While some newer channels should be analyzed at really a property level for their true incrementality, the burden really lies at that compset level – will a hotel lose market share if they don’t participate with a certain provider when their direct competitor is?

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The Ever Evolving Distribution Landscape – A Focus on Emerging Channels
By Chris K. Anderson, Ph.D., Professor, Cornell University and Jay Hubbs, Vice President, Regional Sales,
ReviewPro, members of HSMAI’s Revenue Management Advisory Board
The recent HSMAI‐produced Distribution Channel Analysis Report1
highlighted the importance of established
distribution channels as well as indicating some of the concerns about pending evolution. The figure below
summarizes the channel mix as outlined in the report. As the report indicated in aggregate less than 7% of total
demand is coming through Online Travel Agents – OTAs (merchant, opaque and retail) yet as many of us are
aware this distribution segment tends to get considerable attention owing to its lens into the consumer as the
OTA serves as the focal point for many consumers when they are conducting their online travel research.
More recently though there have been several new developments in the distribution landscape that pose both
opportunities and challenges to consumers and suppliers. The creation of new channels, the evolution of older
variants and the growing prominence of social media content continually pose challenges for suppliers as they
decide where to focus their limited resources. Several of these new channels create interesting segmentation
opportunities as they focus on new methods of selling and engaging consumers or creating demand for hotels–
these evolving channels could be categorized into three major types: new search models, mobile/last‐minute
and new discount channels, as well as discuss the broader impact of Social Media when it comes to online
bookings.
New Search Models
Changes to search engines as well as a few newer OTA/meta‐search models can be categorized into newer
search models. Some of the players in this category include: RoomKey, Global Hotel Exchange,
Room 77, Hipmunk, Google and SimpleHoney.
Google’s HotelFinder has moved beyond beta and is now an integrated part of hotel related search. The
placement of hotelfinder (as a sponsored listing) just below the first set of PPC (pay‐per‐click) ads as illustrated
1
Distribution Channel Analysis: a Guide for Hotels

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below indicates Google’s desire to showcase these results at the expense of organic search results. While much
of the hotel specific results within hotelfinder represent opportunities for supplier showcasing, in the end
reservation facilitation comes via PPC opportunities with OTAs often being highlighted over supplier direct. The
major impact of hotelfinder placement and click flow is it will serve to increase suppliers search related budget
(both search engine marketing related PPC, as well as search engine optimization as it related to organic search).
Roomkey was launched with considerable buzz and continues to add more brands to its stable of suppliers.
Roomkey, similar to the TravelWeb of old, represents the brands attempts to launch an OTA. While suppliers
remain optimistic about Roomkey it has yet to really catch the eye of consumers and still needs considerable
improvements before it starts to offer a viable alternative in the eyes of the consumer to established OTAs.
Other players in the meta‐search have had some interesting developments with Hipmunk receiving attention for
its more graphical – map focused listing of hotels and graphical listing of flights. Room77 is the first major OTA to
showcase qualified rates (e.g. AAA) as part of its display. Given these qualified rates Room77, as it points out
very clearly in its display, will appear to have rates lower than other OTAs. Room77 has the potential to create
service disruptions for suppliers as most guests unfamiliar with qualified rates assume they are booking rooms
at great rates even though (strictly speaking) they don’t qualify for these rates. Global Hotel Exchange (GHX)
similar to Roomkey offers a very inexpensive channel to suppliers as fees are low, $2.99 per booking, and are
paid by the consumer. GHX, similar to Google and Bing, offers an indication of historic prices to provide some
level of comfort with current prices. Additionally, similar to the retail OTA model GHE offers consumers a pay
when you stay model versus pay in advance merchant OTA model. Similar to Roomkey, it is hard to image GHE
getting the scale to compete against established OTAs at $2.99 per booking. So while there are some new
players in the OTA space it is unclear if any will have major impacts upon the established players.
Mobile/Last‐Minute
Travel related mobile developments have received considerable attention over the last few years – but it is only
recently that there has been significant evolution in targeted mobile bookings. While Priceline has been a
leading innovator in mobile booking related applications with its Negotiator App, there are new developments
as both existing OTAs and new entrants focus on the in‐market and last minute nature of mobile demand.
Illustrated here are some recent developments through the eyes of a few key players: Blinkbooking, Priceline /
Booking, Expedia / Hotels.com, and Hotel Tonight. All these day‐of mobile targeted channels focus on some
form of limited inventory availability (i.e., only a small set of suppliers) with rooms only available for the stay

