Understanding the best hotel distribution channels for your hotel is one of the keys to the profitability. The right mix of direct channels like your hotel’s website or call center, and indirect channels like online travel agencies (OTAs) and Global Distribution Systems (GDSs) as well as travel wholesalers and tour operators will make a huge difference on your hotel’s bottom line.
That being said, there is no one perfect mix. Instead, the right distribution mix for your hotel will depend on who is your target audience, what other hotels in your comp set are doing, and your overall budget. We’ll take a look at the means of distribution and the different channels in order to give you a complete guide to building your hotel’s ideal strategy to optimize results.
What is a hotel distribution channel?
A hotel distribution channel is the means by which your hotel’s offer reaches your target audience. This can be done via a variety of methods or platforms through which you sell your hotel rooms. Possible methods include online travel agents, booking engines, phone and other offline means, metasearch and global distribution systems.
It goes without saying that using a variety of channels allows you to create a strategy that will drive bookings and positively contribute to revenue. Learn how to build the perfect hotel distribution strategy.
Different types of hotel distribution channels
There are many different types of channels your hotel can use to reach its desired audience. Let’s take a look at some of the most popular ones.
Direct
Direct channels include your website, phoneline, or social media. Nowadays, online is favored over offline, which is why it’s important to have a website that’s optimized for direct bookings and with a built-in hotel booking engine. Direct bookings are the most profitable because you avoid having to pay commission to third parties.
In order to prepare your website for direct bookings beyond a booking engine, you’ll need to have a mobile-responsive site as a big percentage of bookings are made from mobile, as well as ensure that you are using SEO (search engine optimization) strategies to position your site better on Google. The easier it is for guests to navigate on your site, the more likely it will be for you to lock in a booking from your own channels.
Indirect
Indirect channels include: Online Travel Agencies (OTAs), Global Distribution Systems (GDS), Metasearch sites, wholesalers and tour operators, among others. GDSs like Amadeus and Sabre are used to connect with travel agents, and to maintain accurate information across global travel agent systems. Because of the variety of indirect channels out there, this still remains one of the most popular ways for hotels to distribute their rates.
Online travel agencies and metasearch engines are one of the most important tools to figure into your distribution strategy because they have the ability to reach an incredibly large audience due to the amount of money these sites invest in advertising with the commissions hotels pay them. Wholesalers and tour operators are another source of indirect traffic with wholesalers connecting travel agents with travel suppliers, although wholesalers are not super profitable due to small margins.
Offline
Offline is becoming less and less important due to the popularity and ease of the internet. However, at the same time, offline means like phone, direct email, offline advertising and walk-ins should not be neglected. Events and connecting with locals through strategic partnerships can provide just as much ROI as investing in indirect channels.
A guide to building a hotel distribution channel strategy
Building a hotel distribution channel strategy is all about finding the right mix between direct, indirect and offline. While indirect channels are more immediate, investing in direct provides the greatest profit margins. Offline, while less important, should still be included in your strategy. Let’s look at steps to creating your plan of action.
Start with a goal in mind
A clear goal will serve as your North Star for which you can make all decisions relating to distribution. Naturally, a strategy is devised in order to reach specific business goals, like increasing bookings, reaching your target audience, or increasing visibility in a particular market. Once you know your “who” “what” “when” and “where” you can start by defining your “how.”
Decide how you are going to reach your goals
Reaching your business goals is about finding where your target audience is and using the right medium to reach them. Different types of guests will use different means to find you. For example, the way a Millennial finds you will most likely be via social media, influencer marketing or metasearch engines, whereas a Baby Boomer would most likely pick up the phone and call to make a reservation. It’s important to keep this in mind when devising your strategy so you have the greatest chances of reaching your target audience.
Determine how much you are going to invest in each channel
Depending on who your target audience is, your channel mix will be different. If you are trying to reach a younger clientele, chances are you can invest more money in direct, a little less in indirect, and slim to none in offline. Knowing who your target audience is will help you to find the right mix that helps generate profitability and visibility.
Modify based on KPIs
Key Performance Indicators, or KPIs, will help you determine how well your channels are performing and whether you need to modify your distribution mix. Of course your strategy should be adapted depending on market trends, the appearance of new distribution sources, and depending on how well each channel is performing. The most important thing is to put your money into the channels that are helping you to reach your business goals.
Invest time and money in growth
You will only grow if you continue to have a growth mindset, which involves monitoring the market trends and investing time and resources in research and business development. Come up with new and creative promotion ideas on how to reach your target audience, whether that be doing influencer marketing campaigns, creating strategic partnerships, investing in PR, and not neglecting the power of social media.
Conclusion
In this article we’ve looked at hotel distribution channels, what they are, the most popular ones and how to build the right strategy for your hotel. The most important things to consider when building your strategy are: what are your goals, who are you trying to reach, what metrics will you consider, and how you can adapt and optimize your strategy over time. With the right mix of channels, you can prepare your hotel for success.
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