Fred Miller, a 40-year veteran in the lodging industry, joined Marriott in early 1997 as part of its acquisition of the Renaissance Hotel Group. He is responsible for establishing and maintaining Marriott’s position as a leader on issues that are vital to travel industry sales professionals in the ever-changing marketplace. He is also responsible for developing and executing Marriott’s wholesale strategies and programs.
{{HTR Magazine: Does the travel agents' channel represent an important volume of Marriott International annual bed/night sales?FM: }} It gets back to the trip purpose. For business travellers that are going from Paris to London and back, staying just for a night at the Marriott Marble Arch, they have a choice of self booking tools or Internet sites to do the job. Families for simple trips also can use all the technology available today but this will not cause a dramatic channel shift in distribution. What I do think is going to happen is that the GDS, which are huge and powerful corporations, are going to force hotel companies - as the airlines have done - to find alternative means of communicating with their customers. You may have travel agencies networks and companies willing to have a direct link with Marriott and bypassing the GDS –only because the GDS are going to be too expensive. These are the alternative that we are looking at very seriously today. We are trying to come up with an affordable means by which we can communicate directly to travel agency groups so we are not held hostage by the GDS. That's what happened to the airlines’ justifying their new distribution strategy.Fred Miller: }} About 30 % of our total transient business comes to us directly from travel agents and another 10% comes from tour wholesalers who get their business from travel agents. The travel agents' channel is pretty much maintaining its share. The number that I gave you has not changed much for at least the past 10 years. Here is another sign of the importance of the travel agents community: within the four major GDS, one out of every five hotel room bookings is for Marriott. We have a market share of 20% when our total room inventory only represents 3% to 4 % of market share.{{HTR: Have you recently experienced a shift from one distribution channel to another?FM: }} Our own website, Marriott.com, represents 80% of our total web-based business. What we found is that those customers, using the site, are very loyal to the brand and know how to book through that channel instead of calling our reservation system or calling the hotels direct. If there is a channel shift, this is from direct bookings and voice reservations on to self booking tools for corporate buyers and Internet for our other customers. People tend to go to third-party websites if this is a very simple trip.{{HTR: Do you work closely with the GDS operators to facilitate the access to your inventory of rooms?FM:}} We already have the highest level of connectivity and with the GDS we make it as easy as possible to book our hotel. The most important thing we have is what we call “Single Image Inventory”. It means that the same rate and the same availability is offered in the GDS as we offer to all the other channels. Marriott does not encourage channel shifting by rates. Our strategy is very basic: if we have a room to sell in one of our hotels, we will make that room available to all of our distribution channels because the ultimate goal is to sell that room at the price we have decided for that period. Through that policy, we have gained a lot of credibility in our inventory with travel agents. They know when they book a room with us that their customers will not get a better rate by searching on the internet.{{HTR: Do you think there are still further improvements to make and in what directions?FM: }} There are a number of enhancements that the GDS are continuously making to improve their systems and the connectivity with the hotel systems. In almost every case, Marriott is a leader in working with them on these developments. We are normally on the front end of technology when it comes to our relationships with the GDS. And that gives us a kind of a head start over most of our competitors. We are very active in Hedna (Hotel Electronic Distribution Networks Associations) and have been a member for many years. It is a forum where people bring their ideas. They are discussed thoroughly and then it is up to the individual companies to implement those ideas.{{HTR: Do you have specific programmes to strengthen your relations with individual travel agents and travel agencies networks?FM: }} We do have an educational programme called Hotel Excellence!It is available in thirteen different languages around the world and it teaches travel agents how to sell hotels and not just Marriott hotels: how to approach your hotel customer; how to make sure that you match the appropriate hotel type to the customers travels needs. We previously had the training in a 96-page work book. But now it is also online, available at any time for travel agents to take it at their own pace. At the end of that programme, there is a test they can take online and get graded. Once they have completed that test, they get five hotel vouchers from Marriott hotels good for a $49 to $79 USD rate at our hotels. Each of these vouchers is valid for four nights. So basically, when they graduate from our program, travel agents get the possibility to stay 20 nights in our hotels at a very discounted rate. They get also a certificate with their name on it. They have the opportunity to be a part of our direct marketing programme. By adding their email address, they receive about once every three weeks a newsletter from us. In that newsletter, we have very timely information to assist the travel agents. Some of the news is about Marriott, some of it is about the industry as a whole. Then again, it gives them a little bit of a competitive edge on their other colleagues. If we have a new promotion that we are developing, that will is the first place we announce it. We have today 120,000 travel agents around the globe who completed our Hotel Excellence! training programme and among them 87,000 that enrolled on our newsletter distribution list.