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date. As a result these channels really focus on the last‐minute traveler who suddenly finds himself in‐market
and in need of a hotel room. This limited availability typically comes with 30% off retail listing.
HotelTonight and BlinkBooking are targeted day‐of channels whereas the others are side offerings of established
OTAs. Hotels.com App is very streamlined whereas Priceline embeds its Tonight Only product within its current
Negotiator App. BlinkBooking and HotelTonight’s stand‐alone offerings potentially offer sufficient opacity (owing
to limited access to a limited set of suppliers) to offset dilation (dilution?) whereas Expedia, Hotels.com and
Priceline’s offerings, given the ability to also do a retail search, may also impact day‐of retail bookings.
Discount Targeted Channels
A variety of interesting newer selling models including Tingo, BackBid, GuestMob and Hall St focus on the deal
seeker by offering a new twist to the hotel shopping/reservation experience. Tingo, launched by TripAdvisor,
provides access to hotels through Expedia’s Affiliate program. Tingo automatically cancels and rebooks fully
refundable reservations if prices drop at the supplier of choice between the time of the initial reservation and
check‐in (or within the cancellable period). AutoSlash was the first firm to offer such as service with their
offering being restricted to rental cars. BackBid allows confirmed travelers to upload their confirmations and
allow suppliers to submit offers to the consumers in an effort to get them to switch to other hotels at lower
prices via these private offers. GuestMob offers a semi‐opaque offering to consumers. GuestMob shows a
sample of suppliers (4‐6) in a market subarea at discounts on the order of 20% ‐ the consumer finds out the
Thursday prior to their check‐in which of these potential hotels they will be staying at. Finally, UK‐focused HallSt
(a play on Wall Street) is quite possibly the most novel of these offerings as it creates a peer‐to‐peer market for
consumers to sell the reservations they have acquired through HallSt’s posted price OTA model as well as its
non‐refundable bidding model.
Social Media
In many ways, over the last few years social media has emerged as a new ‘channel’, impacting guest satisfaction,
OTA channel conversations, brand evaluations and ultimately revenue. Early in the internet travel age, brands
became concerned about user perception being on certain channels or having their hotel misrepresented from a
rate or content standpoint. Now with the emerging social media channels, user‐generated content on these
affects not just brand perception but also revenues. The link between online review reputation and revenue is
increasingly clear, with Expedia quantifying the impact on their site as “A 1 point increase in a review score
equates to a 9% increase in average daily rate (ADR).”
A tipping point of this emerging channel evolution was a MarketMetrix study in 2010 that showed for the first
time, more bookings are driven by reputation than either location or even price. ‘Guest experience factors,’
which include past stays reputation, recommendations, and online reviews, are critical to selecting a hotel by

