Balancing distribution channels between Online Travel Agencies (OTAs) and direct bookings is essential for maximizing revenue and maintaining control over the guest experience.
NB: This is an article from Exely
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While OTAs can drive significant traffic and bookings, relying too heavily on them can lead to increased distribution costs and diminished profit margins. These easily accessible OTA discounts often reduce the perceived value for guests and add additional costs for hotels in the form of commissions, which typically range from 15% to 30% of guest-paid revenue.
To optimize distribution and enhance profitability while maintaining a superior guest experience, it’s crucial to adopt a balanced approach. Here are key strategies that help hoteliers diversify their points of sale, reduce costs, and attract more direct bookings.
Achieving a Balanced Distribution Strategy
One common mistake made by a lot of hoteliers is relying on just one or two points of sale. Such a distribution strategy can look like this:
- 80% Online Travel Agencies (OTAs)
- 3% Hotel Website
- 17% Offline
While this might seem convenient, it’s a highly risky strategy. If one major channel faces issues or policy changes, your revenue could take a significant hit.
Instead, consider broadening your approach and implementing a wise distribution of sales across various channels. For example, depending on the market situation, a more balanced strategy might look like this:
- 50% from OTAs: Leverage the broad reach of online travel agencies but avoid over-reliance.
- 15% from Hotel Website: Optimize your website to allow direct bookings, reducing commission costs and retaining full control over the guest experience.
- 25% from Group Tours: Partner with travel agencies and tour operators to bring in groups.
- 10% from Walk-Ins: Ensure your hotel is welcoming and visible to attract passersby.
Strategic Distribution Insights for Hoteliers by Exely
1. Leverage Metasearch Engines
Some booking platforms have started to show member-only rates in metasearch engines like Google Hotel Ads, TripAdvisor, Kayak, and Trivago. Explore these platforms and display your website rates there to make your direct offer more competitive.
2. Manage OTA Restrictions
Rather than entirely avoiding OTAs, learn to manage restrictions effectively:
- MinStay and MaxStay Tactics: Implement minimum and maximum length of stay restrictions to balance occupancy and revenue.
Source: Exely
- Event-Based Strategies: During high-demand events, use OTAs to drive quick bookings while setting more flexible terms on your website to attract direct bookings.
Source: Exely
- Setting Aside Rooms for Direct Sales: During peak demand periods, reserve some rooms exclusively for direct sales to capitalize on high-margin direct bookings. Exely offers the ‘Advanced Availability Setting,’ which allows hoteliers to choose the number of rooms that will be sold only on their website once the rest are booked.
3. Dynamic Pricing Strategies
Use dynamic pricing to adjust rates based on demand, occupancy, and seasonality. Avoid setting low rates far in advance; instead, analyze demand patterns and competitor pricing to optimize your revenue:
- Demand Calendar Analysis: Regularly review your demand calendar to track future bookings and compare them with historical data.
- Competitive Set Monitoring: Understand where your pricing stands relative to competitors and adjust rates accordingly to maximize occupancy and revenue.
4. Ensure Price Parity
Price parity between OTAs and your official website is crucial. Guests often compare prices across different booking channels, and inconsistencies can lead to lost direct bookings. Ensure that the prices on your website match those on OTAs to encourage direct high-margin bookings.
Source: Exely
Achieve Seamless Price Parity with Rate Match
With the Rate Match tool, free of charge for Exely Booking Engine users, you can ensure price consistency across booking channels. This innovative tool monitors OTA and website rates, automatically aligning them for you. Rate changes are seamlessly synced with Exely Booking Engine and Google Free Booking Links.
