Shifts in consumer behaviour coupled with technological advancements have disrupted the hotel distribution landscape. As the world becomes increasingly interconnected, the ways in which hotel guests book their accommodation are evolving. Hotels now need to extend their reach beyond traditional Online Travel Agencies (OTAs) and manage their business across a multitude of booking channels, including metasearch engines, Google Hotel Ads, and social media platforms.

This has caused the modern hotel booking landscape to become increasingly fragmented. Potential guests have an array of booking channels at their disposal, making it crucial for hotels to strategically position themselves where their target audience is most active. Achieving this requires a careful balancing act, ensuring that pricing and availability information remains consistent across all platforms.

To effectively navigate the challenges of today's hotel booking landscape, it's important for hotels to adapt and refine their distribution strategies, concentrating on the following key areas:

Understanding audience of each booking platform

As the hotel distribution sector continues to advance and new booking platforms emerge, hotels must recognise that each booking channel caters to a unique audience – of which hotels must understand for effective targeting. For example, metasearch engines like Trivago or Kayak may be frequented by travellers who are more price-sensitive, focusing on comparing options. Meanwhile, social platforms like Instagram and Facebook are likely to attract a younger demographic, drawn to the visual and experiential aspects of travel. Recognising these differences allows hotels to tailor their strategies to each channel's specific audience.

Maintaining rate parity

A crucial aspect of distribution management is maintaining consistency in pricing across various channels. Price disparities can lead to potential issues with OTA agreements along with creating customer distrust and a decrease in direct bookings, which are often more profitable. Rate parity not only builds trust but also simplifies the decision-making process for customers comparing options across multiple platforms.

Analysing channel performance

To optimise distribution, hotels must keep a close watch on the performance of each booking channel. This involves tracking metrics such as conversion rates, average length of stay, rooms sold, ADR, and revenue per available room (RevPAR), as well as cancellation percentage by channel. Some hotels even track net ADR and net RevPAR to measure profitability by channel, along with sold lead in versus premium room categories to analyse the preference and price sensitivity by channel. Analysing these metrics enables strategic decisions about where to allocate more resources and efforts.

Leveraging data analytics

In the age of big data, analytics is a powerful tool for understanding market trends, customer preferences, and booking patterns. Deep analysis of data can unveil critical insights, such as peak booking times, popular room types, and customer preferences. These insights are instrumental in tailoring marketing strategies and improving service offerings.

Developing strategic partnerships

Forming strategic partnerships with OTAs and other platforms is beneficial, but these collaborations must align with the hotel's brand and market positioning. It's a delicate balance between expanding reach and maintaining the hotel's unique identity and values.

The role of an RMS

In managing this complex distribution environment, a revenue management system (RMS) plays a pivotal role. An RMS provides the technological backbone needed to analyse vast amounts of data, automate pricing strategies, and ensure rate parity across channels. An RMS can forecast future demand, helping hotels set accurate prices and manage inventory across different channels effectively. With dynamic pricing capabilities, an RMS can also automatically adjust and distribute prices in real-time based on booking levels, competitor actions, and other market dynamics, optimising revenue opportunities.

Drive direct bookings

With increasing costs associated with hotel distribution through channels like OTA's or Google Hotel Ads, it’s essential to carefully evaluate the value of each booking channel. Hoteliers must now consider the true cost of acquiring reservations through various booking channels and assess the necessary demand to justify these expenses. While diversifying booking channels is critical for casting a wide net, hotels should also focus on boosting direct bookings through their website to help bypass third-party booking commissions and fees.

The fact remains that a hotel’s own website continues to be the most cost-effective booking channel. So, how can hoteliers maximise direct bookings through their website? The first step is increasing web traffic from potential guests and attracting more ‘lookers.’ To do this, hotels need to understand more about those lookers. What dates are they searching for, where do they search and what is driving them to a particular market? Collecting this market intelligence provides data that can be used to develop targeted marketing campaigns that attract the right type of lookers, the ones most likely to become bookers.

Hoteliers can also increase direct bookings by retargeting past visitors and directing them to their website. When researching a location, potential guests may visit a variety of travel websites and OTAs before deciding where to stay. Hotels need to keep their property on the top of the consumer’s mind and influence guests to book on the hotel’s website. Technology that offers tailored adverts customised around visitor behaviour or website activity can help hotels achieve an estimated 10 percent return rate on website visits – increasing direct booking opportunities.

Increase bookings and revenue with effective distribution management

Boosting bookings and revenue now hinges on the effectiveness of distribution management for hotels. This complex but crucial task is made possible through understanding each channel's audience, maintaining rate parity, forming strategic partnerships, utilising advanced RMS technology, and encouraging direct bookings. By optimising these elements in their distribution strategy, hotels can significantly enhance their booking and revenue outcomes.

For more information on how your hotel can master hotel distribution in a fragmented booking environment, please visit: www.ideas.com

Written by: Tracy Dong, Principal Industry Consultant, IDeaS

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.

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