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.
NB: This is an article from Guestline
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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.
