As the global hospitality industry enters a "redefinition" phase, driven by digitisation and evolving consumer behaviour, modern distribution channels such as OTAs, metasearch engines, and direct online bookings are increasingly dominating revenue strategies. According to a 2025 Skift Research report, over 70% of customer booking journeys now begin on digital platforms, leading hotels to allocate most of their marketing budgets and operational resources to these channels. However, this excessive focus on the "technological surface" sometimes causes hotels to inadvertently overlook a crucial underlying layer that quietly maintains a steady flow of guests: traditional travel agencies. Despite lacking the "glamour" of digital platforms, inbound tour operators, MICE organisers, and international wholesalers continue to play a pivotal role in driving guest traffic, especially in destination markets like Vietnam. According to the Vietnam National Administration of Tourism (2025), over 60% of international visitors to Vietnam still travel on package or semi-package tours – a figure that underscores the irreplaceable role of travel agencies in the tourism value chain. For 4-5 star hotels, this channel not only provides stable occupancy but also helps hotels access long-haul source markets through global distribution networks that hotels would struggle to build independently in the short term.

1005quangnam-danang1-1722306145541-17223061461182059256563

However, a paradox arises: despite its role as a "hidden pillar" in the distribution ecosystem, the traditional travel agent channel faces numerous limitations in its cooperation and operational methods. Many hotels find themselves in superficial partnerships – signing allotment contracts without optimising performance, or relying on a few large partners without a diversified strategy. According to Savills Hotels (2025), many hotels in Vietnam report up to 40% of their guests coming from just 2–3 main travel partners – a structure that poses significant risks when the market fluctuates. Meanwhile, issues such as price discrepancies between channels, rate leakage, or manual, slow booking processes remain unresolved, leading to cooperation efficiency that doesn't match its potential. In this context, re-evaluating the role of the traditional travel agent channel is no longer an option, but a strategic imperative. The article "DECODING HOTEL PLACE STRATEGY – PART 4: "The Forgotten Pillar" – When the Traditional Travel Agent Channel is Underutilised" will delve into analysing the core bottlenecks in the current cooperation model, while proposing a new approach where the traditional channel is no longer an "operational burden," but is restructured to become a "sustainable growth lever" in the hotel's overall distribution strategy.

Current Situation: Traditional Channels Still Contribute Significantly but Inefficiently

In reality, despite the strong rise of digital platforms, traditional travel agencies still hold a significant position in the customer acquisition structure of many hotels in Vietnam and the ASEAN region. According to a Savills Hotels report (2025), for 4-star hotels in Vietnam, the proportion of guests coming from travel agencies, tour operators, and inbound partners ranges from 35% to 45%, and can be even higher in destinations heavily reliant on international tourists such as Ha Long, Da Nang, or Nha Trang. From a broader perspective, data from the Vietnam National Administration of Tourism (2025) also shows that over 60% of international tourists still opt for tour packages or partially packaged travel, meaning that the majority of these guests still pass through travel agencies rather than directly through hotels' online channels.

nt-1-1-17037392155092006604172

In the luxury segment, especially 5-star resorts, the role of international wholesalers becomes even more pronounced in expanding source markets. These partners help hotels access distant markets such as Europe, Australia, or the Middle East – where direct marketing costs would be substantial if implemented independently. However, the prevalent cooperation model still revolves around fixed allotments, meaning hotels "hold" a certain number of rooms for partners for an extended period, often accompanied by significantly lower net rates compared to retail prices. According to Deloitte (2025), the difference between allotment rates and retail prices in the luxury segment can be as high as 25–40%, creating a considerable "opportunity cost" if not managed effectively. Problems arise when these allotments are not optimised according to market developments. During low seasons, many wholesalers fail to meet committed production but still hold rooms until close to the release date, causing hotels to lose opportunities to redistribute through other channels with better conversion potential, such as OTAs or direct bookings. Conversely, during peak seasons, when demand surges and market prices can increase by 20–30% according to STR Global data (2025), hotels are "locked into prices" by pre-signed contracts, forcing them to sell below the product's true value. This lack of flexibility not only impacts RevPAR but also reduces the overall effectiveness of revenue management strategies.

what-is-mice-tourism

In the MICE segment, considered a "revenue lever" for many 4–5 star hotels, the situation is not much better. According to an ICCA report (2024), the Asia-Pacific region is experiencing a recovery and growth rate of over 20% per year in the conference and events industry post-pandemic. Simultaneously, Allied Market Research (2025) forecasts the global MICE market to reach over US$1.5 trillion by 2030. However, in Vietnam, many hotels have not effectively leveraged this opportunity due to a lack of dedicated MICE sales teams, failure to develop competitive package products, or inability to establish a network of professional event organisers. This leads to numerous high-value revenue opportunities being missed, especially during low seasons when MICE can effectively "fill capacity." In summary, a clear paradox emerges: traditional travel agency channels still bring a significant number of guests and play a stable role in revenue streams, but their operational efficiency, in terms of both selling price, control capability, and profit optimisation, is not commensurate with their potential. This indicates that this channel is not "outdated," but rather needs to be restructured with a new, more flexible, data-driven approach, closely integrated with the hotel's overall distribution strategy.

