The following is an excerpt from Max Starkov's article "Controlling Hotel Distribution Costs in Today's Multi-Channel World", Hotels Magazine, April 2011, Pages 24-28
Hoteliers have been rightfully confused by the myriad of headlines about the changing landscape of hotel distribution, from articles titled "Google will change your hotel's distribution strategy" and "Facebook as a commerce engine," to "How to make Twitter Sell" and "Mobile Apps to Impact Hotel Distribution." In other articles OTAs provide "free advice" on "How to grow your ADR without impacting occupancy," causing even more apprehension for readers. On a daily basis, hotel owners, managers and operators are bombarded by far-fetched and often conflicting messages and claims.
This special report aims to set the record straight: What are the most cost-effective and important distribution channels hoteliers should focus on today and what are the latest trends in hotel distribution the industry should keep a keen eye on?
There is no doubt hotel distribution has changed dramatically over the past 16 years since the advent of the "commercial" Internet. Online distribution, social media and the mobile Web have all changed how we connect with, engage and ultimately convert customers. But the fundamental principles of hotel distribution have not changed that much. Hoteliers need to focus on distribution channels that "pass the litmus test" i.e.:
- Are cost-effective
- Generate the most bookings
- Protect rate parity and price integrity
- Reach the targeted customer segments
The Law of unintended channel share loss
Not all bookings are created equal and when planning their distribution strategy, hoteliers should realize the existence of "The Law of Unintended Channel Share Loss" which stipulates the following:
Any booking via a more discounted channel (i.e. Flash Sales Sites like Groupon, LivingLocal.com or SniqueAway.com or an OTA site, etc) is one less booking for the same hotel via the hotel website, call center, GDS, or OTA (in that order).
The main focus and priority for any hotelier should be to sell as much inventory via the most cost-effective distribution channels that can potentially generate the most bookings, while preserving rate parity and price erosion.
Click here to read the full article: "Controlling Hotel Distribution Costs in Today's Multi-Channel World" from the April 2011 issue of HOTELS magazine, featuring case studies, distribution channel cost analyses, and commentary about the future of hotel distribution. Enjoy!
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