When planning a trip, travelers visit dozens of websites to gather information, but they choose only one booking channel. The more booking channels your property is listed on, the better the chances are that travelers will choose it. That’s why it’s important to cast your net far and wide when it comes to distribution. Follow Hanami’s article “6 Steps to Build an Effective Distribution Strategy” to find out more!
What is a hotel distribution strategy?
An effective hotel distribution strategy is a plan for listing a property on channels where potential guests can view accommodation offerings in a destination, compare rates, and book a room. This is one of the four main pillars of marketing and plays an extremely vital function for firms.
What are the benefits of a distribution strategy?
Some of the reasons hotels should develop a distribution strategy include:
Without a detailed and professional distribution strategy, the plans will be ambiguous, if not reversed internally. There will be channel conflicts when introducing new plans and strategies to the market.
When potential customers want to connect but are not met by clear and reasonable policy models, distribution will increase the opportunity cost.
6 Steps to Build an Effective Distribution Strategy
Choose your hotel’s distribution channels
For the hotel business, choosing a distribution channel is very important because it directly affects the revenue of the hotel. Choosing the appropriate channel will help the hotel optimize revenue.
Online travel agencies ( OTAs)
As we all know, OTAs are intermediary channels that connect customers with hotels. It enables customers to browse a destination’s accommodation options and charges a commission for a successful booking. Consider and choose the OTAs channels that are suitable for your hotel and the most important thing is to unify the price between OTAs channels so as not to confuse customers.
Direct channels
These channels allow travelers to make a reservation directly with the property, such as the hotel’s website booking engine, walk-ins, and reservations by telephone, email, or messaging. Because there is no intermediary, the hotel doesn’t pay a commission or referral fee, so these channels are generally more profitable than indirect channels.
GDS
Global distribution systems like Amadeus and Sabre are used by travel agents to browse and book hotels, flights, car rentals, and other components of a trip. Hotels pay a commission to the travel agent for bookings as well as a fee to the GDS provider.
Wholesalers
Wholesalers and bedbanks like TUI and Hotelbeds reserve blocks of rooms with hotels and resell them through OTAs, travel agencies, and tour operators. Rather than charge a fee or commission for bookings, the hotel provides wholesale rates that represent a significant discount from retail rates.
Metasearch
Metasearch engines like Google Hotels, Tripadvisor, Trivago and Kayak display a hotel’s rates and availability from a variety of booking sources, allowing travelers to easily compare offerings on one page. To book a room, the traveler must click through to the hotel’s booking engine, making these channels a valuable source of direct bookings. The hotel pays a fee for every click.
Other channels
Other distribution channels for independent hotels include bed banks, tour operators, regional destination management organizations (DMOs), call centers, social media, paid channels such as Google Hotel Ads, and more.
Identify your target markets
Although it’s a good idea to list on a broad range of distribution channels to maximize visibility, it’s not about listing on as many channels as possible. Rather, it’s about choosing the most popular channels among your target audiences.
It starts by identifying your ideal guests – the guests and prospective guests who will appreciate your property most and will generate the most bookings and profits. Are they younger or older? Where do they live? Are they luxury travelers or budget travelers?
Set hotel room pricing and promotions
Now you’ll need to decide the rates to offer on your distribution channels. Rather than sell rooms with different rates on each channel, it’s a good practice to maintain rate parity, ensuring rates are the same on all distribution channels. Your pricing should be high enough that it covers commissions and fees while still generating a decent profit.
Rather than list only your cheapest rooms, offer several room types and rate plans to appeal to a variety of travelers, such as suites, packages, and non-refundable rates.
To maximize revenue, follow a dynamic pricing strategy, adjusting rates and stay restrictions according to changes in occupancy, market conditions, and competitor activity.
Optimize your distribution channel listings
Optimizing your listings means ensuring the content you share provides all the information travelers need to make a decision to book your property. This includes high-quality photos, compelling descriptions, and information about your location, amenities, and other features that appeal to your target markets. Review your listings regularly to ensure the information is always accurate and up to date.
Keep in mind that traveler reviews and ratings can have a big impact on visibility and conversions on the distribution channels that feature them. Be sure to monitor and respond to reviews and take action to fix problems and improve your ratings.
To encourage those lucrative direct bookings, your website should be easy to navigate, be optimized for search engines and mobile devices, and feature an integrated booking engine and a best-rate guarantee. Consider adding a web chat widget to answer travelers’ questions during the booking process and provide information about upgrades, local activities and tours, and other upselling propositions.
As for walk-ins and reservations by telephone, email, and messaging, some people prefer to contact a live person on property – don’t deny them this need! Ensure that employees respond to queries promptly and have all the information they need to answer questions, quote rates, and take reservations.
Track acquisition costs by distribution channel
Once you’ve activated your online booking channels, you’ll want to keep a close eye on performance. To understand which bookings are the most profitable, calculate the costs of acquisition on each channel, including commissions, cost-per-click fees, transaction fees, and other costs.
For direct channels, estimate the costs of marketing, technology, a loyalty program, and, if applicable, booking engine fees.
Be aware that customer acquisition costs can creep up over time, so check them regularly and shift resources to the most profitable booking channels.
Utilize revenue management tools
Managing multiple distribution channels can be time-consuming and complex, but fortunately, there are a number of property and revenue management systems that help hoteliers save time and boost results by automating a variety of tasks.
Hopefully, Hanami’s article has provided you with useful information about the six steps to build an effective distribution strategy for your hotel. Have a nice day!
