Hotel distribution is a proactive strategy for hoteliers to sell their rooms to target customers with profit concerns in mind.
NB: This is an article from AxisRooms
Hotel distribution management is more clearly defined as using sales websites, online travel agents (OTAs), wholesalers, and global distribution systems (GDSs). The hotel industry is thriving with annual revenue of over $570 billion. And every key player in this industry is worried about the future of hotel distribution.
Subscribe to our weekly newsletter and stay up to date
For all the new and established hoteliers, it is time to consider the change and leverage the potential of the new trends in hotel distribution management. So, let’s explore the shift!
What Is Disrupting the Current Hotel Distribution Strategies?
OTAs are charging a hefty commission, which cuts down the profit margin of hoteliers. Therefore, hotels are investing a large chunk of money in their direct sales channels and loyalty programs to cut down this commission and keep the profits a maximum.
But, the hotel distribution strategies for direct booking channels are mostly inefficient, for which they spend more than the commission that the OTAs would have charged.
Meanwhile, OTAs are also boosting their online presence and gaining market stature. Hence, hotels know online travel agents are not going anywhere in this industry.
Therefore, the future of hotel distribution needs to accept a change and train with new strategies. Will it be possible for hotels to direct the majority of their target audience towards direct booking channels? Is it possible in the future?
If the hotels can play a perfect game with the distribution strategies for direct channels, there is a possibility of leaping with the profit margin.
Are OTAs Friends or Foes?
Many experts in the hotel industry believe that OTAs are more like friends than foes. Even though they want to promote bookings through their sites for commission, they still indirectly help hotels boost direct bookings.
Marco Rosso, the Regional Director of Spain at SiteMinder, attended an interview with the Young Hoteliers Summit. The interview was about changing the distribution landscape for hotels in the future.
The interview also discussed how to increase a hotel’s revenue and visibility by optimizing the use of distribution channels.
Rosso said that hotels should be present over as many OTAs as possible. It will help generate traffic for their business and increase sales. The work on converting those customers into your direct hotel clients from their next bookings will be your primary job to do.
It is obvious that customers look for a hotel, it’s rating, and reviews over OTAs at first and then search for direct websites to know more about it.
So, when they land on your website to learn about the hotel business, ensure you have optimized it and loaded it with elements that won’t send the customers back to the OTA channels to confirm the booking.
Ultimately, OTAs are considered friends rather than foes, as they can be very useful for increasing direct bookings to your hotel. Rosso said it is time for hotels to utilize these OTA channels to overcome their insecurities rather than constantly trying to compete with them.
What Does the Future Hold for Hotel Distribution Management?
There are a few themes that hoteliers are happily implementing to leverage the potential of proper hotel distribution management in the future. They include:
- Scope of Reinvesting on Service Offerings
As the COVID 19 pandemic fear persists among people, it becomes important for the hospitality sector to reinvest in some of the major inclusions to their hotel services such as:
- Growing with digitalisation
- Assuring health aspects of customers
- Proposing flexibility of booking
- Cancellations and promoting new usages.
Such changes have helped improve their overall hotel distribution channel strategy. And the changed consumer behaviour will help your hotel business stand out over others.
- Better Digital Approach
Hotel businesses are improving their digital implementations to reach customers directly and build contacts. They want to depend less on OTAs or other indirect channels.
Therefore, they are investing in digital maturity potential to distribute their rooms and services to customers through their own sales channels. It will eventually help them build a positive rapport with their customers, and they will be able to better understand their experience.
The future of hotel distribution has this theme or strategy as the most focused one. The hotel industry is looking forward to getting the best out of it.
- Environmental Sustainability
Both regulatory and consumer expectations will have environmental sustainability as a concern for a long time in the future. Customers are actively willing to know the environmental policies of hotel businesses.
Therefore, the future of hotel distribution management for direct bookings will stand a chance only if you analyze your hotel’s environmental impact.
Hotel business owners ought to take steps to streamline the inappropriate policies. Following that, you should also be transparent about the climate impact policies with the customers.
- Use of Metasearch Sites
Metasearch is a very efficient marketing tool for all hotels to drive bookings through direct and indirect channels. The use of metasearch has increased over time, and the future of hotel distribution will utilize it.
A recent study states the use of metasearch concerning countries. China uses it at the rate of 54%, France at 38%, the United States at 36%, Germany at 42%, and the UK at 35%.
Metasearch is also facilitating direct bookings for hotels. With dedicated solutions, hotels are listing themselves over metasearch platforms. This allows them to generate immaculate visibility among travellers and generate a lot of sales.
It is an excellent initiative for small hotel owners as it needs less marketing budget. Thus, this hotel distribution system is a futuristic adaptation for the industry.
- Use of social media
OTAs charge around 15 to 25% commission for every booking processed through their portals. And such a high commission eats up the hotel’s profit margins. Therefore, the use of social media helps increase brand recall in the customers’ minds.
With offers, discounts, and incentives, hotels use social media to draw the target audience’s attention to their websites and direct sales platforms for priority bookings. This initiative will eventually cut down the third-party costs and generate more profit for the hotels.
Using Channel Manager
The use of channel managers for a hotel business is currently being leveraged by just a small percentage. A hotel distribution channel manager solution will help the hoteliers take care of the sales strategies across all booking channels.
It will allow you to sell all your rooms simultaneously, overall connected booking sites, including direct and indirect channels. It increases the capacity of your business to attract more customers and bag more profits.
So, this is what the future of hotel distribution will look like when all of these themes are successfully adopted by the key players in the hotel industry.
Most of these trends or themes will eventually grow in the future to change the entire hotel distribution landscape. Moreover, new trends will also come into play as consumer behaviour and technology demands change over time.