Build an optimal distribution mix for better performance

Hotel distribution Hospitality management is fascinating business. It is fascinating for the same reasons that make it a highly complex business, with its rapidly emerging trends, powerful disruptors, brilliant technological applications and dynamic matrix of shifting stakeholders whose needs and expectations must be met to achieve sustainable growth. Managing the influx of leads and converting them is obviously one of the aspects of hospitality management with the highest stakes. Today it has become one of the rapidly changing factors of the industry that may represent important risks, and equally important opportunities.

Now, more than ever, the distribution network available to hoteliers is becoming increasingly difficult to navigate. From meta-search engines to brick-and-mortar tour operators, a plethora of options are available and hoteliers need to be equipped to make the right distribution decisions to maximize visibility, occupancy, revenue, and most importantly, profit. But how to strike the right balance without the tools to measure conversion rate by channel or the opportunity cost of strategic distribution decisions?

With consolidation across online travel agents and meta-search engines becoming the norm, hoteliers must beware of the changes in the power dynamics within their distribution network and manage their relationships with each distribution partner carefully. This means that managers need to be mindful of where they want to be listed, the price or commission they are willing to (or can afford to) pay and the potential issues that may arise if they decide not to engage with any distributors. Going through a structured, thorough channel value mapping stage has become an absolute necessity, even for independent hoteliers.

Some distributors, like OTAs, are viewed by the industry as frenemies. They offer some benefits like market reach and exposure, but they also compete with hotels for bookings. Multiple consumer studies in the travel industry have pointed out that meta-searches and OTAs are the primary sources of information for travellers in the early stages of trip planning. But in the late stages of the search and booking process, hotel websites pull ahead to become the primary source of information, and often, the point of sale.

Recently, many hoteliers have also come to realize that they cannot neglect to leverage the more traditional distribution channels, irrespective of their marginal cost, because some of these, like property voice, GDS, or offline travel agencies, have the ability to bring in business from hard to reach market segments. Each of these channels can be a source of valuable business that may boost occupancy during slower periods for the hotel at lower costs.

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Striking a balance between managing the cost of multi-channel distribution and maintaining high visibility across channels popular amongst potential guests can be tricky as well as time consuming. However, there are strategies and tools that can be implemented quite easily to facilitate the job of developing an optimal distribution mix which will in turn lead to better performance.

There isn’t one right answer to all of these critically important questions. There is, however, a right toolbox hoteliers must equip themselves with to properly analyse their situation, with their specific variables, opportunities and constraints, which will enable them to strike theirÊright balance.

By Aideen Garry, EMBA student at Ecole h™telire de Lausanne (EHL)

ƒcole h™telire de Lausanne now offers a certificate in high performance distribution strategy as part of a new online program focussed on driving hotel revenues. To find out more, visit http://info.ehl.edu/advanced-certificate-revenues.

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