Download Now: h2c's Hospitality Distribution Report
Much has changed in Hospitality Distribution already before the Covid crisis; the pandemic aftermath just accelerated developments.
Today, 6 in 10 bookings are online. Compared with h2c’s first Distribution Study in 2017, the brand.com share nearly doubled from 10 to 20% in 2022. Over the same period, third party bookings (OTA share including bed banks) grew 5 percentage points to 35%. Combined, online direct and indirect sales showed a 15% increase over the past five years, resulting in a compound annual growth rate (CAGR) of over 8%.
As hotel chains are increasingly creating their own destiny via enhanced sales & marketing strategies, Distribution Systems are under continuous review. Obviously, one tech size does not fit all: About nine in 10 large chains use the CRS as their leading system (the primary system for distributing Availability, Rates, and Inventory, aka ARI). In contrary, nearly six in 10 small chains rely on their PMS (including a PMS-integrated Channel Manager) to control distribution.
Two in 10 hotel chains using a CRS today are unsure if it is the optimal solution over the next three years. Chains considering a CRS replacement said that it should be replaced either with another system (e.g., a channel manager) or multiple systems (for example a middleware/ integration hub combined with their PMS).
Driven by elevated inflation and economic uncertainties, overall system cost has advanced to a key criterion for selecting a new distribution system. For acquiring state-of-the-art technology, costs and affordable integration options have firmly skyrocketed as decision criteria, increasing 45 percentage points from 24% in 2017 to 69% in 2022.
Amidst inflationary pressures, 64% of hotel chains pass on cost increases to their guests. Large chains are much more inclined to do so versus their smaller counterparts.
When asked to name the Top 3 distribution innovation leaders, six in 10 hotel chains were unable to do so. In the near to medium-term, AI is expected to drive distribution innovation for guests and system users alike.
These are some of the high-level study results. More details can be found in our report, which can be downloaded here.