Every hotel has an optimal distribution channel mix – meaning that channels are selected and managed in such a way that they will drive optimal profitability for the hotel in the long run.
NB: This is an article from STAAH
There is no set formula for an optimal distribution mix that applies to all hotels. Every hotel has its own unique channel mix that is affected by several things, including the hotel’s position in the marketplace relative to its competitors – its geographical location, its reputation in the industry, and its service offering (think packages, amenities, and terms and conditions).
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Achieving the optimal distribution mix for a hotel is not a simple task. It’s an area where distribution and revenue managers spend most of their time. Thankfully, the technology channel manager makes analyzing channel performance and programmatically managing pricing/inventory to improve profitability much easier.
Here are some things to consider when building your distribution strategy:
1) Understand your target market. Using data from your channel manager, booking engine and PMS, understand your guest segments. What are the demographics, their reason to travel (business or leisure), how they book accommodation and for how long, length of stays, etc?
2) Data sources. Modern technology has unlocked the potential of information businesses can gather about their prospective and visiting guests. From your channel manager to the PMS and website analytics, all platforms capture rich details of your guests’ journey. When integrated, this data is an insightful way to determine which channels are your property’s best friends, and when. In a post-pandemic world, even external market sources such as airline bookings, etc. should inform demand prediction and in turn your channel mix.
3) Things to consider in your channel partners. Now that you understand your target audience and their booking journeys, it is time to map against online channels that can help you reach these guests at the right point in their booking journey. Some things you need to consider when choosing channels are:
- Region or where a channel has the highest presence. E.g. MakeMyTrip for India or Traveloka for Southeast Asia
- Age groups. Some channels may have a higher reach with certain ages
- Behavioral niches such as HotelTonight for last-minute bookings for GDS for corporate/ business bookings
4) Channel cost. Here is where to consider the cost (commission) versus the potential profit from bookings. Here you must consider that whilst the profitability of online channels is lower, these are required to improve your reach. Don’t forget metasearch engines such as TripAdvisor and Google that have better click-through rates and offer lower commissions. When integrated using your STAAH booking engine, maximizing the potential from Google becomes even simpler with the Get Google feature.
5) Offline channels and direct bookings. Whilst channels such as voice or even GDS, wholesalers, and tour operators are overall on the decline in distribution, the value they bring cannot be ignored. Direct bookings – your website and other owned channels – should be your biggest focus to grow due to the profitability associated with these.
- Make sure your website sets you up for booking success
- Ensure your booking engine offers functions such as language support, currency function and supports dynamic price setting
- Don’t shy away from value-based offers that help you meet rate parity requirements whilst making bookings via your website attractive
- Harness the power of your database to get more repeat guests. Build a loyalty program.
6) Review your distribution strategy regularly. Set and forget based on seasonal pricing is a thing of the past. Successful distribution strategies are driven by dynamic pricing and require regular interventions and reviews.
To sum it up
Distribution is complex, and will not be uniform for all structures, but it is without a doubt one of the most important decisions hoteliers can make to improve profitability and boost reservations. It drives demand and revenue growth because the more you distribute your hotel’s rooms and services, the more guests you will attract. Without distribution, it’s as good as if your hotel didn’t exist. Approaching it holistically with the above-mentioned tips in mind lays the foundations for success.