When it comes to achieving higher degrees of hotel profitability, nothing provides more opportunity for financial growth than an intelligent revenue strategy.
Strategic revenue management is recognised as an important component to increasing asset value, attracting investors and improving overall operational efficiency.
The flow-through additional revenue that comes from strategic revenue management can directly impact a hotel’s bottom-line results, making it a valuable tool in increasing a hotel’s valuation. Increased revenue also leads to higher cash flow, which has a number of benefits from giving the hotel greater day-to-day liquidity to having money in the bank and generating interest.
For hotel owners looking to reach the highest profitability today, consideration must be given to the impact hotel distribution channel acquisition costs are having on a property and how to better drive profitability.
The importance of distribution in the hotel sector
The role of distribution in the hotel industry is one historically intertwined with the strategic function of revenue management. While a distribution strategy is nothing new for hoteliers across the region, there has been a significant evolution in the role it plays in driving hotel profitability – largely due to emerging industry data sources, channels and various types of technology.
Such is the complexity of prices, restrictions, add-ons, channel usage, technology and distribution costs that many hotel organisations have considered this function large enough to split off on its own, increasing job roles that develop, execute and measure their comprehensive and intelligent distribution strategies.
The complexity of hotel distribution channels and the impact an effective distribution program can have on a property’s ability to grow revenue make it critical for executives to understand how the quality of this role increases their overall hotel profitability.
Hoteliers that don’t have the right staff, systems or strategies in place will struggle to realise their full revenue potential. Not properly managing or accounting for distribution costs directly affects the net revenue results hotel executives can expect from their property’s distribution channel strategy.
