is that if it's a business hotel, they now need to be really thinking about the Bleisure traveller. And if it's been a Bleisure hotel, they need to be thinking about how they actually incorporate what the business traveller wants. And it, and you know, I would just think, well, it's a fusion of the two surely, but actually it seems that there are slightly different needs for a Bleisure traveller compared to just a pure business or a pure Bleisure traveller there.


Vineeth Purushothaman:

Yeah, absolutely. And I think understanding it is, and, and you can only find out over time. I mean, so it comes through the information that's obviously publicly available, but it's also the nature of your own product, your own location, your own services, you know, that are required because people are looking for slightly longer stays. And, I think, you know, as soon as you're staying longer then, you know, as we all have travelled and you know, we all feel limited in some ways about what's possible. So, it’s also their opportunities to have those additional sales, additional possibilities by talking about the destination, you know, what are the things that you need to look at, you know, pre-booking, you know, during the booking, post-booking and at this during the stay.


Vineeth Purushothaman:

So, you really have to break that out a little bit in order to be able to, to leverage, you know, that market. So, so it's a conscious decision. I don't think every hotel is a pleasure hotel, but I think the ones that have the potential to have a bit of both, I think you have to focus some attention both on the product side and making sure that the product speaks to it, the merchandising side, how do you position yourself in, in, in the, in the public channels and, and, and how do you actually, you know, promote it. So, those are definitely important areas.


Ryan Haynes:

Now another aspect that you were looking at is regulatory changes. Talk to us about that.


Vineeth Purushothaman:

Now that's sort of fun stuff and let's not get people to sleep by too much of that. But I think the, the, the, the challenge I think, you know, distribution meets legal in, you know, is how I see it. And, and not every, it's not for everybody. Not everybody needs to be on top of all of this, but I think being aware of it is really critical. So, if you think about the first sort of range of regulatory issues, I mean everybody is aware of the GDPR and things like that because those were, you know, introduced and then obviously now it's ulcerative, everybody follows it, and it all is meant to follow it. But then there's been a sequence of other regulatory items, you know, the package travel directive, how our package is meant to be sold and how is the booker protected.


Vineeth Purushothaman:

And that came into play during Covid and caused absolute mayhem for lots of online travel companies, particularly on, particularly those who specialize in that. But following on from there, there is also the o ombudsman, sorry, the omnibus directive that looked at how discounts work. So that companies don't say, raise their price and then discount it and say, Hey, here's a huge discount. I mean, you know, so it's obviously there's monitoring of that going on. And then the bigger ones more lately, the Digital Marketing Act and the Digital Services Act, those are sort of the digital marketing act specifically targets really large corporations like, like Google, Facebook, Booking.com and so on.


Vineeth Purushothaman:

you know, some of the larger players in the market sort of talking about something called the gatekeeper, you know, are they being a gatekeeper? Are they controlling both sides of the business in a way that they are the only, you know, they're the sort of really important gatekeeper? And it is a tricky concept, which again, is not for everybody to understand, but sometimes, you know, in our business we love OTAs, and we sometimes don't love OTAs. So, it's just a question of whether they need to be regulated. So, the EU has been taking a closer look at it and saying, if your threshold of revenue is about a certain number, then they fall under the purview of that.


Vineeth Purushothaman:

And, and, and so that's an, it's relatively new, but again, it's important for companies to be aware of because it then puts certain responsibilities that the OTAs are not always fulfilling in terms of disclosing information to the hotels about customer information, et cetera, et cetera, which hotels can be quite sensitive about because there's that question around, oh, whose customer is it? So that's why the DMA is quite relevant. The Digital Services Act is not yet in play. DMA has just gone into play this year, but at the moment I think booking.com does not come under its purview. So they are having discussions at the moment and then you have the DSA, which is due to come in 2024, which sort of talks more about, a little bit about the secret source or the algorithms that sort of sit behind how, what's on display, what do you say, how do you prioritize X hotel or Y hotel et cetera, on, on a, on a, on a platform.


Vineeth Purushothaman:

And it's quite a mystery and sometimes, you know, hotel companies have generally sort of tell, oh, you know, I don't really understand why I've been pushed down. This is up. And the DSA potentially, I mean, again, I don't know, it's too early to say, and I'm no legal expert by any means, but that could sort of persuade companies to disclose a bit more about how they make those decisions. So, so all that, and then there's the short-term rental regulation that is being proposed because obviously, that is one of the hot topics in many major cities where apartments, Airbnb, rental spaces have been limited and so are the short-term rental organizations following the rules that are applied to hotels.


Vineeth Purushothaman:

So, there's that sort of side of it. So, you are very much in quite regulatory mode. And then if you think about payments, there's a whole side of that, you know, the payment services directive. So, one, two and we are I think entering three now, which will, which will also come into play in terms of who you know, and then, so there's, there's lots going on. So again, no legal expertise, but all I observe is that we need to be aware as, as an industry of all this, as it has an impact on what we do. Payments, for example, have pushed the payment sectors quite forward in, in lots of different ways as a result of legislation as well.


Ryan Haynes:

So much to consider, especially, you know, with the advancement of e-commerce, as you say, all these new acts coming in, regulatory stuff, just keeping on top of all of that and how all your distribution partners play, play a part in that And I know, not just regulatory, but cybersecurity is a big issue when it comes to distribution.


