How To Craft An Effective Hotel Distribution Strategy
The transformation brought about by the digital era has modernized and refined the hotel industry landscape and factors contributing to its growth to a large extent. As a result, new, improved and effective hotel growth strategies have come into play to attract customers, increase occupancy and maximize revenue. One such powerful strategy is the hotel distribution strategy. Owing to its ability to reach a wide audience across the globe in real-time and optimize profits for hotel businesses, all hoteliers are making sure to reap its benefits.
This blog covers everything you need to know about hotel distribution strategies including its meaning, benefits, types of distribution channels and how to create an effective hotel distribution strategy to increase revenue for your business –
At a glance:
– What Is A Hotel Distribution Strategy?
– How Is A Hotel Distribution Strategy Different Than A Hotel Marketing Strategy?
– What Are The Benefits Of A Hotel Distribution Strategy?
– What Are The Different Types Of Hotel Distribution Channels?
– How To Craft An Effective Hotel Distribution Strategy
What Is A Hotel Distribution Strategy?
In simple words, a hotel distribution strategy is a plan of action to sell rooms through a variety of channels, in the most profitable manner. These channels include a hotel’s website, online travel agencies (OTAs), metasearch sites, global distribution systems (GDS), wholesalers, etc. The goal is to boost visibility, drive bookings and maximize profitability by selecting the right mix of channels.
How Is A Hotel Distribution Strategy Different Than A Hotel Marketing Strategy?
While a hotel marketing strategy’s focus is limited to creating awareness about the hotel and generating demand, a hotel distribution strategy focuses on securing bookings and maximizing profits for the business.
To learn about some of the most influential hotel marketing strategies for 2022 and beyond, click here.
What Are The Benefits Of A Hotel Distribution Strategy?
A powerful hotel distribution strategy can bring about exceptional results for the business. Listed below are some of its key benefits –
- Enhance visibility
- Target the desired segment
- Increase bookings through direct and indirect channels
- Maximize profits and
- Boost overall business ROI
What Are The Different Types Of Hotel Distribution Channels?
Hotel distribution channels can be categorized into two main types – direct channels and indirect channels. Direct channels include a hotel’s website, walk-ins, reservations made via telephone, etc. while indirect channels include online travel agencies (OTAs), global distribution channels (GDCs), wholesalers, metasearch platforms, etc. Both these channels focus on attracting customers, engaging them and ultimately driving bookings for the busienss. Mentioned below is a brief explanation of all channels –
- Direct Channels: These channels include a hotel’s website, walk-ins, reservations made via telephone, text messages, etc. Basically, it enables the customers to get in touch with the hotel directly to make a booking. Generally, direct channels yield the most revenue for properties and hotel as there are no intermediaries involved, which means that the hotel does not need to pay a commission or referral fee to a third party.
- Online Travel Agencies (OTAs): Online travel agencies are online marketplaces that offer travel-related products and services to customers. This includes flights, transportation, accommodation, tours, local activities, etc. Some examples of leading OTAs are Expedia.com, Booking.com and Airbnb.com. These OTAs have access to a wide audience, and thereby assist hoteliers and property owners to boost visibility and capture bookings. While listing a property on an OTA is free, they charge a commission fee for every booking made via them.
- Global Distribution Channels (GDS): A global distribution channel is a consolidated reservation network, primarily used by travel agents to reserve flights, hotels, rental cars, etc. for their clients in real-time. Some examples of global distribution channels include Amadeus, Sabre, Galileo, Pegasus, etc. Hotels are required to pay a fee to the GDS provider as well as a commission fee to travel agents.
- Wholesalers: Wholesalers reserve hotel rooms in bulk well in advance and then resell them to OTAs, travel agencies and tour operators. Instead of charging on a commission basis, they get rooms at a highly discounted rate from the hotels. Typically, they work with large independent hotels and chains to maximize occupancy and guarantee a certain occupancy rate.
- Metasearch Engines: Metasearch engines like Google Hotels, Trivago, TripAdvisor, Kayak, etc. enable consumers to view hotel room availability and rates from various sources on a single page. By getting access to all the necessary information in a consolidated form, customers can easily make comparisons and book property of their choice. As far as metasearch platforms are concerned, hotels pay a fee for every click.
