Navigating the Online Distribution Landscape for Hotels: Channels, Pros, Cons, and Best Practices

  • June 15, 2023

The importance of online distribution in the hotel industry cannot be overstated. With more travelers booking their accommodations online, understanding the different channels in the online distribution landscape is crucial for hotels to reach potential guests and optimize revenue. In this blog post, we'll explore various online distribution channels, their pros and cons, and best practices for effective online distribution.

 

Direct Channels

Explanation: Direct channels are ways for guests to book accommodations directly with the hotel. Examples include hotel websites, call centers, and walk-in reservations.
 
Pros:
  • Higher profit margins, as there are no commission fees for third-party intermediaries
  • Greater control over guest experience and brand image
  • Direct communication with guests for personalized offers and upselling opportunities
Cons:
  • Higher marketing costs to drive traffic to direct channels
  • Requires investment in technology and staff to manage bookings and customer service
  • To make the most of direct channels, hotels should invest in user-friendly websites with seamless booking engines, mobile optimization, and enticing visuals. Digital marketing strategies, such as search engine optimization (SEO), pay-per-click (PPC) advertising, and social media marketing, can help drive traffic to direct channels.
 

 Online Travel Agencies (OTAs)

Explanation: OTAs are online platforms that aggregate hotel listings and allow guests to compare and book accommodations. Examples include Booking.com, Expedia, and TripAdvisor.
 
Pros:
  • Greater exposure to a wider audience
  • Lower marketing costs, as OTAs invest in advertising and promotion
  • Access to the OTA's customer base and loyalty programs
Cons:
  • Commission fees charged by OTAs, typically ranging from 15-30%
  • Limited control over brand image and guest experience
  • Potential rate parity restrictions
  • To maximize OTA benefits, hotels should maintain up-to-date and visually appealing listings, utilize OTA marketing tools, and closely monitor performance metrics. Managing relationships with OTAs and negotiating commission rates can also help improve profitability.
 

Global Distribution Systems (GDSs)

 
Explanation: GDSs are computerized networks that facilitate transactions between travel service providers and travel agencies. Examples include Amadeus, Sabre, and Travelport.
 
Pros:
  • Access to a large network of travel agents and corporate clients
  • Consolidated management of inventory and rates across multiple channels
Cons:
  • GDS fees and transaction costs
  • Complex and sometimes outdated technology systems
  • Leveraging GDSs effectively requires investing in connectivity solutions and training staff to manage GDS processes. Hotels can also negotiate GDS fees and work with consortia to access preferred rates and marketing opportunities.
 

Metasearch Engines

Explanation: Metasearch engines are platforms that aggregate and compare hotel rates and availability from multiple sources. Examples include Google Hotel Ads and Trivago.
 
Pros:
  • Increased visibility and potential bookings
  • Cost-per-click or cost-per-acquisition models, only paying for successful bookings or leads
Cons:
  • Requires investment in technology and connectivity to metasearch platforms
  • Intense competition, driving up bidding costs
  • To optimize metasearch performance, hotels should maintain accurate and up-to-date information on metasearch platforms, monitor bidding strategies, and utilize analytics tools to measure performance and return on investment (ROI).
 

B2B Marketplaces

Explanation: B2B marketplaces are platforms that connect hotels with travel industry partners like travel agents, tour operators, and wholesalers. Examples include HotelBeds and GTA.
 
Pros:
  • Access to a wider network of travel partners
  • Potential for higher volumes of bookings
Cons:
  • Lower rates due to wholesale pricing models
  • Limited control over distribution and inventory
  • To make the most of B2B marketplaces, hotels should carefully select partners that align with their target markets and maintain accurate inventory and rate information. Building strong relationships with travel partners can also help secure better deals and promotional opportunities.
 

Emerging Channels

Discussion: New and emerging channels, such as Airbnb, Google Vacation Rentals, and Wink, are constantly shaping the online distribution landscape. Hotels must stay informed and adapt to these changes to remain competitive.
 
Pros:
  • Early adopters can gain a competitive advantage
  • Access to new customer segments and markets
Cons:
  • Uncertainty and risk associated with new platforms
  • Potential disruptions to traditional distribution models
  • To capitalize on emerging channels, hotels should regularly monitor industry trends and be open to experimenting with new platforms. By staying agile and adaptable, hotels can take advantage of emerging opportunities and minimize potential risks.
  
Best Practices for Effective Online Distribution
  1. Employ a channel management system to efficiently manage rates and inventory across multiple channels
  2. Utilize data analytics to understand channel performance and optimize distribution strategies
  3. Invest in direct channels to build brand loyalty and reduce dependency on third-party intermediaries
  4. Regularly monitor industry trends and be open to experimenting with new platforms
  5. Maintain up-to-date and visually appealing listings across all channels
  6. Build strong relationships with distribution partners to secure better deals and promotional opportunities
 

Understanding the online distribution landscape is crucial for hotels to effectively reach potential guests and optimize revenue. By leveraging a diverse range of channels, carefully monitoring performance metrics, and adapting to industry trends, hotels can build a robust online distribution strategy that drives success in today's competitive market.

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