A Different Playing FieldModern hotel distribution is a more complex and fast-changing environment than ever, thanks to the dominance of the share of bookings being made online. Phocuswright research reported that nearly 70% of travelers are researching their trips online. Recent survey results published by the WYSE Travel Federation in their horizons IV report found 80% bookings made by under-30s in 2017 were made online. The same survey results also revealed that OTAs were the most popular choice among the under-30s travelers during this period, with 47% of accommodation being booked via this channel.Modern distribution is a different challenge and an opportunity for hoteliers. Unlike other disciplines - such as revenue management where the objective is to predict the price tomorrow, typically based on data and insights from past performance and trends - distribution deals with the challenge of optimizing the cost of every sale based on forward-looking data.Distribution is an unforgiving execution discipline, as once a sale is made there is little hotels can do to influence the cost of that sale which impacts the bottom-line. Hence, it requires careful and continuous monitoring to ensure distribution is always optimized to achieve the best possible cost-of-sale outcome for every booking, for every guest.Therein lies the biggest opportunity for hotel distribution. With the right processes, systems and people in place, hotels can understand exactly how their inventory is being sold across all channels and optimize their distribution. This requires a shift in the mindset and how hotels approach distribution, as an execution discipline. Hotels need to become a more responsive and diagnosis-led, they need to adopt Agile Distribution.Hotel distribution is affected by many of the same macro trends that are affecting other industries, but some of the impact can be more pronounced than other sectors. Technology and consumer behavior are disintermediating processes and disrupting each of the three key pillars of distribution - demand, supply and channels.Demand-Side DisruptionAs consumers become savvier, they are more likely to be on the hunt for the best deal - and are rarely brand loyal. Recent research by TripAdvisor found that 73% of all first searches by travelers are generic - demonstrating potential for brands to find clever way to engage and influence consumers in early stages.Increasingly, consumers also expect a bespoke experience and the window of opportunity for brands to provide the right offer to every guest is getting shorter all the time. A recent survey of travel marketersrevealed their most pressing or routine challenges to deliver more personalized digital experiences were data, technology and people.According to a Traveler Attribution Study published by Expedia Media Solutions, consumers are spending more time visiting websites to plan their getaways - 38 sites on average. Segments are no longer respecting the traditional channel-boundaries. For example, a recent Phocuswright research report revealed that 1 in 4 business travelers are booking through direct channels and 23 percent are using OTAs.Supply-Side DisruptionThe supply side for hospitality is changing rapidly. Hotels find themselves increasingly competing against the Non-Hotel Accommodation (NHA) market.The vacation rental market has been growing rapidly and it is projected to reach $169.7 billion by 2019. Airbnbhas in excess of five million listings worldwide. Following recent announcements from hotel industry giants such as Airbnb and Booking.com, the NHA and traditional hotels market will overlap more than ever, as they cross-pollinate traveler search with both hotels and NHA listings in a bid to capture and maximize market share.The NHA market also continues to innovate, looking for more ways to lure away guests who would normally select and book with traditional hotels. Following Airbnb's efforts to lure business travel, Forbes reported in August 2017 that more than 250,000 companies are now using Airbnb for business travel, rising from 250 companies in 2015. Innovative travel companies like Sweet Inn are looking to attract guests by providing the best of both worlds - a luxurious apartment with a hotel-like experience.Channel-Side DisruptionThe internet has massively reduced the barrier to entry for new players - it is easier than ever to reach global audience or serve niche markets through localization and personalization. This is leading to a clash between traditional, static offline B2B channels and the more dynamic online consumer space.In Q2 2018, we found, on average, eight unique bidders across all hotel searches on Meta Search Engines (MSEs). Most hotels, typically have only a handful of direct partners. Most of these other resellers are what we refer to as uncontracted OTAs, who source inventory indirectly, typically from wholesalers. Many hotels still rely on wholesalers and tour operators to achieve their occupancy and revenue targets, allocating inventory typically through static contracts and fixed rates. When these B2B rates 'leak' on to online B2C channels through such uncontracted OTAs, it severely impacts the hotels' ability to execute their distribution strategy and revenue plans effectively.Shifting to an Agile Mindset: Distribution HealthAll the major trends affecting hotel distribution have two drivers in common - the growth of the online distribution space and the rapidly increasing pace of change.Hotels have been generally quick to identify the challenges and opportunities in revenue management. Most hotels are assessing and adapting their prices, sometimes even five or six times a day. Yet, they lost ground to OTAs who were faster to see and respond to the opportunities in the online distribution space.AccorHotels President and CEO Sebastien Bazin was quoted saying the 'digital players' such as Expedia, Booking.com, Google, Airbnb etc. are so successful because they are agile and lean. OTAs invest heavily in technology, data and being lean and agile organizations, which enables them to dominate the online booking space.But with the emergence and growth of new channels such as Meta Search, Social media and