The Triple Challenge of Long Tail Distribution

The Triple Challenge of Long Tail Distribution

Marc Armengol, VP Business Development at HyperGuest, sums up the strategic importance of long tail distribution: expanding market reach, meeting unique hotel needs, and boosting long-term profitability. Diversifying distribution channels reduces dependency on single sales sources, ensuring resilience in the ever-changing hospitality landscape.
Marc Armengol
March 26, 2024

In the e-commerce world, the concept of long tail refers to products or services with low individual sales volume. The name "long tail" comes from the graphical representation of this situation, where we have an extensive number of points with low sales volume, forming a long tail

The long tail can be applied to both products and distributors, with the latter being the most common use in revenue management and hotel marketing.    

The strategic value of long tail distribution lies in its ability to expand the target market and increase long-term profitability. A distribution network allows you to expand your potential audience and meet the specific distribution needs of certain hotels. Similarly, by expanding distribution, you reduce sales concentration and dependency, hence improving profitability.

The Three Challenges of Hospitality Long Tail Distribution

  • Commercial: Due to its high atomization and fragmentation, long tail distribution cannot be addressed point-to-point by the sales force of a chain. In traditional hotel distribution models, this role was outsourced to wholesale intermediaries in exchange for a commission that can range from 10% to 35% depending on the region of the world and type of accommodation.
  • Technological: The extremely fragmented hotel technology ecosystem, with countless overlapping systems (PMS, CRS, Channel Managers, Switches, etc.) and a clear lack of internal synchronization, makes it extremely difficult and costly to connect distributors to the availability source.
  • Control: In too many cases, the black box that allows you to reach the market located behind long-tail distributors implies a complete loss of control over inventory; disparities, loss of rate integrity, and channel cannibalization.

Although these are the three main strategic challenges of Long Tail, they are not the only ones. In the purely operational area, there are also frictions related to collections, incident management, reconciliation, and billing.

Faced with this predicament, the different players have taken very different approaches:

  • Maintaining the status quo
  • Outsourcing the management of intermediation
  • Taking direct control of the situation using HyperGuest, which through its marketplace allows you to define multiple business rules to execute an efficient global distribution strategy.

In conclusion

Long-tail distribution presents both opportunities and challenges in the realm of hospitality, particularly within revenue management and sales enablement. While it expands target markets and boosts long-term profitability, it also poses significant hurdles in terms of commercial, technological, and control-related aspects.
The fragmentation of distribution channels and loss of inventory control demand innovative solutions. Some players opt for maintaining the status quo or outsourcing management, while others embrace platforms like HyperGuest's marketplace to assert direct contracting and execute efficient global distribution strategies that do not depend on a few travel providers. 

Tackling these challenges is paramount for maximizing the benefits of long-tail distribution, and reaching operational agility while minimizing frictions in the increasingly complex landscape of hospitality.