From its database management origins, distribution is still evolving through every new channel, every new connectivity method, and every new selling technology to make sure hotel rooms are accurately and prominently placed on the shelf and that reservations flow seamlessly back to hotels.
If the prior paragraph was news to you, you aren’t alone. The Hospitality Sales and Marketing Association International (HSMAI) and ZS recently conducted state of
distribution interviews with members of HSMAI’s Global Distribution Board. Practically every leader said their biggest challenge was this: Most hospitality professionals, including their closest counterparts and even their leaders, don’t understand distribution.
We uncovered three myths that plague the distribution function. Let’s dispel them, then discuss steps taken by best-in-class organizations to overcome them.
Myth 1. Distribution Just Manages OTAs
While OTAs are important to a hotel’s selling strategy, distribution’s role goes far beyond managing these partners. Remember, hotel inventory is booked through many sources like global distribution systems (GDS), B2B booking platforms, financial partners, the hotel’s website, the call center and wholesalers. Each channel provides unique value through the segments it attracts, and each requires a different approach to fulfill the selling strategy (content, technology, rate setup).
Distribution ensures rates and content are correct on all selling channels. While a seemingly straightforward task, the distribution technology ecosystem is remarkably complex and fragmented. Content is still managed manually, and distribution relies on hotel teams to keep content updated and on partners to accept and display that content correctly.
Partners aren’t always motivated to modernize, meaning distribution must operate within technological constraints outside its control. Integration standards developed by organizations like Hospitality Technology Next Generation (HTNG) haven’t been widely adopted, so distribution develops and manages dozens of custom integrations. Harder still, distribution sits amid a complex web of stakeholders, including revenue management, sales, marketing, IT, finance, and loyalty. Unclear or overlapping responsibilities among these functions cause unnecessary conflict, unproductive interactions, and rework. This negatively impacts speed to market, a key competitive advantage in a fast-moving digital marketplace. For example, distribution is responsible for enforcing contract terms and managing connectivity, but sometimes sales or revenue management holds the primary relationships with these partners, forcing distribution to work through counterparts to resolve issues.
Myth 2. Distribution Is a Cost Center
Most senior hospitality leaders have the mistaken impression that distribution is a cost center. They understand that the function is somehow needed to build rates, but they manage it tactically, minimizing labor cost and technology spend.
At the very least, distribution should be seen as revenue-enabling. If third-party connectivity breaks, the best case is that the hotel slides out of parity, losing conversion through demoted positioning on third-party sites. The worst case is direct revenue loss, either from incorrect pricing or rates not being available for sale.
Selling strategy is frequently constrained by distribution technology, like the CRS. For example, while hospitality companies believe they can generate revenue from selling ancillaries or room attributes, hotels currently can’t because legacy selling systems can’t be configured that way.
Additionally, if a partner’s technology can’t display length of stay pricing, the hotel can’t either, or it risks being perceived as out of parity, even though length of stay pricing might be a revenue-generating selling strategy. Distribution understands the internal and external channels’ current capabilities and can work around configuration constraints to drive profitable revenue.
Channel management can be just as effective as price management when it comes to driving revenue and profits. The distribution team collects information on segment mix, volume, cost of acquisition, booking behavior, and flexibility.
However, it can be difficult to access this data, and stakeholders are frequently unfamiliar with how to interpret it. The distribution leaders we spoke with mentioned that they struggle to persuade key stakeholders to invest in more advanced distribution and data management technology. Too often, senior executives don’t understand that legacy selling system’s limitations create extra – often highly manual – work to maintain connectivity, accurate rate plans, inventory availability and selling restrictions. This prevents distribution from creating flexible products and packages.
Distribution teams can’t dedicate enough time to contribute to commercial strategy when they’re bogged down with so much manual effort.
Myth 3. Distribution Is an Administrative Function
Because hospitality leaders don’t understand what distribution does, they have an even harder time understanding who should do it. A distribution staffer’s role encompasses functions from each of these departments:
- IT: Understand complex integrations
- Reservations agent: Know how room inventory is sold and fulfilled
- Rate strategist: Build efficient sales strategies across partners
- Account manager: Maintain relationships with third-party partners that have competing needs
They must do all of this with an eye toward a comprehensive distribution strategy. Yet, most executives think of these teams as admins, doing clerical work. This unique blend of skills makes it challenging to find the right people for distribution roles. Furthermore, gaps in understanding distribution’s role and strategic importance complicate recruiting efforts. Hospitality programs don’t push distribution as a career, and internal recruiters don’t highlight distribution opportunities in their broader recruiting efforts.
Distribution also struggles with talent retention. The specialized skills and knowledge required for a distribution role make attrition especially costly. Yet people in distribution may be encouraged to move laterally into other departments due to uncompetitive pay and limited upward mobility.
Next Steps
Successful companies should explicitly include distribution in their commercial strategy, ensuring it has proper investment, access to top tier resources, and a voice at the commercial table. Consider these best-in-class tips as next steps for your organization:
Increase awareness: Be purposeful in explaining key terms and methodologies in every interaction. Evangelize success and emphasize the cost of failure. Manage what you measure: Provide ongoing visibility to distribution-specific metrics at the executive level.
Ensure senior level representation: Promote visibility by adding distribution explicitly to a senior level title, i.e. senior vice president, revenue and distribution. Ensure the leader is well-versed in the function.
Elevate the role: Create a management by objective (MBO) around strategic projects for distribution, ensure teams have time to dedicate to them, and provide distribution with a seat at the commercial strategy table.
Justify investment: Collaborate across the commercial team to ensure investment requests are aligned with commercial strategy and emphasize the right outcomes for the organization.
Educate internally: Develop programs like lunch and learns or quick hit videos to disseminate information broadly across the organization.
Recruit purposefully: Arm recruiters with specific information on roles, responsibilities, and career paths. Consider partnering with local hospitality programs for coursework and guest lectures.
Uplevel training: Invest in well-maintained training materials, knowledgeable trainers, and
external professional development opportunities.
Kelly McGuire is an independent consultant and can be reached at https://www.linkedin.com/in/mcguirekelly/. Nick Sutherland is Business Consulting Manager at ZS (https://www.linkedin.com/in/nhsutherland/), and Sarah Fults is vice president, Distribution with MGM Resorts International.
