The hotel booking ecosystem is weighed down by siloed software systems, middlemen who take a piece of the RevPAR pie, and guests who don’t have as much control over their experiences as they should. The founder of Impala spoke to SkiftX about how to eliminate these issues with a new model: Open Distribution.
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Speed has never been a more essential ingredient to business success — we expect email responses within five minutes, deliveries within 24 hours, and groundbreaking ideas to come to life overnight. Hotels, however, continue to crawl when it comes to innovating the most important piece of the puzzle: selling their rooms. How can the industry break up with clunky and costly integrations and middleman-heavy indirect affiliate programs?
One solution that is fueling a new future is the concept of Open Distribution — a model that charts a new course with fewer bumps and lower costs for hotels and room sellers. SkiftX spoke with Ben Stephenson, CEO and founder of Impala, a company pioneering the new approach to booking, to learn how Open Distribution can open the doors to new opportunities for the travel industry.
SkiftX: How do you define Open Distribution? Tell us how it creates a new approach to online booking.
Ben Stephenson: Open Distribution is a new model that allows hotels and room sellers to work together seamlessly. In addition to cutting out those inefficient layers of middlemen, it drastically reduces the amount of time needed to get up and running. Consider the old world where room sellers and hotels would need to agree to commercial terms, take six weeks to build out an integration, test it, coordinate sending images of the property, and all the other cumbersome steps involved before ever actually booking a single room. Now, all that work is taken care of. Hotels and room sellers can be connected and start working together in less than 48 hours, delivering flexibility and control for both parties – without anyone else standing in the way.
SkiftX: How do commissions work between hotels and OTAs?
Stephenson: The entire philosophy behind Open Distribution is to be the underlying infrastructure that allows a hotel and a room seller to work together in any manner that makes sense to them. So, by default, we have agreed to a baseline commission with the hotel, but there is flexibility to help attract the guests that benefit both parties. For example, let’s say that a hotel really wants more guests from Japan because they tend to stay longer and spend more.
That hotel might be willing to increase the commission level from 12 percent to 14 percent for an OTA that attracts Japanese guests.
Every hotel has a different strategy. The market sometimes mistakenly says that hotels are just looking for bookings that charge lower commission levels. That is true to some extent, but what hotels are really looking for is the right kind of guests. Hotels can easily adjust their commission levels as part of their strategies to attract that target audience.
SkiftX: Speaking of guests, what’s in it for them? What are the tangible benefits for the people who will actually be staying in these rooms?
Stephenson: In addition to thinking about how much a room costs, guests want a more comprehensive picture of the room that goes beyond square footage or type of bed. Our technology and API gives room sellers and hotels the ability to offer a richer level of detail about the experience that will greet them when they arrive. For instance, a hotel could build an experience where the guest can see which floor the room is on, whether there is a bath or a shower, if there is a desk where they can work, and other specific features that can help guests determine the room that fits their exact needs.
Despite the best efforts from hotels, the existing infrastructure doesn’t allow them to go much beyond sharing room types online. Open Distribution aims to offer the full picture of the experience to meet the needs of today’s experience-focused traveler.
For example, we work with a company called RemoteDream, which has been built on the belief that there will be a massive increase in the number of remote workers. They have different requirements, such as a desk, a kitchenette, and a communal space where they can meet people. We also work with a hostel and hotel brand called Selina that wants to attract guests from that niche. They couldn’t sell those rooms through RemoteDream with their existing technology, but Impala made it possible in 48 hours.
SkiftX: Can you share some of the impact that Open Distribution is currently having?
Right now, a lot of hotels are struggling to balance the post-pandemic recovery with the fact that they simply don’t have enough people to deal with bookings. We work with one large hotel group that had to make an enormous reduction to their distribution and e-commerce team due to Covid. Now, as things are picking up, the short-staffed e-commerce team had to deal with 50 or 60 new partners wanting to sell their rooms to help the group shift from business to leisure. They couldn’t handle the expense or the time, but Open Distribution gave them the ability to work with exactly the partners they wanted to on the exact terms they preferred — without having lots of middlemen in the way.
SkiftX: Looking well ahead into the future, what might it mean for the entire travel industry?
Stephenson: In the bigger picture, this will be a way to finally make the dream of attribute-based selling a reality. We can let customers pay slightly more for a room with a bath, or they can add on a balcony at checkout. The industry has always been excited about this possibility, but we’ve never quite gotten there. The technology didn’t exist, and there wasn’t a big catalyst — from hotels or guests — to fuel the shift. Now, we’re seeing travelers wanting to control the experience, and hotels wanting to give them that ability. As the evolution of the hotel experience continues, Open Distribution is designed to meet the demands of a new generation of guests. And ultimately, what we’re trying to do at Impala is more than help sell rooms, we’re trying to rebuild the infrastructure from the ground up so that the next 10,000 travel entrepreneurs can build the businesses that power the next 400 million trips.
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