How should hotels be reaching out to potential customers? When it comes to distribution channels, the discussion should never just be limited to the hotel’s relationship with online travel agencies or OTAs. In our view, hotels should deploy strategies with the right mix of information to allow potential customers to make informed choices. In addition, hoteliers should leverage services offered by indirect channels to win over business from their competitors.
For many hotels, managing distribution channels is currently more of an administrative task than a strategic necessity. Most hotels add distribution channels opportunistically, as and when they come along. Once a distribution channel is up and running – whether it be via an OTA or a global distribution system (GDS) – hoteliers allocate the number of rooms and manage pricing, plus monitor bookings and pay commissions. However, given the evolving nature of the distribution landscape, smart hoteliers need to switch from an administrative function to leverage channels actively to maximize online visibility and expand market share. Here are some suggestions:
1. Distribution channels connect hoteliers to markets
Smart hoteliers see a distribution channel as a means to connect to markets they can’t reach on their own. By offering a wide selection of accommodation choices and technology infrastructure, GDSs create markets consisting of travel agents and travel managers, while OTAs attract individual travelers. For instance, Trivago attracts travelers who focus on price comparisons and HotelTonight attracts last-minute mobile travelers, while CTrip is the largest Chinese OTA. Hoteliers could strategically expand target segments by working with indirect channels such as these.
Cost is an important factor when it comes to selecting a distribution channel, but it should not be the only criterion. Hoteliers must also consider the distribution channels’ own markets, their ability to bring in business within high-need periods, and their ability to provide information about markets and competitors.
2. Leverage services offered by indirect channels
Some indirect channels provide market intelligence as part of their services. For example, Expedia Partner Central (EPC) provides performance indicators, such as revenue booked and earned, the tracking of bookings which went to competitors, and benchmarking of performance against competitors and the market in general, etc. Such market intelligence reports are available in real-time and free up hoteliers from laborious data collection so they can spend more time on decision-making.
