Given the industry's characteristics and how it has naturally developed, going from agreeing to terms and connecting to a trading partner to distributing and capturing a room booking to paying partners and reconciling payments is anything but simple.

Traditionally, this requires a complex structure, including connecting to multiple companies and tools, which are often disjointed and siloed. The results are missed revenue opportunities, operational inefficiencies, poor customer experiences, and avoidable costs.

That’s why there has been a major push to go direct and cut out unnecessary intermediaries in hospitality and the greater travel ecosystem.

While the benefits have been well documented for travel suppliers such as hotels and airlines, there are also significant advantages for travel buyers such as travel management companies to buy directly with their suppliers.

Embracing direct relationships and payment workflows with suppliers enhances operational efficiency, improves customer experience, and creates new revenue opportunities.

Accepting new partnerships faster

One of the biggest challenges to making this accommodation available to customers is coming to terms with partners.

This process can be simplified by using a single direct integration to connect to the entire supply of global chains such as Hilton and Choice. Everything is streamlined, from contracting and governance to connectivity to quickly onboard new properties.

On the flip side, this process allows travel buyers to connect with smaller independent properties at a scale that would otherwise be too labor-intensive.

Building stronger relationships with supply partners

This direct connection fosters direct relationships with suppliers and paves the way for stronger partnerships. Travel buyers who engage directly with accommodation providers can collaborate more effectively to develop tailored offerings that meet the needs of both parties, such as special rates and connections to loyalty programs, which is not always possible.

This collaboration can enhance buyers' commercial success by enabling them to offer their customers more and better accommodation options while suppliers can better control their content, rates, and terms.

Accessing special offers & rates

This is especially important In an age where personalization is key. Direct distribution enables buyers to offer tailored experiences to their customers. Access to special rates and loyalty programs can be leveraged to create unique packages that resonate with travelers.

For example, travel buyers who work with Katanox can leverage direct distribution functionality to access 140% more room availability and all special rate types, including BAR (Best Available Rates), loyalty, prepaid, and CNRs (Corporate Negotiated Rates). Hotel chains receive the highest margins by working with Katanox, so they prefer to open up more inventory via Katanox.

Travel buyers can create unique packages that resonate with their customers. This personalized approach not only meets the demands of modern travelers but also distinguishes travel buyers in a crowded travel market, enhancing their value proposition.

This is especially important for travel management companies (TMCs). According to Deloitte, only 56% of surveyed employees consistently use their company’s booking tool or corporate travel agency because of convenience, finding better deals elsewhere, and wanting to earn loyalty points.

Filling inventory gaps with high-value long-tail partnerships

Direct distribution fills inventory gaps more effectively. Traditional distribution channels, at worst, might overlook niche accommodations and lesser-known properties and, at best, will restrict the partnership's value.

By establishing direct connections with suppliers, including long-tail properties, travel buyers can access a broader range of inventory at a higher value.

This expanded inventory can provide travelers with unique options that cater to diverse preferences, ultimately enhancing customer satisfaction, especially in more fragmented markets such as Europe.

Diversifying revenue through ancillary services

Direct distribution allows buyers to explore ancillary revenue opportunities (revenue generated beyond the standard booking).

For example, by partnering directly with suppliers, buyers can facilitate loyalty program signups and offer exclusive deals that strengthen their relationships with supply partners.

This drives additional revenue and strengthens the relationship between buyers and their clients. As mentioned, customers highly desire the ability to book with loyalty programs and collect points.

The potential for ancillary revenue diversification can create a more resilient business model, especially in a (sometimes) volatile travel market.

Improved attribution & recognition

In a competitive environment, buyers must receive credit for the business they generate. For example, if a TMC is connected via an OTA and one of their customers books accommodation, the TMC doesn’t always get attributed for the booking.

Direct relationships with suppliers allow for better and more accurate attribution, meaning that buyers can more precisely track and report on the rooms or services sold.

This transparency helps demonstrate value, strengthens partnerships with suppliers, and gives suppliers more accurate insights into their bookings, creating a mutually beneficial ecosystem.

Enhancing customer service & reducing travel friction

Direct distribution allows buyers to serve their customers more effectively. Buyers can enhance their service offerings by accessing the right content at the right time and competitive rates.

Additionally, reducing travel friction — facilitated by streamlined processes and better customer support — ensures that travelers enjoy a seamless experience from booking to check-in.

For example, if there is an issue with the booking, it’s much easier for a travel buyer to resolve it directly with the hotel instead of going through an OTA.

This responsiveness to customer needs ultimately fosters greater satisfaction and loyalty, giving buyers an advantage over their competition.

Streamlining payment processes

Improving payments also reduces travel friction and improves the customer experience. The financial aspect of travel management is often complex and fraught with challenges.

Adopting direct payment solutions can benefit buyers by simplifying commission settlement and payouts, unified reconciliation processes, and VAT-compliant invoicing.

When working with Katanox, these commissions are paid in net, meaning hotels don’t need to be chased for commission payments. Worse, deploying a collection agency kicks off an expensive and time-consuming process.

Direct payments simplify financial operations, reduce the administrative burden, and enhance the overall efficiency of travel transactions.

Moreover, it mitigates issues associated with virtual credit cards (VCCs), leading to a smoother payment flow and improved cash management.

On average, 15% of all virtual credit card (VCC) payments fail during check-in. Instead, create a smoother payment flow, improve cash management, and provide a better customer experience.

If customers must use VCCs, a seamless transaction can still be assured. For example, transmitting the authorized credit card charges through Katanox’s API can reduce errors regarding such authorizations by 85%.

Regardless of payment method, direct connections provide secure and effective payment solutions to keep travelers happy and keep operations running efficiently and smoothly.

The future is now; the future is direct

The best way forward for travel buyers is direct. Scalable growth no longer needs to be throttled by legacy complexity and non-value-adding intermediaries.

Buyers can reap many opportunities by connecting directly with accommodation suppliers, including improving the customer experience, increasing organizational efficiency, reducing complexity and cost, and seizing new revenue opportunities.