EHL Insights
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Business Management
3 min read

Q : What is Disintermediation?

In the modern age, how businesses engage their customers continues to evolve rapidly. Consumers have changed how they search out the brands they want to buy from, how they choose between options and what they expect with regards to service.

Hotels need to make sure they understand the concept of "disintermediation" (the reduction in intermediaries between producers and consumers), so that they can better grasp customer needs, make the necessary changes and continue to exceed their customers’ expectations in order to thrive as a business. A keen understanding of the latest trends allows professionals in the hospitality industry to adapt and adjust their marketing efforts so that they are better equipped to provide the type of services customers are really seeking. Here is what is important to know about disintermediation and its role within the hospitality industry.

 

What is disintermediation?

At its core, disintermediation refers to removing the middle man between a business, that produces a type of product or service, and their customers, who want to receive the product or service. This type of strategy empowers brands and customers to interact more directly with one another, providing organizations with more information about the needs of their target customers so they can continue to build their business to serve these expectations.

For hotels, disintermediation allows them to deal more directly with their guests. Hotels may have to pay higher upfront costs associated with the software and systems needed to act as intermediaries, but overall the process allows them to develop better relationships with customers. They can also reduce their long term costs associated with managing the intermediary between customer and producer.

Unfortunately, what often happens, is that it is the hotels themselves who risk a reduced role. Customers frequently turn to various booking websites, as well as emerging businesses like Airbnb, to book their rooms. This leaves hotels that would usually carry out secure reservations to simply offer bed, food and beverages, but this formula provides them with little to no information about the customer themselves and what they sought when making the booking.

As customers have adapted to the increasing convenience of digital communication, particularly when booking hotel rooms, these online booking websites are now the ones who gather the information and data about customers. This leaves hotels in the dark and without the information needed to improve their services.

 

Why is disintermediation important?

Disintermediation has become a significant trend for hospitality brands that want to understand how to remain relevant among modern customers. Customer opinions and needs continue to adapt as technology and society evolve, and industry professionals wanting to develop their brands must understand how to use this principle.

As a general rule, the hospitality industry tends to be slow in adopting the latest technology and accommodate the changes in the sector. Brands that see this emerging trend and use it to adapt to customer needs and expectations can position themselves for tremendous growth. They can secure a slot at the forefront of their sector.

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Examples of where you can see disintermediation

A few brands have begun to take steps to incorporate disintermediation into their business plans and capture the attention of the modern consumer. A few attempts have been made to bring hotels in particular areas together to attract potential customers as a unit, but these have not yet succeeded.

Instead, brands in the hospitality industry need to focus on three main areas.

Convenience

Customers appreciate convenience, which is why they often enjoy looking at travel packages and the convenience offered by sites that provide online hotel bookings. Hospitality businesses should consider their growth potential if they were to incorporate vacation ideas in with their hotel bookings, creating all-in-one deals that customers can take advantage of.

Technology

Customers who are booking hotels today appreciate the convenience offered by digital approachability. They have turned to websites to help them book desired businesses and find the experiences they want. The hospitality industry is often resistant to incorporating new technology, but finding avenues to incorporate important apps and software that provide greater digital aptitude can be of great benefit to the business. These tools can also help the hotels and other hospitality brands deal more directly with their customers.

Hotels should focus on building their presence on the search engine results page and mobile compatibility. Increasing their visibility to potential online customers, while also empowering those using mobile devices, is a sure way of bringing in more business.

Providing direct and delightful experiences

Finally, hospitality industry professionals need to focus on learning how to stand out to their customers. Providing experiences that exceed expectations, including a level of personal services that cannot be replicated outside of the hotels, and helping organizations demonstrate their value will encourage customers to keep returning. Building brand loyalty with employees and staff, and providing service training will help to create a strong identity and reputation.

Disintermediation will have a growing impact on hospitality industry professionals as they face competition from online businesses. It can provide opportunities for general growth and revenue increase for those who know how to incorporate it successfully into their business model.

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