HMG 6446 Chapter 6 Learning Activity

Chapter 6 Learning Activity

Although Hotel Elegante does not want to jeopardize their relationship with travel agents, they could benefit financially by promoting their own website, given they are paying a reasonable fee for its maintenance. The approximate average cost for a single reservation are as follows:

1. How customer centric is Hotel Elegante’s approach towards distribution?
2. Client centric businesses ensure that the customer is at the center of a business’s philosophy, operations, or ideas. According to one marketing executive at Hotel Elegante, “Distribution is all about making it easy for our customers to do business with us.” Hotel Elegante will enter any distribution channel that is indicative of how its customers want to buy its products rather than try to dictate how its consumers buy its products and services. Therefore, Hotel Elegante will continue to fund distribution channels of higher cost as long as there is sufficient volume to justify their existence.
3. Over the years, Hotel Elegante has successfully pursued a two-pronged distribution strategy that involved building relationships and developing loyalty with both consumers and travel agents (or other influencers). The company’s reservation technology and distribution channels, support infrastructure, and rational pricing strategy simplify the shopping process and add to the guest convenience. Going forward, Hotel Elegante’s distribution strategy continues to be: “To make it as easy as possible to do business with the company by putting its products and services on as many shelves as possible.” In my opinion, Hotel Elegante’s approach toward distribution is extremely customer centric based on the facts above and the additional information in the chapter 6 readings.
4. How can Hotel Elegante evaluate each distribution channel and measure its contribution to the bottom line?
5. Distribution costs can be as high as 35% of room revenue. It makes sense for organizations to pay attention, develop effective distribution strategies, and manage their channels carefully to maximize results. Hotel Elegante should hire a Channel Manager, who works closely with the Revenue Manager or Revenue Management Team to oversee the different distribution channels used. The Channel Manager also ensures content, rates, availability information, and selling rules and restrictions are up to do date in each channel and then verifies whether each channel is properly representing his or her portfolio of properties.
6. Create a measurement scorecard that can be used by company leaders to monitor the performance of each distribution channel.
7. Which distribution channel needs the most attention and why?

For example, we book a room that costs us $100 per night and we stay one night. The commission for a travel agency/intermediary is $10-$15 dollars. The same hotel room booked on the hotel/resorts website will cost $2-$5, significantly less when we are talking about hundreds of thousands of reservations. There is a significant amount of money that can be saved by promoting Hotel Elegante’s own website.

1. -Travel agency or intermediary commission: 10-15 percent of total room revenue
2. -Hotel/resort website: $2-$5