By Erik Munoz
In my daily interactions with hoteliers and revenue managers, I encounter many people who find the huge number of different online distribution channels overwhelming. Most hotels have questions about the best practices of this very valuable and profitable channel. In an attempt to demystify online distribution, I wanted to share with you some of the most common myths – and offer insight into the truth behind each myth.
Myth: Hotels should reduce their reliance on OTA bookings.
There are many hoteliers who are adamant about avoiding OTAs (online travel agencies) unless absolutely necessary – primarily because of the high commissions that the sites charge. Although commissions can be high, in most cases, the OTAs have a much bigger marketing budget which can drive online traffic and conversions to their booking platform more effectively (and affordably) than an independent hotel could (to their own website).
OTAs are especially useful in driving bookings from markets that are geographically out of reach to the average independent hotel or regional chain. In some markets, emerging, local OTAs will be more effective channels to secure bookings from outbound travelers. If your hotel isn't using these OTAs to market your property, you are missing out on bookings and revenues from these potentially lucrative source markets.
When planning your online distribution strategy, consider the following ‘best practices':
- Selecting the right mix of OTAs on which to list your property is key. Don't put all your OTA “eggs” in one basket; instead, implement a broad and far-reaching online distribution strategy to cover your target source markets.
- Technology is also an important part of leveraging the OTA channel most effectively. Because you will achieve better results by listing your rooms on multiple, varied OTA sites, it will be important to use an online distribution connectivity tool that does not increase your costs when you choose to work with six or more channels.
- Finally, ensure that you integrate your online distribution channels for maximum reach and minimal risk of overbooking or inconsistent pricing.
Myth: Metasearch is most useful for the marketing department, not the online distribution team.
Traditionally, the marketing and online distribution departments in most hotels have worked autonomously; however, since metasearch providers started to connect directly to the hotel booking engine or CRS (Central Reservation System), the two teams must now work together to ensure the best possible results from these channels.
TripAdvisor's TripConnect is a perfect example of a channel that requires a hotel's marketing and online distribution teams to work together. From a budget perspective, the marketing team manages the pay-per-click (PPC) spend for TripConnect (as well as other metasearch platforms). Conversely, the online distribution team manages the integration for live rates, availability and deep-links from the metasearch partner back to the hotel website booking page to convert the clicks to bookings.
Myth: All channel managers are the same.
Definitely not! As online distribution becomes more complex, technologies are being created to help hoteliers effectively manage their online distribution channels. When trying to identify the best channel managers look for those which offer:
- Dynamic pooled inventory
- Two-way XML connectivity
- Self-mapping tools for faster speed to market with new offers
- Enterprise-wide reporting and distribution status dashboard with analytics
When you apply these core features from market-leading channel manager products, you will very quickly realize that not all channel managers are the same.
Myth: The GDS is an overly expensive channel that is only beneficial for big chains or regional hotel groups.
The GDS (global distribution system) is not only for big chains or multi-property hotel groups. If you are a hotel in a key corporate destination – even if you have only 35 rooms, the GDS channel can be an extremely lucrative booking source. GDS bookings have a longer average length of stay (LOS) and higher average daily rate (ADR) than bookings originating from other channels, and this has been the case historically.
Much of the perception of the high cost stems from the ‘middle men’ that do business between the hotel and the GDS booker, as well as the varying pricing models that exist from CRS and connectivity providers. Before signing up with a provider, do your research because there are certainly very cost-effective ways to connect to the GDS.
It is very important for a hotel marketer and/or revenue manager to factor in the total revenue and profitability of this channel, as well as the above criteria, before labeling the GDS "too expensive". As the saying goes, “You have to spend money to make money” and this is definitely true in the case of the GDS.
Do you have any questions about your online distribution strategy that you would like answered in an upcoming article? If so, please send your question to [email protected].
