The Role of the DMO - A Lesson From VisitScotland.com
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Loading ...There has been a lot of discussion about the role of DMOs and how DMOs should be implementing technologies for the benefit of stakeholders. In the struggle to maintain viability and revenues, some DMOs have turned to a sales model. How does this model affect the DMO’s primary mandate to market the destination? We need look no further than VisitScotland.com to see an example of a DMO whose priority has shifted from marketing the destination to generating revenues from commissions. There are many, especially stakeholders, who are not happy with the direction that VisitScotland.com has taken. One group of disgruntled accommodation providers known as the ADGAP (Association of Dumfries & Galloway Accommodation Providers) have developed a site called Reclaim VisitScotland.com to voice their concerns about the site. The site states the following:
“To benefit tourism, the national website should sell Scotland, the destination, by showcasing our unique tourism product. It should promote all accommodation providers and facilitate contact with them. Under the control of eTourism the main function of the website is to sell accommodation. To maximise sales, direct contact between consumer and business is obstructed. Pressure selling precipitates bookings at the expense of customer satisfaction. Commission charges increase costs to providers who pass them on to the consumer as price rises. Increased prices result in reduced volume of business overall. Emphasis on the website is room sales - Scotland as a destination comes second. eTourism has no interest in attracting new tourists to Scotland as it costs less to close sales to people already committed to holidaying in Scotland.”
Part of the issue is the fact that the underlying technological infrastructure is not designed for the benefit of the suppliers but for the facilitation of control of inventory by the DMO. Providers log into the DMO’s extranet and load inventory for sale through the DMO website. This is the same model used by other travel sellers like Expedia, Viator, and Isango. Although there is nothing inherently wrong with this model, the problem is that the model is designed to facilitate sales of product through the travel seller and not through the supplier. The control of the sales process is in the hands of the seller, in this case the DMO.
So the question is, what is the ideal technological model for a DMO? The overwhelming consensus among tourism technologists and experts is that travel suppliers should be managing their inventory in open single inventory source (SIS) systems. An SIS would allow the travel supplier to manage their inventory in a single system and, with the use of open APIs, allow other sales based systems to connect to and distribute the suppliers inventory in real-time while allowing the supplier to control who connects and at what cost. For the DMO, this would mean that the burden of sales and customer fulfillment falls on the travel supplier, which is arguably, where it should lie. The DMO can still benefit financially by being rewarded for their marketing efforts, however, the reward is spread equally across all suppliers in a region rather than just those that choose to participate in the booking engine program.
Ultimately the question remains whether a DMO is a marketing organization or an intermediary. Does the Internet, and more specifically travelers, need yet another intermediary to get involved in the booking process?
I’d like to hear what you think about this issue.
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Written by Stephen Joyce · Tags dmo, reservation systems, technology, tourism, travel · Filed Under Destinations ·
Bonjour Stephen,
Real-time single-image inventory and Managing Rate Integrity became a reality in hotel industry, could happen in the leisure and tours market.
But I think it was a long process !!! and not affordable (as far I can see in the hotel industry).
Maybe it’s not a technology problem, maybe more a market problem (big players want direct contact with suppliers thanks their extranet) and also the size demand and size pressure from the suppliers.
Maybe Rezgo can become a new actor in this tours and leisures Real-time single-image inventory market
Make some benchmarking in hotel industry, look at this:
http://www.htng.org
http://www.micros.com
http://www.travelclick.net
http://www.cultuzz.com/content/view/24/86/
Best regards
Claude
That’s a great comment Claude. There is definitely a market demand by big players to deal directly with big suppliers (and even smaller ones too) but shouldn’t DMOs be supporting all segments of the tourism industry in their regions, big and small? I’m hoping Rezgo will be able to play a role in the leisure and tours market but it can difficult if we have to compete with DMOs who are essentially providing the same service (i.e. Web in a Box).
I’m not familiar with the exact workings of the Visit Scotland situation except that they have been grappling with this issue for more than a dozen years. What I do know is the situation in Switzerland where the national DMO was instrumental in enabling access to online distribution to the accommodation sector in the country when it established Switzerland Travel Center in 1998.
The company is jointly owned by all interested segments of the industry, including accommodation and transportation and allows the DMO to sell all these services on MySwitzerland.com the national destination site.
Initially the hotel association was reluctant to join but realized that this organization presented the most effective distribution channel for a very fragmented sector dominated by small and medium size hotels at affordable cost.
At the same time this set-up solved the previous problem of having to turn away thousands of visitors who wanted to book a hotel at the DMO offices around the world prior to their departure.
While the primary purpose was not to generate additional income for the DMO it is certainly a welcome side benefit for these organization who are increasingly under pressure to justify their existence and show an ROI on public finances they receive.
Stephen,
Check out this http://www.openresort.org/
discover today
for your benchmarking
best regards from France
Claude
Hi Stephen
For me, the nub of the issue is in your final paragraph when you write, “Ultimately the question remains whether a DMO is a marketing organization or an intermediary.”
In terms of VisitScotland, I feel that half the bad blood arises on account of the confusion between these two roles on account of VisitScotland (effectively the state owned marketing agency) and VisitScotland.com the ticketing agency being two separate bodies but with nearly identical names.
It is the role of one to attract people to Scotland while the other coverts. VisitScotland the marketing body is only concerned about specific businesses from a macro-hygiene point of view (e.g. trying to get something done if there were appalling levels of standards in specific sectors) whereas VisitScotland.com has micro-hygiene and sales worries. The accusation by ADGAP, however, that, for VisitScotland the marketing body, ‘Scotland as a destination comes second’ is balderdash and piffle! You might disagree about how effective VisitScotland are but they’re not spending most of their time promoting Mongolia as a destination.
There also exists among the industry (predominantly made up of small suppliers) that both VisitScotlands are not doing enough for them. When you attend meetings between VS and operators, it can sometimes be like attending marriage counselling, with one side crying that they’re being ignored and the other side implying that if only they tarted themselves up a little, then they might warrant more attention. And like many loveless marriages, the small operators are often reluctant to break free.
You ask, “Does the Internet, and more specifically travellers, need yet another intermediary to get involved in the booking process?”. My answer would be that if the ‘original intermediary is failing or a small group thinks it can do better than something like VisitScotland, then yes but, like VisitScotland.com, it will still need paying for by the suppliers in some way.
Incidentally, I think it’s also important to distinguish between a destination management organisation and a destination marketing organisation. The former can (and should) include the latter while the latter doesn’t generally include the former. Put simply, the former is concerned with all aspects of the product from the state of the pavements through to how well the area is advertised – the latter just concentrates on marketing.
This reply has gone on far to long (and probably should have been a post of my own!) so I’ll start to wind up. I think somewhere behind all of this lies the issue of bed taxes (see our recent post for more details) as a way of reconnecting suppliers with lager scale intermediaries but hell will freeze before this is contemplated in Scotland.
What an excellent response. Thanks for that Stephen. It is great to get some open dialogue on the issue and a Scottish perspective on the subject. The issue of marketing vs. management is one that many DMOs (whichever one they may be) are tackling. In Canada for example, the role of the DMO varies from province to province with some focused on marketing and some creating call centres to sell product and make bookings. Will consumers come to expect organizations to play certain roles in the future? Does the mixing of roles confuse rather than bring order to the industry as a whole? I think at some point organizations like yours and conversations like these will help to define some roles for these organizations so, at long last, we can stop discussing what is best for the organization and start talking about what is best for the traveler.
[…] in February I wrote about the role of the DMO and the lesson learned from VisitScotland.com. That post received a number of comments back that added more depth to the […]