Hotel Distribution Industry Scenario
In India and globally today, hotel distribution remains largely a fragmented operation. Some of the large hoteliers are able to manage their online room distribution efforts successfully using a channel manager. While their operational efficiency may have improved, their internal operations around revenue strategy, pricing, inventory control are all disjointed. Hence improving revenues becomes a difficult task.
Other hoteliers deploy a channel manager and probably benefit from a basic process flow for reservations and inventory flow. However, there is utter chaos and the processes seem complicated, cumbersome requiring a lot of time and effort leading to loss of productivity. The major issue which arises from this includes: overbooking scenario as the sold out updates were not passed to the online channels in time. Due to this, guests turn up at the property and the hotel has to turn them away leading to loss of credibility and reputation or they have to honor the booking and accommodate the guest in a nearby hotel at their expense- again not a happy experience for the guest and results in loss of revenue and additional expenses for the hotel.
Revenue optimization is difficult because revenue managers do not know channel performance in real-time. Updates have to be manually done and this can lead to undersell of the hotel inventory and loss of revenue.
The potential of a real-time intelligent distribution model remains untapped. When it comes to the budget and mid-market hotels in the 2-3 star categories, online distribution is still a nascent concept.
During weekends and seasons, destination hotels and those with amazing deals and packages do get fully sold out. There is a shortage of supply of rooms of about one lakh especially in the budget and mid-market segment which leads to this scenario. However not all the hotel rooms available for sale are available online for booking and hence their utilization rate is low. With consumers becoming more online savvy, it is important that hoteliers adopt a digital distribution strategy.
This is where RezNext facilitates the availability of more hotel rooms for sale online. Several mid-market hoteliers in India now through the RezNext platform make their rooms available for booking in the online market place, introduce deals and packages real-time and be visible to a larger consumer base. Today, RezNext is facilitating the sales of 60000+ rooms on a day-to-day basis.
Automating the Hotel Distribution Process
RezNext is a hotel distribution switch and a profit management partner for hoteliers in India. RezNext started operations in 2012 and today, about 2500 hotel customers benefit from its comprehensive distribution solution suite. RezNext’s customers have been able to embrace the benefits of real-time distribution which has not just automated their bookings and inventory flow, it has helped them drive efficiencies in their business with improved collaboration between staff internally and with demand generators externally. This has helped improve profitability with consistent growth in revenue and improved occupancy with the ability to sell up to the last room in real-time.
With the online boom in the travel space, Mike Kistner, Chief Executive Officer, RezNext Global Solutions, saw a great opportunity for mid-market hotels in India to adopt online distribution. “Limited awareness about internet technologies and the complexity in the existing processes had made it really hard for hotels to adopt online distribution. This is the gap we have been successfully addressing. We not only connect hoteliers to demand generators like Goibibo, Cleartrip, MakeMyTrip, Yatra, Expedia, Booking.com, Agoda, Orbitz, but do so in real-time” says Mike Kistner. This means all inventory and rates from hotels flow real-time to all their channels through the distribution platform. Also, all bookings from these channels flow back directly into the hotel’s property management system. RezNext automates the reservation processes completely for the hotels and allows them to then focus on distributing their rates and inventory intelligently.
According to Google, the country is geared to generate 1.8bn in hotel booking by 2016. If mid-market hoteliers are to get a fair share of this market, then they need to look at distributing their rooms strategically. RezNext addresses this need in the market. Its integrated solution suite helps hoteliers dynamically price their offering considering their booking history, demand, market trends and reputation, enabling them to choose a high ROI oriented channel mix and distribute the offerings to the right audience. More importantly, RezNext empowers hoteliers to take decisions backed by smart analytics.
Mike Kistner,the Chief Executive Officer at RezNext Global Solutions, had gauged the Asian Markets when he was working at Pegasus Inc. where he served as Chairman of the board and CEO. Sensing the opportunity in Asia, he met with Suresh John, a hospitality veteran and several other visionaries in the hospitality space in India and founded RezNext. Mike initially served on the board and then within months of launch became the CEO of RezNext Global Solutions.