Vineeth Purushothaman:

Yeah, absolutely. And I think the more systems that are involved and you know, in our earlier conversation you mentioned city channel managers as an example, but then if you look at a technology stack of a, of a hotel, even in one independent hotel versus a global chain, there are so many pieces of technology now, they all need to share information between them in one way or the other. And protecting each of those systems and ensuring that each system is compliant and making sure that all the protocol is followed is quite hard work. And, and, and the hotels are one of the trickiest areas to ensure that there is proper security.


Vineeth Purushothaman:

And part of it has to do with the fact that there's a lot of employee churn as well. And, and, and so there's an, you know, manual risk, not just a tech risk. So, if you combine manual risk with the number of tech pieces at play, you know, the two together make it a high-risk area, plus the fact that you are dealing with hotel guest payment details, guest profile information, et cetera. So there has been a whole bunch of things that have happened, hotel companies that have been put at risk, travel companies that have been put at risk and, and, and you know, it, it is quite a, an important area to particularly connected to distribution that, you know, typically you wouldn't look at so much, but we have to be really careful with.


Ryan Haynes:

Oh, absolutely. Yeah. I mean there are so many cyber threats now that obviously with the number of entry points potentially there within hotels from your guests, your employees, as well as your third parties’ providers. Now you've touched on this one already, slight payments, but FinTech because there has been an explosion in the types of platforms and systems and apps in a way that, you know, guests and, and, and TMCs expect to, to make payments as well. What do we need to be considering from that then for distribution?


Vineeth Purushothaman:

I think one of the things is, is Booker friendly, right? So, bookers are we as travellers or you know, anybody else that we are okay catering to want a level of simplicity of, you know, in, in terms of payment and, and there's so many regional considerations, Regional and cultural considerations as well with payments, which we don't automatically understand. So, if you look at how some of the payment methods have evolved, alternative payment methods have evolved and every European country has its own, almost its own sort of alternative payment method. And so, China has its own, or India has its own, you know, Indonesia, I mean, you know, you just go anywhere and it, it, it's got so many different options.


Vineeth Purushothaman:

So, the traditional thinking that hey, you know, here's your price, here's how you pay user credit cards. I mean that sort of time has really sort of moved on. The other side of it is obviously all the payment services directive act type of you know, regulation that's been coming through in not only Europe or in other countries in terms of secondary authentication protocols and things like that has had an impact as well. So if you combine how people are travelling and how the Regional expectations or cultural expectations of being comfortable paying in your own currency or your own payment method and you blend all that together, so that sort of comes to the world that we are in, which is you have, you want more options in terms of payment, whether it's in the form of Google Wallet or Apple Wallet or, or you know, is it just a direct sort of, some people just want direct transfers still, believe it or not, or you know, apart from the regular VCCS and so on.


Vineeth Purushothaman:

So, there's a lot that's been happening and if you look at one of the biggest sorts of changes that happened in the last few years, again, I mean the, the, the driver of that change is booking.com. Expedia for example, always had a, you know, payment collect Expedia collect as well as hotel collect, but Booking had only a hotel collect for a very long time and they then invested massively into this program where, and, and developed a lot, lots of different alternative ways to pay. So, that's changed quite a lot. And hotel companies are, you know, again, we are not travel tech companies, so therefore I feel sometimes, you know, for many reasons we are a little bit behind the travel tech companies and for good reason I would say as well.


Vineeth Purushothaman:

But you know, hotel companies are following suit as well. The other thing that has changed substantially is the whole buy now pay later piece of the puzzle, which was never the case before. So, there's the, the risks are hedged in, in the financial risk is a hedge in lots of different ways, but it's immensely popular, so popular that again, government's regulation is coming in after the event rather than before. Where now there is much more oversight, and financial oversight over the BNPL schemes. And in the UK for example,


Ryan Haynes:

I mean, as you say, there's so much to consider there and certainly with the buy now pay later, that is a whole minefield in itself. And the opportunities though, make it more accessible to Hoteliers, even independent small properties can get involved with that and open up that opportunity for accessing more guests.


Vineeth Purushothaman:

Absolutely. No, I mean, and it has been very much proven and there are a lot of companies that are doing quite good work supporting that, that sort of, that adjustment almost into that space. Absolutely.


Ryan Haynes:

Well, NIC, I mean we've pretty much come to the end of 20 minutes, which is, you know, for us to sort of delve into the 18 trends. There is so much more that you And, I could talk about. But for the listeners, please check out Vernice's article on LinkedIn, the 18 trends to watch in hotel distribution 2023 and beyond. He touches on direct bookings, new marketplace models and platforms, group bookings, as well as data insights. And you know, tap him and I'm sure Vineeth you'll be open to conversations to explore a lot more of your speciality really here in distribution.


Vineeth Purushothaman:

Absolutely love this topic. It's crazy, it's hard to tame so here I'm talking about it. Thanks, Ryan.


Ryan Haynes:

No problem. I appreciate you joining me today. So that was Fannie per Hoffman, the Regional, Director, Commercial Planning and Distribution EMEA at Wyndham, Hotels and Resorts. Check out the rest of the episodes as part of season three for Hoteliers’ Voice on Travel Market Life. You can find that on Google, Deezer or Spotify. We are very pleased to say that our audience has more than doubled in the last few months. Thank you ever so much for listening to our show. Sign up for our newsletter either on www.travelmarket.life, or head to our LinkedIn account where you can get regular updates of all the latest episodes and content that we're producing.


Ryan Haynes:

Thanks for listening, I'm your host, Ryan Haynes ciao for now.

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