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the majority of hotel guests (51%) and are now more important to guests than either hotel location (48%) or
price (42%).
Today, online travel agencies, independent review sites and various social media platforms have provided
travelers with the value of tremendous customer insight, and hotels with the burden of monitoring, responding
and analyzing the data that these channels are offering. While TripAdvisor remains the leader in this area, other
review sites like Yelp and Zagat Ratings (purchased by Google) offer aggregated customer feedback, while nearly
every OTA offers their own user‐generated content that ties to sort, conversion, and ultimately bookings.
Just as hotels weigh decisions to participate in various distribution models for incremental revenue, they too
need to view these social media ‘channels’ as pivotal aspects of their distribution and revenue strategy.
Summary
Potentially the best way to strategically assess new channels is to first ask, “Do they offer benefit to both
suppliers and consumers?” While suppliers often speak negatively about OTAs, the value proposition is clear on
both sides as they provide a great shopping experience to consumers and considerable reach and revenue to
suppliers. While some newer channels should be analyzed at really a property level for their true incrementality,
the burden really lies at that compset level – will a hotel lose market share if they don’t participate with a
certain provider when their direct competitor is? Also, when analyzing your hotel and your competitive set
through the lens of social media lens, recognize that there may be a direct impact to your top line revenues if
there is clear distinction between properties in the eyes of potential customers. So when considering a new
channel, a good first step is to evaluate the opportunities from both parties and if the channel fails to deliver to
both key parties, it may not be around for the long haul. These channels will be discussed further in the
upcoming HSMAI webinar.
About the Authors
Chris Anderson is an associate professor at the Cornell School of Hotel Administration. Prior to his
appointment in 2006, he was on faculty at the Ivey School of Business in London, Ontario Canada.
His main research focus is on revenue management and service pricing. He actively works with
industry, across numerous industry types, in the application and development of RM, having
worked with a variety hotels, airlines, rental car and tour companies as well as numerous consumer
packaged good and financial services firms. Anderson’s research has been funded by numerous governmental
agencies and industrial partners and he serves on the editorial board of the Journal of Revenue and Pricing
Management and is the regional editor for the International Journal of Revenue Management. At the Hotel
School he teaches courses in revenue management and service operations management.
Jay Hubbs is Vice President of Sales for North America for ReviewPro. Before joining ReviewPro,
Jay led hotel supplier relationships for Hotwire.com, an Expedia Inc. company, as part of the
Expedia Partner Services Group. A graduate of both the School of Hotel Administration at Cornell
and the Wharton School of Business at the University of Pennsylvania, Jay has extensive
experience at the property, regional and corporate level of hotel and revenue management. Prior
to Hotwire, he worked on the distribution and revenue management teams for Starwood Hotels
in New York. Before that he was a strategy consultant for online companies in travel and other
industries, and prior to that he worked in revenue management and operations capacities in hotels all over the
United States. Jay lives in San Francisco with his wonderful wife Laura and their twin sons Brewster and Hunter.
About the HSMAI Revenue Management Advisory Board
The Revenue Management Advisory Board leverages insights, emerging trends, and industry innovations to
guide the development of products and programs that optimize revenue for hotels. www.revmanagement.org

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Members include:
• Co‐Chair: Jon Eliot, CRME, CHA, Vice President of Revenue Management, Premier Hospitality
Management
• Co‐Chair: Sloan Dean, CRME, Vice President of Sales & Marketing, Interstate Hotels & Resorts
• Immediate Past Chair: Scott Roby, CRME, Vice President, Revenue Management, Evolution Hospitality
• Chris K. Anderson, Ph.D., Professor, Cornell University
• Bonnie Buckhiester, President & CEO, Buckhiester Management USA Inc.
• Sheila Cosgrove, Director, Revenue Management Ops & Planning, Intercontinental Hotels Group
• Kathleen Cullen, CRME, Vice President Revenue Strategies, Heritage Hotels and Resorts
• Kent Duncan, CRME, Vice President, Sales & Revenue Strategy, Marcus Hotels & Resorts
• Tammy Farley, Principal, The Rainmaker Group
• Neal Fegan, CRME, Executive Director of Revenue Management, Fairmont Raffles Hotels International
• Rhett Hirko, CRME, Director of Revenue Analytics, Hyatt Hotels & Resorts International Opertaions
• Jay Hubbs, Vice President, Regional Sales, ReviewPro
• Burl Hutchison, CRME, Director of Revenue & System Optimization, Sabre Hospitatlity
• Klaus Kohlmayr, Senior Director, Consulting, IDeaS ‐ A SAS Company
• John LeCoz, Regional Director of Revenue Management, Loews Hotels
• Mark Molinari, CRME, Corporate Vice President of Revenue Management and Distribution, Las Vegas
Sands
• Orly Ripmaster, CRME, Senior Associate, KSL Capital Partners
• Mark Robertson, Central Director Revenue Management, Wyndham Hotel Group
• Susan Spencer, Market Director ‐ N. America, ChannelRUSH
• Trevor Stuart‐Hill, CRME, President, Revenue Matters
• Paul Wood, CRME, CHBA, Vice President of Revenue Management, Greenwood Hospitality Group
Want to Learn More?
This topic will be addressed as part of the 10‐part 2012 Revenue Management Webinar Series produced by the
HSMAI University in partnership with HotelNewsNow and STR, and sponsored by IDeaS. Each month a webinar
covers one aspect of cutting edge revenue management in today's economy in conjunction with articles written
by members of the HSMAI Revenue Management Advisory Board. If you’re not able to attend a live program,
archives are available.