Google there are many more new challenges and opportunities for hotels to boost direct bookings. The traditional, monthly or weekly planning and review cycles, supported by an 'autopsy-view' of channel performance needs to give way for a more agile mindset, looking at hotel distribution health more holistically. Today, diagnosis-led data can provide a true view of how the hotel inventory is being sold across all direct and indirect channels. Hotels can take advantage of such distribution intelligence, to monitor their distribution health continuously and respond faster by adopting Agile Distribution.Agile Distribution for HotelsAgile has been proven to work both in theory, and in practice. Revenue Managers are already leveraging the agile mindset to maximize the topline revenue for every room-night sold, constantly evaluating demand and competition. Several other industries have successfully adopted agile methodologies to overcome similar challenges in adapting constantly to fast-changing environments. In marketing, for example, large-scale digital campaigns which are conceived and developed, then executed over several months, can now be more effectively managed and adapted based on performance and early results as they roll out to different audiences and segments.Shifting to an Agile MindsetLike most important changes, this needs to start at the top - developing an agile attitude and mindset requires leadership and focus in changing the distribution practice. Revenue and distribution leaders need to demand more speed and responsiveness from their organization, setting new benchmarks and KPIs that promote the same.Two leading global hotel chains we work with, approached the shift in this manner. They challenged their organization to be more responsive and move faster to underpin their direct-booking strategy. They demanded the at-property and above-property teams to focus on monitoring their distribution continuously and improve or maintain their distribution health on a daily basis. They set KPIs that measured their daily activities against pre-defined thresholds. They even went a step further and implemented fines and incentives for failing, meeting or exceeding targets.At one of these chains, within nine months of implementation, they more than doubled (2x) the number of hotels that met their 'Green' distribution health threshold. For 36% to 85% of hotels. As a result, they also achieved a 9% reduction in their consumer claims against their 'Best Rate Guarantee' offer compared to the same period in the previous year.Adapting processes to support Agile DistributionAttitudes and mindset need to be supported by processes that can enable Agile Distribution practices. Building an agile organization that can constantly adapt also means they will need a framework for decision making and communications to ensure they are working on the right challenges and opportunities at the right time. Teams should develop and incorporate agile methodologies such as building backlogs, classification, estimation and prioritization into their processes.Successful agile organizations also focus a lot on communicating effectively. It is important to share the strategy consistently and for information to flow both ways to enable the team(s) to execute efficiently. Ensuring the right process are in place to facilitate such communication and share a common framework of understanding across the team critical to successful adoption of Agile Distribution.Systems to support AgileDistribution is a big-data challenge in every way. The sheer number of channels, partners, resellers, points-of-sale and devices, among other factors, mean that the amount of data points that need to be monitored on a daily basis can be astronomical. On top of that, distinguishing symptoms from the underlying cause and then classifying these correctly can be a challenging task. Once issues are identified correctly, diagnosed and prioritized for action, then hoteliers need to be able to act quickly and easily.Teams need to be empowered with systems that can support them in being more efficient and responsive. Such systems not only provide data and insights but can provide deeper distribution intelligence that can automatically identify and classify the underlying issues - enabling teams to easily prioritize and respond faster.PeopleThe concept of Agile began in software development. The first of four ideas that were developed as part of Agile Development in software was to value 'individuals and interaction over process and tools'. Agile methodologies actively encourage more interaction and collaboration between individuals and across teams.Working with some of our chains, we have observed how the need to respond faster and looking at distribution health holistically across both direct and indirect channels has enabled the revenue, distribution and ecommerce teams to find new synergies and work more closely together.Building Cumulative SuccessOnline distribution, while complex, fast-changing and challenging, also presents immense opportunity for hoteliers that are ready to adapt and evolve. Distribution Intelligence is unique compared to other Business Intelligence available to hotels, as it is based on forward-looking diagnosis-led data.Agile doesn't necessarily mean quick. It is about choosing small pieces of work that will deliver value quickly, but over time will lead to greater overall result. The number of challenges and opportunities will always outstrip a hotel's capacity to respond - Agile Distribution provides a framework to prioritize and focus on the most value-creating efforts.Exactly how you adopt Agile Distribution will be unique to your hotel or chain, but it will likely involve rethinking your approach to distribution, the way you work with your partners and the structure of your internal teams and of course your choice of technology. But regardless of your hotel distribution strategy, hotels need to think carefully about how they execute their distribution strategy - by taking advantage of the new diagnosis-led data and adopting some or all of Agile Distribution.Reprinted from the Hotel Business Review with permission from www.HotelExecutive.com