Hotels often struggle with the long tail of travel. The larger demand partners among OTAs, wholesalers and tour operators are highly visible. The time, effort and cost involved in working with them can usually be justified. However, this misses out on great opportunities in certain strong source markets where hotels may not have a presence or structure to identify and contract with smaller regional partners, let alone connect with them.
From a channel mix and diversification perspective, this long tail could be very important. One source market can be impacted while another remains strong. We have already seen this with the regional shifts during the Covid pandemic. We prefer a balanced and diversified mix of distribution channels, including Long Tail, to ensure business continuity and control distribution costs. However, the biggest hurdle is determining the return on investment (ROI), i.e. the time spent finding the right partners, contracting with them, ensuring they respect price controls and distribution, and establishing connectivity. Get this wrong and you’ve spent a lot of time chasing a (proportionately) small amount of revenue!
A number of technology-based solutions have begun to address this need by providing access to a wider network of long-tail partners from which to choose from and collaborate, without direct contracting or connectivity conversations.
Hyperguest which received $15M in funding from Lightspeed Venture Partners offers a B2B marketplace for accommodation providers and demand partners.
Katanox is targeting the $150 billion business travel market by “streamlining and improving the distribution of travel accommodation previously controlled by OTAs, GDS and bed banks”. Katanox received seed funding of $5.7 million in early 2022.
Holibob is building something similar targeting the tours and activities market and received $12M in funding.
It seems clear to me that the “new” marketplace model is here to stay and evolve.