Why a Diversified Vendor Strategy is a Recipe for Failure
By Nate Lane Senior Director Business Development, Pegasus | February 09, 2020
Hoteliers can't handle every aspect of their business in-house, even if they want to. In their search for assistance, hotel operators form relationships with a wide variety of vendors in order to cover operations outside of their core competencies and reduce redundancies, but today this type of organization is fraught with its own set of challenges. A diversified strategy that may have once served to protect a business is now a competitive liability.
We have all seen it before. A hotel is preparing to give its marketing strategy a much-needed overhaul, so it seeks out a variety of agencies to handle the challenging process of getting the word out effectively. Pretty soon, an array of agencies and technology partners are considered for the job, with each taking the helm to manage isolated components including branding, social media, performance marketing, channel management, and more. By the end of the process, the hotel is working with anywhere from eight to 12 different parties, but they aren't seeing the expected results.
The main reason for a business to diversify its list of vendors is also its greatest misconception. Operators think that a wide array of vendors will create an environment where they will hold each other mutually accountable for their successes and failures, where they will compete under the shared umbrella of a single business and produce increasingly favorable results. In reality, this creates an ecosystem where none of your hotel's individual parts are communicating with one another and the data and performance measurement provided by these parties is near impossible to reconcile.
Another issue is that fragmented vendor relationships cut hotels out of key innovations that continue to proliferate throughout the industry. When multiple systems are connected and sharing information, and this information can be displayed or referenced in a holistic manner, hotels can have access to major competitive advantages.
By comparison, a strategy that uses multiple standalone vendors in many cases doesn't provide access to the same level of integration and access to data across multiple programs, leaving hotel operators with a number of siloed tools, none of which perform as they should. Or, operators are presented with an immense cluster of information, with no idea how to put it to work and an inability to determine true value and returns on a channel-by-channel basis.
This is not an ideal situation for hotels or merchants, but it doesn't have to be this way.