Reasons: When the Old Model No Longer Fits the New Market

One of the core reasons why traditional travel agency channels have not fully realised their potential lies in the "mismatch" between traditional contract models and modern hotel pricing strategies. While travel agencies require a fixed net rate for the entire year to build tours, calculate costs, and market them consistently, hotels, especially in the 4–5 star segment, are increasingly reliant on dynamic pricing models to optimise revenue over time. Room rates are no longer fixed figures but fluctuate daily, according to market demand, events, and even different customer segments. This difference in approach makes it difficult for both parties to find a "balance point," and in many cases, hotels are forced to sacrifice flexibility in exchange for a stable flow of guests from partners.

Unbalance concept. Balancing stones on the shelf.

The consequences of this conflict are most evident during peak seasons. For example, a hotel signs a contract at the beginning of the year with an inbound partner for the Korean market at a fixed rate. When the peak tourist season arrives, with surging demand and market prices potentially 30–40% higher, the hotel still has to allocate rooms to the partner at the lower, pre-committed rate. This not only reduces revenue per available room (ADR) but also leads to a decline in RevPAR and overall business performance. In the context of increasing operating costs, "locking in prices" through static contracts inadvertently becomes a major obstacle to profit optimisation strategies.] Beyond the pricing issue, the lack of diverse partner structures is also a systemic cause. According to Savills data (2025), many hotels in Vietnam report that up to 40–43% of their guests come from just 2–3 main travel agencies. This means that a large portion of revenue depends on a few source markets, making hotels vulnerable when the market fluctuates. The 2020–2021 period clearly demonstrated this risk, as the decline in major source markets like China and South Korea led to a significant drop in occupancy rates for many hotels in Da Nang and Nha Trang. This lack of diversification is not just a market issue but also a sign of an unbalanced distribution strategy.

technology

Furthermore, technological limitations and operational processes are also significantly reducing the effectiveness of collaboration with traditional travel agencies. While modern channels like OTAs have fully digitised the booking process – from checking availability and confirming bookings to payment in mere seconds – many transactions with agents still occur manually: via email, Excel files, or even fax. This not only slows response times but also increases the risk of errors, especially during peak seasons when booking volumes surge. The lack of integration between channels also means data is not updated in real-time, often leading to overbookings or missed sales opportunities. Overall, these reasons highlight a clear reality: the problem lies not with the traditional travel agency channel itself, but with how hotels operate and integrate this channel into their overall distribution strategy. When old models, from static contracts and partner structures to manual processes, no longer suit a rapidly changing market, restructuring is essential if hotels wish to leverage existing resources more effectively.

Consequences: When the "Distribution Backbone" Becomes a Risk Factor

If not managed strategically and cohesively, the traditional travel agency channel can become a "double-edged sword" in a hotel's distribution system – providing a stable source of guests while posing long-term risks to revenue, pricing, and market structure. First is the revenue risk – a core element in any hotel business strategy. As the inbound market strongly recovers, especially with international tourism growing again post-pandemic, hotels that fail to build a sufficiently broad and diverse partner network risk missing out on a large volume of potential guests. Conversely, over-reliance on a few partners or specific source markets leaves hotels vulnerable to external fluctuations. A mere change in visa policy, economic shifts, or geopolitical factors can cause a sudden drop in guest numbers, leading to plummeting occupancy. The period of 2020–2021 demonstrated this, with many hotels dependent on Chinese or Korean guests facing closure or minimal operations when these markets were disrupted.

business-cost-reduction-guide

Second is pricing risk – one of the most sensitive factors in revenue management. Maintaining fixed-price contracts in a constantly fluctuating market can lead to hotels "selling below true value" during peak periods when demand is high but prices are pre-locked. This not only reduces ADR but also directly impacts RevPAR and profit margins. Conversely, without strict control over the distribution chain, wholesalers or intermediaries might resell rooms at lower rates on other platforms, leading to "rate leakage". When prices leak uncontrollably into the market, the hotel's overall pricing structure is disrupted, causing conflicts with other channels like OTAs or direct bookings, and eroding customer trust.