Mike has three decades of experience in the hospitality industry, online operations, and technology. He is a founding member of the Open Travel Alliance and led this global industry association as its Chairman for 5 years. During his tenure, the dream of bringing an industry standard XML specification to the travel industry was realized.
Mike has held various leadership positions including Chairman of the Board and Chief Executive Officer of Pegasus Solutions, Inc., CIO and Senior Vice President Ecommerce at Best Western International, Senior VP of IT and Ecommerce at Wyndham Hotels and EVP of Operations for Super 8 Motels. In all his roles, he has been closely associated with the hotel distribution environment and has worked on several industry-recognized projects. These include bringing to market one of the largest and first consumer data warehouse having consumption detail data of over 100 million travelers and leading the industry’s largest property management system deployment to date, 6,000 properties in 18 months, at Cendant, now Wyndham.
The Product Differentiation
Channel management is one piece of hotel distribution. Hoteliers need all the other pieces to have a robust online reservation strategy. This includes knowing what rates work best, when to introduce promotions, how to deal with low demand and make the best of the peak season, how to leverage online reviews, and what channels to distribute to. RezNext brings all these pieces together in real-time and integrates it with the distribution platform. Hence, hoteliers can use a single application to manage their distribution plans smartly.
Another big differentiator is core of their offering i.e. Business Intelligence. Hoteliers can use platform to know their occupancy, availability, arrivals, departure, channel performance and sales for the day. Therefore, they can proactively address any issues they foresee in their performance.
Challenges and Learning with the Journey
While the ecommerce industry is booming in India, awareness about internet technologies is still low among hoteliers. It is only in the last five years that the digital landscape has started to gain prominence among mid-market hoteliers in India. The major challenge to RezNext has been around educating the hoteliers on the benefits of online distribution. RezNext has educational webinars and monthly newsletters and regular blogs that it uses to communicate to customers. RezNext also has a character called ReD that it uses to connect with hoteliers. Through ReD (presented as a comic book hero), RezNext is trying to create awareness about how typical day-to-day challenges in the hotel can not only be addressed with the right technology, but how real-time data intelligence can also help hoteliers act on market opportunities immediately. Check the link for the same: http://reznext.com/ReD-comic-book.pdf
“We started in 2012 and have seen great success. Our first acquisition of 1000 customers was a great milestone for us. Similarly, the NEA funding was a great buy into our vision and has helped us expand our product portfolio and market reach” Mike comments.
To a large extent, RezNext is redefining the economies of supply and demand. By bringing a lot of hotels that hitherto did not have access to online channels; RezNext is facilitating the availability of close to 62500 rooms online today on a day-to-day basis.
As a team, RezNext has close to 150 employees and headquarters in Bangalore. RezNext also has an office in Delhi and its sales teams are present in all the metros and tier 2 destinations. The company is also looking to expand into Vietnam and Africa through strategic partnerships. Early next year, RezNext will focus more strongly on other Asian countries and Middle East.
RezNext has achieved close to 14% market penetration in India and is looking to double sales to 5000 customers by the end of this fiscal. On December 08, 2014, RezNext Global Solutions raised $5 Million of funding from New Enterprise Associates, Inc. (NEA), one of the world’s largest and most active venture capital firms, to further accelerate the company’s already impressive growth and customer success. Read the full news here: http://www.reznext.com/press-release-reznext-global-solutions-raises-5-million-from-nea-2/
RezNext is significantly expanding on its mobile capabilities. RezNext is ready to launch a purpose-built mobile application that will help hoteliers be in control of their distribution plan when on the move. RezNext is also looking to bring to market a 360 degree business intelligence solution that analyses all the hotel distribution functions from reputation management, revenue management, channel management and hotel marketing independently and also evaluates the influence of each function on the other. “We will also continue to invest in our distribution platform to offer additional enhancements to our customers” Mike concludes.