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Hotel distribution has always been a critical aspect of the hospitality industry. Effective hotel distribution strategies enable hotels to target the right audience, optimise occupancy rates, and enhance revenue management.
Hotels have worked with third parties such as airlines, travel agents, online travel agents (OTAs) and the Global Distribution System (GDS) for decades. The dynamic landscape of hotel distribution offers numerous opportunities for hotels to maximise their market presence and profitability.
By leveraging a diverse array of distribution channels, hotels can tap into different market segments and geographical regions, increasing visibility to attract high value customers which unlocks opportunities for upsell, therefore increasing the revenue potential.
Strategic distribution means hotels can minimise the impact of seasonal fluctuations while accessing real-time market data to inform pricing strategies swiftly, ensuring competitive advantage. To effectively manage online distribution, Channel Managers are pivotal tools that streamline the management of third party channels, ensuring price consistency and real-time room availability.
Hotel distribution is a multifaceted domain which presents significant opportunities for growth and revenue optimisation and remains underutilised by the industry. We look at where hotels can review distribution strategies to maximise market potential.
Myth 1: Hoteliers must adhere to rate parity
FACT: Firstly, this all depends on the contract in place with your third-party travel sales platforms. The strong-hold that OTAs have had on rate management may well be changing, particularly following the European Commission’s ruling that Booking.com is a gatekeeper – meaning that OTAs cannot impose rate parity conditions in its T&Cs.
DACH hoteliers are exploring the opportunities of pricing to drive direct bookings with this new ruling – and while this is yet to affect the UK, we expect a similar judgement to be recognised before too long. However – based on the experience in France where rate parity has been disregarded since 2014 – it could in fact lead to a loss of direct business.
Removing the rate parity clause is not going to change customers’ behaviour. Booking.com will continue spending big on marketing, attracting more and more bookers. For hoteliers to succeed, it’s essential they have the right revenue management strategy and supportive technology to push their rates and availability to the right platforms (like metasearch and Google) while offering a seamless booking process, including payment, to prevent basket abandonment.
Businesses that rest on their laurels and do not keep up with changing trends and digital booking expectations will inevitably lose direct business to third parties that are constantly investing in the UX.
Myth 2: Hotels lose revenue from OTA bookings
FACT: Third parties charge high commissions to cover the cost of marketing and provide access to their audiences and source markets – which are often out of reach for the budgets of independent hotels and small portfolios. While the OTA owns the customer in the first instance, hotels can put in place systems to win over the customer and earn more revenue from each guest’s stay.
Currently, OTAs are unable to sell hotel packages, but with direct connectivity between distribution channels and the PMS hotels can improve rate and availability control – ensuring they implement strategic pricing while automatically receiving reservation details.
Where hotels capture guest contact data they can offer a wide array of services before or upon arrival to offer upsell opportunities. By utilising a guest portal, hotels can present OTA bookings with additional services such as table reservations or make special requests. Once the hotel has directly received the guest contact details, hotels own the customer and can improve revenue through future campaigns or ancillaries without bearing the cost of OTA commissions.
Furthermore, by receiving the reservation’s Virtual Credit Card (VCC) details in the PMS, hotels can streamline the payment process, improving operational efficiency and guest satisfaction.
Myth 3: Distribution is an inflexible, administrative nightmare
FACT: By broadening the distribution mix hotels capture a wider market share, targeting specific audience profiles and engaging with niche audiences. In utilising a channel manager, room rates and availability can be automatically updated in real-time reducing the huge administrative burden of managing and updating multiple channels manually.
Working with a channel manager that’s fully integrated into your PMS gives the flexibility to switch on channels as and when they’re required. Once an agreement is in place with a third party, it’s up to the hotel when to use them. Specific channels can be selected to drive certain types of audiences at specific times – offering complete flexibility throughout the year for the distribution channel strategy. By working with your third party channel account managers, you can ensure opportunity and visibility is maximised to secure guests.
There’s no need to commit to a level of availability with any channel, and by ensuring the hotel’s direct channel is competitively priced there’s less likelihood of losing control of dates and missing out on bookings.
Remember to thoroughly read all contracts and agreements with third parties before agreeing to them and ensure they do not limit the hotel’s distribution possibilities.
Myth 4: Only Expedia and Booking.com are worth it. Niche channels and Airbnb are just a novelty
FACT: The target audience is more important than the booking source. To improve revenue, it’s important to know the profile of a hotel’s most valuable guests and continually market to this audience across the right channels.
Going beyond Expedia and Booking.com with a broader channel mix, hotels can be sure not to leave money on the table. New channels like Airbnb are surging in popularity among accommodation providers – and even for hotels as the platform opens booking opportunities for a wider range of businesses.
While an OTA’s brand is a strong draw for booking confidence and deliver volume, niche and specialist channels provide access to a highly targeted audience through which the hotel brand can build an affinity with guests by tapping into their particular interests and expectations. The more a hotel embodies lifestyle within its brand, the wider the opportunities to not just secure the right guest but also build an audience of returning guests which will significantly reduce the cost of future sales.
Myth 5: Metasearch is only for big hotel players and OTAs
FACT: Metasearch has evolved massively in recent years and is often a traveller’s first booking stop – ahead of OTAs. Metasearch presents room rates across different hotels and channels to allow consumers to compare prices. Once the playground of OTAs, airlines and large international hotel brands, metasearch is open to all hotels, providing a powerful price comparison to help drive direct hotel bookings.
Myth 6: Distribution lacks transparency
FACT: Working with intelligent channel managers, like Guestline’s Distribution Hub, provides hotels with insightful reports to measure key performance metrics and understand how each selected channel is performing. The more granular the data, fully integrated into the existing tech stack, the greater the insights to understand the cost of sale – especially during demand peaks – and where the bookings derive from.
The more information available relating to channel performance, the more hotels can leverage these insights to agree new contracts with third parties, attract higher value guests, and adjust the number of channels it is working with.
Making partners count
Distribution partners offer a wide range of benefits, from supplying bookings when demand is low, to targeting specific audiences to either enter new markets or test new products, offers and propositions. The better the relationships with OTAs and sales partners, the more hotels benefit from additional visibility and promotions.
However, it’s essential to ensure availability and rates are accurate at all times, to prevent overbooking, or under- or over-pricing products. Plus, by sharing accurate rates directly as they are on third-party channels you can encourage more guests to book direct.
With the adoption of a revenue management system (RMS), hotels can improve pricing strategies across distribution channels to maximise rates across each and every channel. Hotels are unlocking time to focus on strategic revenue opportunities by either using automated price management or partially supported pricing mechanisms to respond to market changes to maintain competitiveness.
By working with Guestline, hotels can ensure the distribution is fully integrated into the PMS for a seamless flow of data providing real time updates to all channels, including the hotel’s own booking engine. This integration will constantly optimise a diverse distribution mix, allowing hotels to manage a constant stream of revenue from third parties while identifying ways to reduce the cost of sale.
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This post originally appeared on the Guestline blog here and is reproduced with their permission.
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