Hotel Distribution: Direct versus Indirect

Moving on to look at what you’re doing now. I think it’s interesting, as you said, you started in OTAs, moved to Google and now you’re at the supplier side. You’re playing the game of owning distribution or taking back distribution and really owning relationships with the customer. What is the biggest challenge you’re facing, today, doing that?

I spend most of my time on the organizational piece, many of which derived from the culture of the company. I lead a team of about 2,000 people, who are distributed across different geographies, in over 25 countries. That already brings an important layer of complexity, to any organization. Also, we are a company that has been not very focused on technology, in the past. Today, in 2020, that is a problem.

So I spend a lot of time enabling people to make decisions, bringing some cultural aspects, bringing some basic concepts, like the ones we talked about, such as cost of distribution. Upon joining, I asked, what is the cost of distribution that we have on the trade, versus direct, and we didn’t have the answer. So I created a whole data office, with over 20 people and some data scientists, who are looking at this specifically. Now we have everything on a dashboard and we see, at the flick of a switch, what it’s costing us to sell to each channel.

We used to talk about distribution, on and off. Online and offline. This shocked me, when I joined. We shouldn’t be talking about distribution, versus non-distribution, so B2C and B2B. Everyone is digital now. We are digital and every retailer is digital and every tour operator is digital or they have a digital outlet. We shouldn’t be looking at the world from an online versus offline view, because that’s nonsense. This is 18 months ago. I was shocked by this. There are many, many organizations that are in an even worse position, with all due respect. We need to shift and change footing. That’s where I’m spending most of my time.

I’m now looking at things such as direct, versus non-direct and both are great. We have very strong communication with the trade and we plan to keep those, forging forward together. One of the things that caught my attention was, the famous Thomas Cook, the first tour operator in the world, from the 19th century, over 170 years in the industry and it went down the drain, last September. They were an important partner for us and we feel very sorry for their demise but this proves that we needed to move faster. Our company and many others, are still extremely reliant on distribution and there’s nothing wrong with distribution, as long as it’s good, healthy distribution that will stay alive.

We live in a world, especially in the hotel industry, where we’re on a constant fight against the clock. Our product is the most perishable inventory that you may have. More than food, even. At midnight, our room is lost and you can’t stock an unsold room night; it’s gone forever. You can’t go back in time and sell it again. This mindset of relying on partners to sell is great and it needs to be controlled and properly managed.

Coming back to the measurement, that’s an area where I’m spending a lot of time understanding how profitable it is, to sell this room through this channel. Is it possible to sell the same room through another channel or not? Think about Cape Verde, a small archipelago, it’s an African country where we operate a hotel. Would it be possible to sell 100% online for that hotel? Well, certainly not or it would be stupid to try to do so. We have a beautiful property in Catalunya, in the heart of Barcelona. The Apple store is in our hotel, to give you a sense of how central it is. Would it be possible to sell 100% direct, online, in that hotel? Well, maybe yes. Would it be wise to do so? Probably not, because you need to find the right balance. Obviously, an operator that wants to sell Barcelona, you might ask him to sell more of Cape Verde and you need to find the right balance.

So the point is, you need to look at the world, in terms of who can sell more, measure and understand what the impact is going to be on the GOP and build the teams around that strategy that you want to accomplish. This needs to be in accordance with what the world is asking for, not what your product is like. That’s another aspect that I’m spending a lot of time on – changing the mindset. Our product is beautiful, our product is the best, so the product-based marketing, is one of the fundamental pieces of marketing, but you need to think about the consumer much more. What does this individual want? How are we going to engage with this audience, to give them what they need, instead of convincing them to buy what we have? So a shift in mentality. Those are the things that keep me quite busy, these days.