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Andrea Daniels, Director, Distribution Partnerships at IHG Hotels & Resorts*, HSMAI Global Distribution Advisory Board Member
The hotel distribution landscape is facing potential transformation, driven in part by the entry of fintech and big banks. As the industry looks ahead, several other key factors such as Artificial Intelligence (AI), data privacy, regulatory changes, and evolving distribution channels could shape the strategies of global hotel distribution. I explored these trends and their implications for the current and future state of hotel distribution with HSMAI’s Global Distribution Advisory Board – here’s a compilation of what we discussed.
Fintech and Big Banks
The involvement of fintech companies and big banks in the hotel distribution landscape is an indicator of the growing opportunities in the market. The entry of banks into distribution stems from the potential profitability and the flow of money within the industry. Although the industry is still in the early stages of bank participation, their presence is expected to bring significant changes in the coming years. However, it is important to note that distribution remains country-centric, with various players operating within specific regions.
Regulatory Changes
Regulatory and legal frameworks are evolving which impact on all parts of the travel distribution industry and the effect on the major players in this space is particularly noteworthy. Across the world, governments are implementing regulations that affect the distribution landscape and these regulatory shifts will influence the strategies and operations of hotel chains and companies across the distribution ecosystem, prompting adaptation to new compliance requirements and consumer privacy concerns.
Contracting and Data Ownership
The intersection of contracting and data ownership in distribution raises complex questions about the sharing and control of information by organizations. As AI becomes more involved in code generation, proprietary information ownership becomes particularly important for organizations to address. Stakeholders in the industry must look to proactively address these issues to establish transparent and mutually beneficial agreements, although further regulations related to data governance and privacy may emerge as a result.
AI in Distribution Strategy
AI is poised to redefine hotel distribution strategies. From optimizing pricing and inventory management to personalizing guest experiences, AI can supply valuable insights and streamline processes. In the context of distribution, it can be used to identify the most effective channels, target specific customer segments, and drive revenue growth. However, privacy and data governance issues must be addressed to ensure responsible AI implementation and protect sensitive customer information.
The Rise of Attribute-Based Selling and Emerging Tech Tools
The hotel industry’s exploration of attribute-based selling reflects a trend towards more sophisticated selling methods. While implementation challenges exist, this approach holds promise for providing customized offerings based on specific attributes, enhancing customer satisfaction. Additionally, emerging tech tools indicate a changing landscape, potentially leading to cross-channel integration and greater economic advantages.
By embracing changes in technology, streamlining operations, and adapting to evolving regulations, the industry could benefit from reduced costs and increased profitability. Collaboration, innovation, and forward-thinking strategies will be key to staying competitive in this evolving landscape.
According to discussion with HSMAI Advisory board members, here are 9 Predictions and Trends for Hotel Distribution in the next few years:
- Rise of the mega platform – not just in travel – that crosses industry lines.
- Looking inside of the organization, the franchise expectation and the delivery of big brands will be more important than ever.
- More consolidation and the attempt to bring lower costs
- Continued blurred lines as everyone look to where they can grow their share.
- Follow what generative AI is going to bring to us – it could be wonderful guest experience with some guardrails.
- Rise of the super apps – opportunity to drive revenue. All the distributors have taken on multiple roles. Who else is going to jump in?
- Industry saw some cross over between segments, and vice versa. Now we are seeing fintech enabling entrance into the OTA space – how do we preserve business as these segments blend?
- There will be a push for better technology – it’ll be all about the connected trip.
- AI will get into distribution platforms.
* This article reflects the collective views of the individual HSMAI Global Distribution Advisory Board members, and not the views of the author alone or of IHG Hotels & Resorts.