- Miscellaneous: Other miscellaneous hotel distribution channels include destination marketing organizations, tour operators, social media, paid media channels, offline advertising, etc. These channels to help broaden reach, target the desired segment and generate more bookings.
How To Craft An Effective Hotel Distribution Strategy?
Listed below are seven important steps to create a powerful hotel distribution strategy –
1. Define Your Objective And Goals
Like any other marketing strategy, the first step to creating an effective hotel distribution strategy is to have clearly defined objectives and goals. They help you craft your action plan, define your key performance indicators (KPIs) as well as measure your overall success. Whether your goal is to attract more international travellers, optimize profits during the off-season or improve your ability to fill last-minute vacancies, setting an explicit objective will bring immense clarity to your plan of action.
2. Understand Your Target Audience
Thereafter, develop an in-depth understanding of your target audience. Create a buyer persona that contains information regarding your target group’s age range, location, approximate income level, hobbies, interests, and pain points. This will help you select the right mix of distribution channels and the ideal communication approach to connect with them. In essence, the better you know your audience, the more you will be able to enhance your efforts in reaching out to them and driving conversions.
3. Choose Your Hotel Distribution Channels
The next step involves evaluating various hotel distribution channels, to create the right mix for your business. Keep in mind that the goal is not to be present on all distribution channels but to be present on all relevant and profit-generating distribution channels. Hence, taking into consideration where you are most likely to find your target audience, assess all your options diligently (including direct and indirect channels) and ascertain the right mix for your business.
4. Adopt A Dynamic Pricing Approach
Another valuable component of your hotel distribution strategy is competitive pricing. Be sure to maintain rate parity across distribution channels as well as offer multiple room options and packages for customers to select from. In addition to that, ensure that you set your pricing such that you cover your commission fee and any other charges applicable. Lastly, stay updated regarding the latest industry trends, market conditions and forecasts, and adjust your hotel pricing strategy accordingly to yield optimum results.
5. Optimize Your Distribution Channel Listings
Nowadays, consumers are conscious about the choices they make and like to look up a property and what it has to offer in detail before making a reservation. For this reason, optimizing your distribution channel listings is an absolute must! Be sure that all your listings across channels are updated with high-quality pictures of the property, complete information including the latest packages and offers, real-time rates and availability, client testimonials, contact details, etc. to engage the customers and convert them effectively. Moreover, creating a lasting first impression can go a long way for your business.
6. Track Customer Acquisition Costs
Thereafter, another essential component in determining the success of your hotel distribution strategy is tracking your customer acquisition cost. Analyze which channels are most profitable to your business by calculating the cost of acquisition on each channel. Doing so, will help you evaluate your performance, understand the gaps in your strategy and assist in making the necessary corrections or revisions, in order to achieve your desired results and meet your goals. Additionally, you can also determine the overall profitability of your strategy through key hotel industry metrics like Net Revenue Per Available Room (Net RevPar).
7. Invest In A Hotel Management Software
Last but not the least, invest in a leading hotel management software. InnQuest’s award-winning hotel management software comes integrated with all the necessary tools like booking engines, channel managers, revenue management systems, hotel CRM, mobile app, payment solutions, etc. to streamline your operations and maximize business ROI. It is designed to optimize your online presence, boost direct hotel bookings, improve overall operational efficiency, foster customer loyalty and increase profitability for your business!
In conclusion, constantly monitoring and refining your hotel distribution strategy is pivotal to the growth of your hotel business. The right, cohesive strategy can amplify your online presence, boost reservations and engender growth to a great extent.
At InnQuest, we understand the importance of the challenges faced by businesses in the hospitality industry. InnQuest’s mission isn’t just to provide the best hospitality management system but to ensure hospitality businesses are supported whenever they need it. Our goal is not only to help manage your businesses more efficiently but also to provide ongoing support to engender growth and expansion. This is why we offer competitive pricing, without sacrificing quality or functionality in our software solutions. Book a demonstration of our award-winning hotel management software here.