In this interview, Nayan Peshkar, SVP of Digital, Distribution & Revenue Strategy at Millennium Hotels & Resorts presents a case study on how his brand has worked successfully with distribution, pain points experienced and how he sees it unfolding in the next 24 months.
Q1. Nayan, please tell us a little about yourself and your role at Millennium.
Hi, I’m Nayan Peshkar, I head the Digital, Distribution and Revenue Strategy at Millennium hotels and resorts. MHR owns and operates 140 hotels in 30 countries. We have 10,000+ team members, generate more than £1bn in revenue and are listed on the London stock exchange. We manage 35,000 rooms across 60 destinations. Summarized, I am part of the commercial and marketing team and my activities are focused towards the acquisition, engagement and retention of customers.
Q2. When considering the scope of the problem or opportunity, what does distribution mean for your business?
Distribution is a combination of marketing and technology. Marketing plays a larger role in distribution today than it has done in the past, and this is a good thing as technology is an enabler, not a proxy for marketing.
We consider distribution at MHR as-
- A force multiplier of our sales reach.
- A pathway to new markets, audiences and opportunities.
But, distribution comes with a cost; for MHR the cost of customer acquisition (the main purpose of distribution) is the largest expense after payroll. We have focused on building a full picture of our customers, our channel partners and our platforms. This gives us actionable information on costs of each of these – hence, cost is no longer an emotional argument, but one that is connected to the business’ abilities or lack thereof.
Distribution is a challenge when there is no commercial strategy underpinning it. The disintermediation effect of distribution can be a bogey man. It is not distribution itself that causes disintermediation, but the lack of control over what, with whom, why and how. MHR has cut down on its OTA relationships to better manage its representation in the market.
Finally, here is some food for thought – Are the changes we see in Distribution about profit improvement or about profit protection? For example, a few years back mobile was not essential, it is now. Your investment in getting up to date were important else you would have lost customers… but are the mobile customers paying you any more for that new distribution point?
Q3. What is the pain that some of the more aggressive digital tactics are causing? How have you tackled them?
- Distribution based on price is a lose-lose situation for all concerned, but this is the preferred approach of certain platforms. Unauthorised use of first-party content and rates is a growing concern, still.
- Loyalty is shifting from being affiliated to a brand, to now being affiliated to a platform. But this must not be understood as third-party distribution causing brand dilution. Distribution is a game of platforms – brands have their own direct platforms too. If a third-party platform is more impactful than a first party one, this has no bearing on the brand values of the hotel company itself.
Solutions will follow only after we understand whether the current distribution model is sustainable or not-
- Unlock data to quantify the cost-value relationship of each channel. Assign a grading logic to determine which channels are sustainable. Create a commercial strategy that is under-pinned by this data. The whole company then needs to line up behind this strategy – all customer acquisition incentives need to be re-structured on this basis too.
- Move from the current fragmented state to focus limited resources on top performing channels. These channels are not the ones that are simply the highest revenue streams, but rather the ones that are the highest revenue streams and the most sustainable.
- The supply chain of hotel distribution is quite long. 50% of revenues earned for us by OTA’s do not come through their own brand sites, but through their affiliate networks. Hotels must identify direct partnerships within this supply chain to better serve their interests. B2B2C is fine, but B2B2B… is not – technology has several solutions for enabling B2B2C – understanding and adopting these are essential.
Q4. How are you preparing for what you expect will unfold over the next 24 months?
Distribution is about presence – there are two parts to this: footprint and quality. Are you represented in all the 194 countries of the world and is this representation one of quality? What I mean by that is, do you have a localised and customised experience for each market? We can see why distribution is expensive and fragmented. So, the industry needs new solutions.
- Distributed Technology / Blockchain – This will allow for B2C transactions, though the logic layer for catering to different audiences and differing needs is yet to be seen. This won’t mean that anything is free, just that new markets open up to even niche players.
- Data will continue to shape customer experiences as personalisation and recommendations take hold, especially in the digital platforms. GDPR could not have come at a better time – as marketers, the playing field is clearly defined now and hence we can focus on delivering experiences.
- AI, ML will go mainstream just as Cloud has. The current “wow” will be the norm. We will be marketing to Digital assistants!