Channel conflict in hotel industry

In the evolution of technology and Internet usage, consumers are becoming more and more sophisticated when choosing a channel for purchase decision making. Therefore, it is more complicated and difficult to accomplish the effectiveness of distribution channel in marketing strategy, especially in hotel industry.

The fact that hoteliers and managers are changing their concentration to a more diverse distribution channel besides the traditional channel so as to enhance and boost the efficiency of hotel room booking as well as to increase sale revenue and improve brand awareness (Freed 2013). The usage of online channels including online travel agencies and hotel websites experience a fantastic growing in hotel booking (Ling et al 2015). Meanwhile, the use of direct calling, walking in or through travel agent face a decline in consumers’ choices.

Consumers increasingly demand for a quick, simple and inexpensive mean when purchasing and receiving products or services (Tan & Dwyer 2014). Internet booking from the top 30 hotel brands marks an incredible record at 56.9 % of the Computer Reservation Systems bookings (Tan & Dwyer 2014). The rise of Internet usage and consumer behaviour with a fast and effective attribute has been contributed to the rise of third-party online travel service companies such as Agoda, Booking.com, Expedia, etc (Tan & Dwyer 2014).  The accessibility of those online agencies, including the hotel website have provided consumers a comprehensive and comparable board of information such as price, the availability of hotel rooms to enable consumers to make the best purchase decision. A more diverse set of distribution channel will make it easier and reduce the cost of time for consumers for hotel booking process.

distribution_feature

A hotel generally implements various marketing channels such as hotel website, online travel service, travel agencies, call centres to offer consumers a more convenient booking activities (Tan & Dwyer 2014).Those channels will all heighten the hotel’s profitability and cost-effectiveness. However, the combination of multi distribution channel may increase the conflict among channel members and the hotel itself.

Channel conflict happens when distribution channel is influenced by another channel to be attracting the same customer with the same brand at the same time and setting (Lamb, Hair & McDaniel 2012, p.466). Conflicts arise due to many reasons such as different objective, different expectation and different approach in the management and functions (Lamb, Hair & McDaniel 2012, p.466). Channel conflicts can be either horizontal or vertical. Horizontal conflict involves the conflict among two or more channel member in the same level (Lamb, Hair & McDaniel 2012, p.466). For example, conflicts among two wholesalers or different retailers of a same manufacturer. On the other hand, vertical conflicts engage among different level of a marketing channel, normally between manufacturer and wholesalers or retailers (Lamb, Hair & McDaniel 2012, p.466).

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In the case of hotel industry, horizontal conflict occurs when online travel services provide a cheaper price compared to another online service or to travel agencies for instance. Vertical conflict takes place when the hotel tries to increase the sale or booking rate through its own website or booking service but still continuing the connection with its partners such as online travel agencies. A competition of sale rises through the conflicts.

In order to prevent channel conflict among channel members and the hotel, it is significant to generate and implement an appropriate solution that can manage and control the conflicts. It is essential to balance market exposure among channel members and develop an applicable pricing strategies to avoid channel conflict. Channel members and the hotel can obtain mutually beneficial relationship when minimizing the rise of channel conflict and be able to overcome the impact of channel conflict. Strategies, policies or several management tools and a clear goal can be adapted to have a better workable and profitable results (Cunningham 2013).

By Thanh Truc Duong – 215241883

References

Channel Manager Hotel.BB 2013, TheHotelBB, video.

Cunningham, MK 2013, ‘Reducing Channel Conflict’, Journal of Marketing Development & Competitiveness, vol. 7, no. 1, pp. 78-83, retrieved 14 May 2016, Business Source Complete, EBSCOhost.

Freed, J 2013, “The Evolution of Hotel Room Distribution”, RYH, photograph, retrieved 14 May 2016, < http://revenueyourhotel.com/the-evolution-of-hotel-room-distribution/>.

Lamb, CW, Hair, JF, & McDaniel C 2012, “Marketing”, Cengage Learning.

Ling, L, Dong, Y, Guo, X, & Liang, L 2015, ‘Availability management of hotel rooms under cooperation with online travel agencies’, International Journal of Hospitality Management, vol. 50, pp. 145-152, doi: 10.1016/j.ijhm.2015.07.005

Tan, J, & Dwyer, L 2014, “Managing Distribution Channel Conflict in the Hotel Industry”, International Journal of Marketing and Business Communication, vol 3, no.1, Publishing India Group, retrieved 14 May 2016, < http://www.publishingindia.com/GetBrochure.aspx?query=UERGQnJvY2h1cmVzfC8yMjMxLnBkZnwvMjIzMS5wZGY>.

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