Ted Zhang of DerbySoft on hotel distribution challenges

Ted Zheng 300Assessing hotel marketing and distribution challenges, and planning strategies will be top of the agenda for many hoteliers in the first quarter of 2017. We spoke with Ted Zhang, CEO and cofounder of DerbySoft, to hear his insight on key trends and advice to help alleviate those challenges.

What are the main challenges hoteliers approach you with?

Hotels want to work with more and more partners. DerbySoft‘s whole approach is to support a Global Data Network that enables travel players of all sizes and types to easily connect and conduct commerce. This includes suppliers, whether hotel groups/chains or independent properties, OTAs, metasearch engines, social media outlets, and so on.

Managing connections with an increasing number of players becomes progressively harder. Also, every additional partner results in additional costs if hotel companies themselves build the connections, so long tail distribution partners with small transaction volumes become less viable for home-grown connectivity.

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The challenge is to add partners while minimizing the additional operating costs for doing so. DerbySoft’s goal is to reduce the hotel’s additional operational cost to zero when it adds a new channel.

How do smaller players in the hospitality industry solve the connectivity issue? Cost, resource and time are all challengesÉ

For the most part, smaller players haven’t really solved the connectivity issue. Their lower volume makes it impractical to spend large resources to build highly customized connections to their partners. Even if cost weren’t an issue, the connectivity queues at larger players can mean waiting for years, in some cases, to actually get connected.

To plug this gap, we’ve recently launched a streamlined connectivity solution called Go. We leveraged our unparalleled experience in connectivity to develop the API for Go that is priced appropriately for smaller players but also supports the needs of their larger counterparts. ÊWe are at work on another solution to be called Book for even smaller players that do not have their own systems to connect with.

How can hoteliers overcome challenges with metasearch management?

Managing metasearch manually is very complicated. The number of computations required to properly manage a single metasearch channel makes it necessary to use automation, and cross-channel optimization only adds to the complexities.

Spend is another challenge, but it is important to think about metasearch spend in the same way that you think about OTA commissions. This means that it’s not something that should have a pre-determined budget for the month or year, but rather should be considered as a cost of sale.

For example, no hotel would Òturn offÓ a high-performing OTA just because it had reached a set a budget for commissions, and the same approach should apply to metasearch.

Consumers are using metasearch regardless of whether hoteliers are participating in it or not. Hoteliers just need to find a tool that can effectively reduce their average cost per booking. DerbySoft’s Marketing Services, called Click, offers such a tool, MetaSearch Manager, that can drive direct bookings for hotels at a cost of distribution that is less than OTA commissions.

Participation in metasearch should be an easy decision for hoteliers as long as they use an effective tool to manage it.

What key trends do you envisage for the hotel industry in 2017?

The big push is in social media. Explosive growth in the use of WeChat for travel and the introduction of Facebook Dynamic Ads for Travel are good examples. This will only develop and expand in 2017. Increased emphasis on personalization is another trend to watch in 2017. This includes personalization in products as well as marketing. Much of this personalization is integral with mobile devices and will influence the whole stay from check-in to check-out and everything in between. Lastly, I believe that almost any B2C site will either sell or market hotels in the future.

About the Author

Ted cofounded and runs DerbySoft with Feng Ou, the company’s CTO. Ted has seventeen years of experience in travel distribution as well as many years of engineering experience in Silicon Valley.

Founded in 2002, DerbySoft is a global technology company that partners with all of the top 10 global hotel groups and many others, the world’s leading online travel agencies, metasearch engines, wholesalers and tour operators.

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