Evaluate Your Booking Channels to Improve Distribution
In a highly competitive hospitality industry, hoteliers are constantly seeking innovated ways to increase their hotel´s revenue.
What´s more, the complexity of the market demands constant process automation. For this reason, traditional methods make it difficult or nearly impossible to track and predict periods of peak demand in inventory. If you add to this the complexity that comes with identifying your competitive set and the massive number of distribution channels and platforms, you are left with an array of tasks that prove difficult to cover alone.
Revenue Managers need access to massive amounts of data to be able to respond to all the challenges that come up with hotel distribution. Furthermore, the commercial interaction that exists between online travel agencies, hotel websites focused on direct booking, relationships with target groups or traditional travel agencies, makes your distribution strategy the determining factor for the success or failure of your hotel´s marketing plan.
Analyze channel performance
You can evaluate channel performance by measuring the following basic metrics:
Gross Revenue. Total revenue that a distribution channel has generated within a specific time period.
Guest Demographics. The type of guest attracted by each booking channel.
Distribution Channel Costs. The total costs associated with using each channel.
Distribution becomes a “game” when opportunity costs gain importance. When resources are limited you must justify which channels you are interested in using and make decisions about which channels can prove most profitable in the future. Also, knowing to what extent a transaction may have been more profitable to one channel versus another will depend on the strategy you develop. Maximizing direct bookings in markets where your hotel has a commercial presence should be the “obsession” of the Revenue Manager, at least if this option is the most profitable given that on certain occasions maintaining an internal structure can be significantly more expensive than outsourcing distribution.
What are the 3 pillars of direct booking?
Keep in mind that direct bookings are only profitable after a determined number of bookings. In the meantime, this income will be used to amortize the cost of distribution by your own means. The following are three actionable steps for achieving direct distribution:
An attractive and visual web with an optimized booking system.
A SEO and SEM strategy that captures the right traffic.
Generate more repeat business with a loyalty program.
Most hotels cannot compete with online travel agencies, in terms of exposure, simply because of the difference in marketing budgets. Therefore, it does not matter how much hotels spend on their websites, because customer acquisition costs on this channel will only be profitable if the hotel receives a substantial amount of direct bookings. If the number of direct bookings falls too much, customer acquisition costs soar, so eventually hotels end up in the hands of distribution channels.
Demand generation isn´t a one-time thing. It´s a continuous process that hoteliers will improve with time and experience. Each hotel is influenced by different factors and by adjusting their revenue management strategy from time to time, hotels can discover what works best for them. This is when the real challenge begins- to find a balance between direct distribution channels that assume the costs it generates and a moderate intermediation that conditions a hotel´s survival.