The Internet has had an impact on almost every industry out there and how could hotel industry be an exception to this revolution. Traditional booking mechanisms like phones and agents have been replaced by OTAs, brand websites, and other channels. Some channels are more profitable or we can say less costly than others are. Hotels have to continuously make sure that they are using the most profitable channel to sell their inventory to maximize revenues. Yielding and Pricing strategy has the prime role to play in determining which channel shall be used to maximize revenues. However, some hotel revenue managers fail to determine which channels have been major contributors to the revenue against the cost incurred on them.
Studies reveal that cost of distribution has grown manifold as compared to revenues. This scenario can be detrimental to the health of the hotel industry in the long run and calls for hoteliers to adopt measures to control distribution costs. Some channels even charge up to one-third of the room price as commissions.
With so much to leave on the table, it becomes imperative for hotels to continually audit the performance and contribution of different channels to the revenue. Optimum hotel distribution not only affects financial health but also has a considerable impact on marketing strategies and technology required to maintain the sales data.
Hospitality industry becomes fiercely competitive when it comes to urban properties like resorts and penthouses. They are generally booked by high spenders and hence award opportunities to hoteliers to earn handsome returns on such big size bookings. This also calls for hotels to determine the channels that not only fetch the best room rates but also clinch high-spending guests. Evaluating these drill-down parameters can only reveal the right distribution channel that is most profitable in the true sense.
Various distribution channels ranging from call/walk-ins, Global Distribution Systems (GDSs) to diverse online channels like OTAs, metasearch sites, and social media have made the profitable hotel distribution task more intricate and complex than ever before. Successful hotel operation demands the all three parties responsible for distribution, marketing and revenue to work together in close coordination to optimize pricing strategy, revenue generation and net profits.