{{HTR: To what point is your education programme worth the effort?FM: }} We have offered this programme for eight years. As a result of that, travel agents feel like they are extended members of our sales force because of the relationship that we have with them. They have an opportunity to email us with suggestions or concerns and we rapidly respond to these emails. We also implemented Travel Agent Assistance Desks, one in London which covers Continental Europe as well as the UK, and one here in the US for our North American market. When they have an emergency situation, they can call that number and speak with professionals to solve travel agents’ issues.{{HTR: Does your central reservation system include a specific tool to calculate the commissions with secured and easy payments?FM: }} It is interesting to note that Marriott is the only hotel company with a “double commission guarantee”. By that I mean if we do not send a check or the information to the third party system within 15 days of the guest's check out we will double the commission payment. Last year, we paid just under 200 million US$ in travel agency commissions. Our accuracy in paying those commissions is 99.97%. We have this information because of our double commission guarantee. It is the most efficient and most accurate commission payment program in the industry. It most likely human error when we make a mistake. Most of these errors were based on a misunderstanding and certainly were not intentional. So when you have rate and inventory integrity, an easy way for travel agents to book us through the connectivity that we have with the GDS, do a good job in educating and a guaranteed commission payment, it is kind of a winning combination.{{HTR: Do you maintain the basic system of commissions paid on the sales by travel agents or could you change your practise, considering what the air carriers have managed in drastically reducing the commissions?FM: }} Today, in the United States, it is very difficult for travel agents to do business with air carriers. The airlines have their web only fares. They limit their inventory to the travel agents through the GDS’s and reduce or eliminated their commissions. But at the same time, airlines have their lowest average fares coming from the web sites. We do not want to engage in that process. Right now if a travel agent does not bring value to the consumer during the buying process then that consumer will direct himself to the Internet to do his own work. Travel agents need to specialise more. Their role has changed over the years. They have gone from being a transaction processor to a travel consultant. They have to know more information about the destination they are selling than what the customer can get online. He has to know more about a specific trip type, be it a safari or a cultural or ski journey… In other words, the travel agent needs to specialise{{HTR: How do you foresee the business relations between hotels groups and the travel agents?FM: }} The travel management companies such as American Express or Carlson Wagonlit have anticipated that evolution. Their transaction processing for corporate accounts have gone all on a net price basis with a service fee because they are performing a service for these corporations. And any commissions that are paid to them are normally rebated back to their corporate accounts. But as for the retail travel agent, it really has an important role to play by adding value to the sale. With Marriott they are the highest rated distribution channel that we have. They are the ones who are not selling the lowest available rate, they want to sell the ocean side rooms, they are selling the Club Floor rooms. They are selling trips to the most upscale travellers. Marriott believes they earn their money when they sell travel. We are not reluctant to pay the commissions they deserve. It is true that the strategy of the airlines has cleaned up a lot of the travel agency community. Those who were travel agents for the wrong reasons have disappeared. The ones that have overcome the transformation from airline commissions to service fees are really much more professional.{{HTR: Would you be tempted to bypass the travel agents using new electronic tools - such as Internet or mobile phones - which could give you direct and cheaper access to the final clients?FM: }} It gets back to the trip purpose. For business travellers that are going from Paris to London and back, staying just for a night at the Marriott Marble Arch, they have a choice of self booking tools or Internet sites to do the job. Families for simple trips also can use all the technology available today but this will not cause a dramatic channel shift in distribution. What I do think is going to happen is that the GDS, which are huge and powerful corporations, are going to force hotel companies - as the airlines have done - to find alternative means of communicating with their customers. You may have travel agencies networks and companies willing to have a direct link with Marriott and bypassing the GDS –only because the GDS are going to be too expensive. These are the alternative that we are looking at very seriously today. We are trying to come up with an affordable means by which we can communicate directly to travel agency groups so we are not held hostage by the GDS. That's what happened to the airlines’ justifying their new distribution strategy.
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