Online Distribution Strategies

Topics: Hotel chains, Hotel, Hyatt Pages: 18 (6501 words) Published: May 18, 2013
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Online distribution strategies and competition: are the global hotel companies getting it right? Gabriel Gazzoli
´ Institut Hotelier Cesar Ritz, Le Bouveret, Switzerland

Online distribution strategies 375
Received 25 May 2007 Revised 3 July 2007 Accepted 18 October 2007

Woo Gon Kim
International Center for Hospitality Research, Florida State University, Tallahassee, Florida, USA, and

Radesh Palakurthi
School of Hotel and Restaurant Administration, Oklahoma State University, Stillwater, Oklahoma, USA Abstract
Purpose – The internet has significantly changed the ways hotels distribute and price their products. The imminent success of online intermediaries caused financial problems for hotel chains since online travel agencies offered better prices than the hotel brand websites. The existing literature on hotel online distribution has focused on pricing strategies and room availability issues for different segments of hotels. This paper, however, aims to compare online room prices of global hotel chains across online distribution channels and their own brand websites. Design/methodology/approach – By using only the internet, 2,800 room rates were collected and analyzed. Descriptive statistics such as means and percentage were used to answer the research questions. Personal interviews with a CEO of an e-business company and an area revenue director of a global hotel chain were conducted to confirm our findings and to gain additional insights in the related issues. Findings – Descriptive statistics indicated that US properties are doing a much better job than their international partners in regards to “best rate guarantee,” “rate parity,” and room availability across online channels. Rate consistency still remains a problem within US properties. Research limitations/implications – A limitation of this study is the use of convenience sampling methods, sample size, and currency conversion instruments. Originality/value – Findings of this study would benefit revenue managers, general managers, hotel owners, and corporate brand managers to make decisions and to formulate new policies concerning their online distribution, revenue, and brand optimization strategies. Keywords Hotels, Distribution, Intermediaries Paper type Research paper

Introduction The development of the internet has greatly affected the ways hotels distribute and price their products. In the mid 1990s online travel agencies such as Expedia and Travelocity – also known as online intermediaries or online third party sites – partnered with airlines and hotels to offer travel products such as airline tickets and hotel rooms from multiple suppliers directly to consumers (Carroll and Siguaw, 2003). By using different business models and smarter business practices, and by taking

International Journal of Contemporary Hospitality Management Vol. 20 No. 4, 2008 pp. 375-387 q Emerald Group Publishing Limited 0959-6119 DOI 10.1108/09596110810873499

IJCHM 20,4


advantage of the poor management and application of hotels’ online pricing (Enz, 2003; O’Connor, 2002, 2003; Tso and Law, 2005), online intermediaries proved to be very successful. One of the main reasons for these e-intermediaries’ success was their ability to provide cheaper room rates than the ones offered by the hotel brands websites or their reservation offices. Price disparities among the distribution channels of hotels have shaped the perceptions of the consumers who are now searching several online engines and shopping around for better deals (Enz, 2003; Murphy et al., 2006; O’Connor and Frew, 2002; O’Connor and Piccoli, 2003; Thompson and Failmezger, 2005; Varini et al., 2003). Past studies have urged hotels to implement consistent pricing across all distribution channels (KPMG, 2005; Murphy et al., 2006; O’Connor, 2003; Thompson and Failmezger, 2005; Tso and Law, 2005). Rate...
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