Hotel Electronic Distribution in China:

Is the Status Quo Acceptable?

May 15th, 2014

Shanghai

HEDNA

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The changing game of hotel distribution in China

Evolution of the distribution landscape

Marketplace growth and globalization

Distribution challenges

Chinese travelers’ preferences are challenging long-standing

status quo of established distribution standards and systems

Time for change

Establishing the China Organizational Group of HEDNA

Agenda

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Hotel distribution used to be straightforward

GDS (Global Distribution

Systems)

Voice / Call Center

Property Direct

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Hotel distribution has become much more complex

GDS

Voice

Property Direct

Brand.com

Mobile

OTAs

Opaque Sites

Search

Local Search

Meta Search

Social Media

Plan & Review

Sites

Search

Meta Search

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Brand.com

Mobile

Plan & Review

Sites

OTAs

Voice

Group Meeting Intermediaries

Wholesalers Brand.com & Voice

Hotel Direct Sales

Boundaries have started to blur

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TMCs

Online Travel Agencies

Independent Travel Agents

Consortia

Meta-search

Tour Operators

Wholesalers

Online Travel Agencies

TMCs

Wholesalers going online

OTAs entering TMC space

TMCs entering group space

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Transparency exposes the lack of distribution control

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For this hotel, the same room type is being sold at different rates through different channels

Hotel

Existing 84%

Pipeline 13%

Recently opened

3%

China’s tourism has been growing over the years

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Grew about 10 times from Year 2000-2013 (unit: million border-crossings)

Grew about 4 times from Year 2000-2010 (unit: domestic air travelers per day)

Sources: China Outbound Tourism Research Institute (COTRI); China Tourism Academy (CTA); US-China Institute, University of Southern California; STR Global; PR Newswire

Domestic Hotel Supply (August 2013)

Major Outbound Destinations

CHINA’S OUTBOUND TOURISM CHINA’S DOMESTIC TOURISM

China

2012 Jul-Aug 2013 Jul-Aug

est.

What does that mean for hoteliers?

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Domestic Hotels

China

Leverage domestic distributors to capture the domestic travel market

Leverage international distributors to grow inbound business

International Chains

Leverage domestic distributors to capture domestic and outbound travel markets

Leverage international distributors to grow inbound business

China

Domestic Hotels

Leverage domestic distributors to capture the domestic travel market

Leverage international distributors to grow inbound business

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What does that mean for distributors?

Domestic Distributors

The need to access domestic hotel supply in an electronic and automated fashion to scalably support their growing domestic business

The need to access overseas hotel inventory to capture the flourishing outbound travel market

China

International Distributors

The need to access domestic hotel inventory to capture the domestic and inbound travel markets

China

Domestic Distributors

The need to access domestic hotel supply in an electronic and automated fashion to scalably support their growing domestic business

The need to access overseas hotel inventory to capture the flourishing outbound travel market

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Guarantee Requirements

Chinese/Western travelers’ preferences are different

What does that MEAN? What is the DIFFERENCE?

Chinese consumers typically prefer Chinese interface/content

The need for hoteliers to serve Chinese hotel content for both domestic and overseas hotels

It is not customary for Chinese guests to guarantee a booking

The need for hotel chains to support non-guaranteed bookings

Credit cards are getting popular, but other payment methods are in widespread use, e.g. Alipay, WeChat Payment, etc.

The need for hoteliers to support multiple payment methods

The need to comply with channel-specific requirements, e.g. Taobao’s open platform APIs and escrow payment method

Possible need for different connectivity protocols, rate types, promotional structures, etc.

Language Preferences

Non-traditional Channels

Payment Methods

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Inventory

Hoteliers are seeing the following distribution challenges

HOTELIERS’ CHALLENGES

How to distribute text content (Chinese/other languages) and images to multiple domestic/international distributors in an efficient and scalable way?

How to entrench the single inventory – multiple channels principle? – Connecting CRS with all channels, e.g. OTAs, wholesalers, etc.

Domestic distribution landscape is dynamic with players fast-changing, need a flexible and scalable solution to connect to new players

Lack of standardized protocols / technologies domestically, e.g. – How to support local customer preferences, e.g. non-guaranteed bookings? – How to support local payment methods, e.g. Alipay, WeChat Payment, etc.?

Content and Images

Protocols

Connectivity

How to keep data (e.g. credit card data, personal data) secure as it travels across multiple platforms for a booking?

Larger hotel chains’ rate types and rules are typically more complex than those of independent hotels, putting pressure on distributors’ systems – Data freshness/accuracy issue and performance issue

Systems

Security

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Inventory

Distributors are seeing the following distribution challenges

DISTRIBUTORS’ CHALLENGES

How to obtain hotel content in Chinese as well as images with Chinese captions?

How to obtain rates and inventory for domestic/overseas hotels in an efficient and scalable fashion?

Need a scalable solution to execute Chinese-market-specific rules through complex interfaces (guarantee methods, payment methods, etc.)

How to ensure rate and product parity with competitors?

Content and Images

Parity

Connectivity

How to keep data (e.g. credit card data, personal data) secure as it travels across multiple platforms for a booking?

Security

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Larger hotel chains’ rate types and rules are typically more complex than those of independent hotels, putting pressure on distributors’ systems – Data freshness/accuracy issue and performance issue

Systems

The way forward

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We are all “in the same boat”

The above distribution challenges are common to all parties involved

The best way forward

To improve upon the status quo and address these challenges

through greater collaboration between hoteliers, distribution

channels, and technology providers

Hoteliers Distributors

Technology Providers

Collaboration

Time for Change: HEDNA in China

No cost

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HEDNA China Organizational Group Hoteliers

Distributors

HEDNA University (educational program)

White Papers and Resources (selected ones available in Chinese)

Enables Chinese hoteliers, distributors and technology providers to collaborate, work and learn together to:

• more efficiently distribute to domestic customers

• more easily connect to and distribute through international channels

Conferences, Forums and Webinars

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Technology Providers

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HEDNA: What is it? @

HEDNA is the global forum to advance hospitality distribution through collaboration and knowledge sharing

Optimizing the use of current and emerging technologies

Influencing development of current and emerging electronic distribution channels

Providing an opportunity for an open exchange of information among members

Offering industry members professional development opportunities

HEDNA meets its objectives through various ways

Not-for-profit trade association founded in 1991

Brings all segments of the industry together to improve

electronic distribution systems and services

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HEDNA: Overview @

Worldwide membership includes the most influential

companies in the hotel distribution industry

HEDNA: Why should you get involved? @

HEDNA is the only global forum where the industry works collaboratively to overcome common challenges

Take advantage of extraordinary networking opportunities with the “right” people

Gain access to extensive educational resources

Gives your company a “seat at the table” to influence future developments in electronic distribution

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No cost No cost

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Thank you!