3rd Party Merchants - Internet Distribution System
The events of September 11, 2001 had an impact on every aspect of life in the USA. American behavior immediately changed and few industries were hit as hard as the travel and hospitality sector. Simply, people stayed home. Both business and leisure travel realized immediate new lows and within weeks operators throughout the United States started pushing the yield management panic button – the Internet Distribution System (IDS) channel.
Following 9/11 and as a result of the rapid decline in demand, 3rd party web sites such as Travelocity (Sabre Holdings) and Expedia (formerly Interactive Corp.) were the only entities with marketing dollars. Owners and operators traded profitability for visibility and in some cases were paying margins of 40 or more percent. Then people began to travel again and the “love-hate” relationship with merchant providers was spawned. Though 3rd party relationship have warmed-up during the last few years smart operators are now keen to the relative profitability of this channel and are managing it appropriately. You can too with the help of HPG!
The Hospitality Performance Group distribution philosophy is based upon balanced channel management and bulk rate merchants are important to any hotel or resort operation’s success. HPG can help you determine which merchants are appropriate to your market and operation, assist with negotiation of margins, process agreements and integrate the sites within your channel management platform. HPG can also help you determine the cost and efficacy of 3rd party marketing and yield-related promotions.
Generally 3rd party merchant sites can be an effective contributor to your operation’s distribution programs due to the strength of their marketing efforts. The keys to success in working with them is margin (3rd parties expect a parity rate) and inventory negotiation during the contracting process and acquisition cost management within yield processes to ensure maximum overall profitability of your distribution architecture. The Hospitality Performance Group knows this space well and will be your best vendor-partner in the complex world of 3rd party merchants.