The foundation of any hotel sales and revenue strategy lies in its distribution channels.
NB: This is an article from StayNTouch
A distribution channel is simply any forum or platform that a hotel uses to advertise and sell its rooms. This can include a hotel’s website, its social media platforms, phone or email reservations, metasearch engines, or OTAs. Although hotels can – and should – diversify their income streams and realize the potential of ancillary revenue, distribution remains the cornerstone of hotel profitability and success.
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This article will examine how hotels can leverage distribution technology and strategies to drive bookings, access new markets, and increase profitability.
There is No Single “Magic” Distribution Channel:
While it may be tempting for hotels to focus heavily on a single distribution channel, or spread their energy over as many channels as possible, neither of these is likely to be a successful strategy. Focus too narrowly and you miss potential customers; focus too broadly and you risk wasting resources on unproductive channels. Each type of channel has its own advantages and disadvantages:
- Online Travel Agencies (OTAs): OTAs provide hotels with a great opportunity to widen their distribution networks, fill previously unused rooms and capitalize on the “Billboard Effect” of advertising in multiple forums. The Billboard Effect shouldn’t be underestimated, as a study by Cornell estimates that being listed on an OTA corresponds with a 7.5-26% increase in hotel reservations. However, this exposure can be expensive, as OTAs charge commissions which can be as 30% of the final rate. Because OTAs engage customers early on in the “inspiration” and “planning” phases of the guest journey, they can come to dominate the guest relationship, accruing customer data, and loyalty that would otherwise go to hotels. It’s critical to integrate your PMS and booking engine with a channel manager so that you can efficiently manage distribution through multiple OTAs, gain valuable data on channel profitability, and prevent overbookings.
- Direct Booking: Promoting direct bookings can be an attractive option for hotels looking to eliminate OTA commissions, and forge deeper relationships with their guests. But a “direct-forward” approach also comes with costs, as hotels will have to spend more on customer acquisition, online marketing, and guest services, and may face an initial drop in occupancy from the loss of exposure from OTAs. To capitalize on a direct booking model, hotels need at minimum a streamlined and easy-to-use booking engine that’s directly integrated with their PMS.
- Metasearch Engines: Metasearch Engines such as Google Hotel Ads or Trip advisor can help even the playing field because they allow independent hotels to be listed alongside larger brands and OTAs. Metasearch is also growing tremendously and currently accounts for over 45% of global unique visitors in travel, which is greater than the proportion of unique visitors for OTAs. Metasearch advertising is generally based on either a pay-per-click (PPC) or pay-per-impression (PPM) model. While PPC is generally more cost-effective, PPM is better for raising brand awareness. Some channels can also greatly streamline the booking process by offering instant bookings, where customers can book on the same screen where they are comparing rates. In order to fully capitalize on metasearch, hotels need the right PMS and channel manager to connect to the largest metasearch channels, integrate instant booking, and monitor/ analyze key performance metrics.
- Social media: By leveraging sites such as Instagram, Facebook, and Pinterest, hotels can engage travelers early in the “inspiration” phase of the guest journey, raise brand awareness, drive organic traffic to their webpage, and with a properly integrated and customizable booking engine, earn direct bookings. Integrating your PMS with a guest messaging system and an online reputation manager can help promote positive reviews and increase your brand’s reputation.
