Resource Allocation In Hotels

Resource Allocation in Hotels –Alternative Distribution Options

The number of reservations flowing to hotels through the electronic and switchboard distribution channels – the Internet and reservation call centers – is growing steadily. Once a minor contributor of bookings, they are now primary business sources and grow more important with every passing month.

This productivity growth has heightened emphasis throughout the hotel industry on using the electronic and switchboard distribution channels effectively and maximizing their potential. Every director of sales and marketing faces the challenge of understanding, prioritizing and managing these alternative outlets on behalf of his or her property.

How important is this mode of resource allocation as a means of gaining reservations? The Hotel Electronic Distribution Network Association (HEDNA) reported that in 1999 these alternative distribution systems delivered over 43 million bookings with a value in excess of $12.5 billion. GDS booking growth continues at about 10 percent a year. Everyone has his or her own stories of the impact of the Internet and central reservations centers. Some large chains are experiencing 200-300 percent growth annually. Small, boutique properties report that over 75 percent of their bookings now come from the Web.

It is clear that bookings over the Internet will become more of normality than even the central reservation call centers. While the number of people who have Internet access approaches 100 million in the United States and 200 million worldwide, research repeatedly indicates that consumers are turning to the Internet for travel-related information. They may not book online (although they will eventually), but they are already comparing hotels online before they pick up their telephone to call central reservations or drive up to the front door of the property.

For hotel sales and marketing professionals limited resources are allocated to presenting properties in the sales channels that will be the most productive in their comp set--be they print ads, direct mail, public relations, sales calls or electronic distribution channel participation and advertising. A sales professional strives to select the most cost-effective and compelling channels that will in turn bring guests to their door and fill their available rooms at a competitive price.

This resource allocation process requires assessment of each potential business source’s target audience, opportunities for participation, probable production and costs. This applies to electronic distribution just as it does to utilizing central reservation call centers.