Risk

Third is missing opportunities in the MICE segment – a "goldmine" for revenue that remains underexploited. According to Allied Market Research (2025), the global MICE market is projected to reach over USD 1.5 trillion by 2030, with a compound annual growth rate (CAGR) of over 7% per year. This is a high-value segment, not just for room revenue, but also for ancillary services such as conferences, banquets, F&B, and experiential activities. However, if hotels fail to build effective collaboration strategies with event organisers, MICE travel companies, or PCOs (Professional Conference Organisers), they will miss out on accessing groups with high and stable spending potential, especially during off-peak seasons – when MICE can effectively "fill occupancy" better than any other channel.

Solution: Restructuring Partnerships – From "Selling Rooms" to "Strategic Collaboration" with NewSun Hospitality

To effectively leverage the traditional travel agency channel in an increasingly volatile market, hotels cannot continue operating with a "static contract" mindset. Instead, they must shift to a "flexible partnership" model where both parties share data, risks, and growth opportunities. This is not merely a technical adjustment but a strategic shift in how travel partners are viewed: from a pure sales channel to an integral part of the overall distribution ecosystem. First, contract models need to be redesigned for greater flexibility, combining seasonal pricing, dynamic elements for demand-based adjustments, and reasonable release policies. Instead of holding fixed allotments for extended periods, hotels can implement shorter release periods, allowing unsold inventory to be reclaimed and redistributed through higher-performing channels. Simultaneously, establishing risk-sharing mechanisms, such as adjusting prices based on occupancy or market fluctuations, will help balance benefits between the hotel and its partners. According to Deloitte (2025), flexible contract models can improve revenue efficiency by 8–12% compared to traditional contracts, thanks to better adaptability to supply-demand fluctuations.

Flexibility

Concurrently, investing in technology is a foundational element for enhancing cooperation efficiency. Building a dedicated B2B portal for partners, integrated directly with PMS/CRS systems, allows agents to check room availability, prices, and book services in real-time, similar to how OTAs operate. This significantly shortens processing times and minimises errors. According to Oracle Hospitality (2024), hotels implementing integrated distribution systems can reduce booking processing time by up to 30% and significantly increase conversion rates from partners. As a consulting and implementation firm, NewSun Hospitality supports hotels in building integrated technology systems, from selecting suitable solutions to training operational teams, ensuring an efficient and sustainable transition. From a market perspective, expanding and diversifying the partner network is essential to mitigate dependency risks. Instead of focusing on a few traditional markets, hotels need to proactively seek opportunities in emerging markets such as India, the Middle East, and Australia – regions that have seen strong outbound tourism growth in recent years. According to UNWTO (2025), outbound tourist numbers from India are projected to grow by an average of 10–12% annually between 2025–2030, presenting significant opportunities for destinations in Southeast Asia. Participating in international travel fairs, establishing relationships with DMCs (Destination Management Companies), and developing well-structured market strategies will help hotels not only expand their customer base but also enhance their resilience to market fluctuations.

flexible-work1

For the MICE segment – a high-value revenue stream – hotels need a distinct strategy, rather than merely "passively accepting" business. This includes building a dedicated sales team that understands the specifics of group bookings, designing comprehensive package products (including accommodation, conferences, F&B, and experiences), and investing in professional facilities and service processes. NewSun Hospitality acts as a partner in developing a comprehensive MICE strategy, from product positioning and pricing to optimising sales processes, helping hotels enhance their competitiveness in this segment. Most importantly, relationships with travel agents need to be redefined as long-term "strategic partnerships," rather than short-term, price-driven transactions. Activities such as organising fam trips, providing regular product updates, sharing market insights, or co-launching sales campaigns will increase engagement and prioritisation from partners. In an increasingly competitive distribution ecosystem, this engagement will create a distinct advantage – where the hotel is not just "present" in the agent's product portfolio, but becomes a preferred choice when selling to the market.

Conclusion: Modernising the Traditional Channel

In an increasingly multi-channel distribution world, no channel is "old" – only the way it's operated can be outdated. The traditional travel agent channel, if managed correctly, not only provides a stable customer base but also acts as a balancing force for the entire distribution ecosystem. The question is not whether to cooperate, but how to cooperate effectively and sustainably. If you are looking for a systematic approach to restructure your distribution channels – from OTAs to traditional agents – NewSun Hospitality is ready to partner with you in building a comprehensive, flexible, and profit-optimising Place strategy.

References

  • Vietnam National Administration of Tourism (2025). Vietnam Tourism Report
  • Savills Hotels (2025). Vietnam Hotel Market Report
  • STR Global (2025). Hotel Distribution Trends
  • ICCA (2024). Global Meetings Industry Report
  • Allied Market Research (2025). MICE Industry Outlook
  • Deloitte (2025). Hospitality Revenue Management Study
  • Skift Research (2025). Global Travel Distribution Report