Hotel Distribution, OTAs, and the Future of Hotel Technology

August 10, 2016 Thomas Landen

 

An interview with David Chestler at SiteMinder

The hospitality landscape is rapidly changing. With new distribution channels opening up, hotel management has become more complex for hotels. To get the latest on recent developments, we had the pleasure of speaking with David Chestler from SiteMinder. David is a hospitality industry veteran who has previously worked at companies like Pegasus Solutions and RateGain and he has been on the front lines of the industry’s evolution.

David, you’ve been in the hotel distribution space for more than 25 years. What is the biggest change you have seen in that time?

I have seen many changes from the physical appearance of hotels, to the operations and technologies, to the number of people touched by travel and tourism, which today employs one in nine people globally.

Just think about phones. Phones were very important when I started in the business, and now they are important again… but for digital marketing reasons. Mobile search, 24/7 research, and the fast-moving booking experience have all evolved as the consumer has evolved. Mobile is now becoming all-encompassing, with the ability to manage our every activity including payments.

Then there is the automation of ARI. It wasn’t long ago that ARI was delivered on microfiche and bookings via telex and standard post. Look at that now.

And we can’t forget about global proprietary systems, such as the GDS and CRS, and how they have evolved alongside the emergence of the cloud.

Travel agencies. Travel agencies have evolved from bricks and mortar, to clicks and mortar, as OTAs continue to disrupt the distribution space with their evolving models and moves to consolidate.

These have been natural changes as hotels have truly evolved. The brands that began with the likes of Wilson Hotels, Relais & Châteaux and other iconic names have dramatically evolved to include the likes of Airbnb and HomeAway. However, the evolution of independent hotels is, in my opinion, still the most interesting, and better visibility online will help them to gain customers from all over the world.

The world and our markets are changing and so must our business practices and technologies evolve. Security is now the ultimate detail that we must be ever vigilant of. We need to maintain our guests’ data and their payment data so it is safe and protected. Crime can be anywhere and strike at any time, so, as some say, it is not a matter of if you will be hacked as a business but when. That’s why hotels need to invest in PCI DSS compliance – and make sure that all of the technology providers they use adhere to the same standards.

Who has benefitted more from the changes in technology, the independent hotels or the groups?

The easy answer is both – but including the traveller.

SaaS has played a huge role. With SaaS growing in functionality and capability, it’s become a very cost efficient model for operators on both sides. That’s what SiteMinder’s suite of products is about – simplifying very powerful technology and making it affordable so that hoteliers of all sizes can benefit.

So, for independents, it’s now about increasing their competitiveness and points of differentiation from the brands – using the same, if not more, of the technologies available.

For hotel brands that have had access to these technologies for much longer, now it’s about illustrating their value to brand-loyal or rewards-loyal travellers and leveraging technology to drive the lowest price with the greatest of expectations. Complimentary breakfasts and free wifi cost millions to the hotel operator and are not differentiating points anymore.

Do you think that Airbnb or other similar sites will ever become significant distribution platforms for hotels, since they are cheap (Airbnb charges 3% basic commission on transactions)?

They are right now, just not for hotels… yet. Taking market share with credible inventory in key markets, and changing the user landscape especially for the long-term leisure traveller and extended-stay visitor, is how they are pushing into the competing marketplace.

They have become good at the merchandising of the destination and experience versus just the room and amenities. I believe one’s ability to search for what they want, when they want, on any device will make it easier for hotels to convert travellers directly if they invest in the proper technology, marketing and content.

Hotels need to step up their ability to compete with an apartment, townhome or house. Merchandising and improved content are going to be the tactics.

Do you expect that Instagram, Facebook or WhatsApp are possible future distribution channels? And what about chatbots?

If you think about it, those are social channels that bring a great number of users together and make them a collaborative and crowdsourced wisdom for the aspiration of travel and adventure. So, using platforms like Instagram, Facebook, and others will help the imagery and crowd feedback.

However, each hotel will still need to link to an Internet booking engine or have the ability to provide e-commerce, so the sites you mention are technically channels. Facebook seems to be leading the way – for example, booking engines like SiteMinder’s TheBookingButton already integrate into the Facebook business page as a widget, removing that need to click away from the site to make a booking.

Artificial Intelligence is making great strides, and machine-learning combined with message apps are bringing a new model of engagement to the mobile screen right now. Chatbots can enhance the conversation with customers and enable better experiences and managed conversions if they are done well. They are being deployed to schedule meetings, answer a question, enable a purchase or report weather, but it is early days for this technology. I look to see this year a ‘prove it or move it’ situation with these solutions.

Data-driven decisions for travel using Artificial Intelligence will not only provide for a better user experience that’s more aligned with financial means and natural resources, but they will also take a lot of the risk out of buying vacations.

However, I look for more mobile engagement with search and voice recognition driving personalisation and the travel experience with these sites providing high quality content and testimonials from friends and co-workers.

The ‘Internet of Things’ will bring big data to the forefront and the personalised connected traveller will have a truly seamless experience going from home to work, domestic and abroad, as boundaries will be limitless as long as wifi and electricity are available.

I see the intersection of travel and technology, and, likewise, the intersection of destination travel and experiences, at just the beginning.

What do you expect the future OTA vs. direct booking landscape to look like in 2020?

Who will be just an OTA?

By 2020, I expect the ‘agent’ will be computer-aided and support cognitive networks. I expect a consumer’s semantic search to be based on their priorities and interests, making choosing a trip or experience much simpler.

For hoteliers I believe automation and the interoperability of platforms like PMSs, CRSs and RMSs will make merchandising and the conversion process more automated while pricing becomes more dynamic and predictable. And we can see signs of that already. Science is helping to make operations more efficient, while data-driven decisions are helping with machine learning and calculable growth.

In this highly competitive market where hoteliers compete for the online guest, gathering, analysing and reacting to data can have a very positive impact on the hotel’s bottom line – but only with the right technology in place to drive the hotel (and its data) forward.

Hoteliers can look to their systems to glean the all-important data that we know is essential to run a profitable hotel. SiteMinder’s solutions – The Channel Manager, TheBookingButton booking engine, Canvas website builder, and Prophet pricing intelligence tool – are packed with in-depth reporting features.

I don’t believe it will be long before agents are consulted like doctors or publishers where guests pay for their expertise and benefit from their advice and a personalised itinerary – or, as TripAdvisor illustrates, user-generated content-driving interest.

Which new companies will help to sell travel? Which destinations will become larger players? Which airlines will broaden their interests? Which phone company will drive change via mobility?

Regardless, I am very excited about the future!

ABOUT DAVID CHESTLER

David Chestler
Executive Vice President, Global Enterprise Sales & Business Development

Born and raised in the balmy breezes of Miami Beach, David Chestler packed up his beach towel, donned his cowboy hat and boots, and made the move to Dallas, Texas, in part to help establish SiteMinder’s operations for the Americas. David’s passion for hotel technology has allowed him to forge a rich career with over 26 years in the industry. Prior to SiteMinder, he held senior positions at BirchStreet Systems, Pegasus Solutions, Utell International, RateGain and Visual Data Corp – to name a few – and most recently worked at Sceptre Hospitality Resources, a U.S. eCommerce firm.

Today David is strategically focused on SiteMinder’s partner development, global account development and new revenue opportunities. He is active with HSMAI, HEDNA, Skål and, in 2014, was announced one the first co-chairs of HTNG’s newly-established Software Resource Team.

David holds a B.S. in communication, marketing and sociology from Florida International University with family, golf, cooking, gardening and travel high on his list of favourite things in the world.

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