Distribution, Channel Strategy, and the Importance of OTAs (or Not)
By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | September 2019
To the uninitiated, the concept of revenue management may be simply described as the process of "selling the right product, at the right price, to the right person, at the right time." Of course, it's a bit more complicated than that, and in the hotel industry, we know there's another key ingredient to this recipe: the right distribution channel.
By addressing channel performance-the concept of measuring key performance indicators across a complex, multi-channel booking landscape-hoteliers can optimize pricing and marketing across all channels, and boost revenue as a result. But for those new to the world of advanced revenue management practices and technology, how does one begin to map out a proactive and profitable distribution strategy?
How you choose to distribute your offerings must be carefully and regularly assessed, with the goal of maximizing your profit potential always in mind. Evaluating channel acquisition costs, looking beyond online travel agencies (OTAs) for better revenue opportunities, and finding ways to drive more direct bookings are all good practices for monitoring and improving the health of your distribution strategy. First and foremost, however, a functional distribution strategy starts with the quality of the people implementing it and the tools they use to drive it forward.
The Right People and the Right Technology
There has been a significant evolution in how distribution drives hotel profitability due to emerging industry data sources, channels and a variety of new technology. Such is the complexity of prices, restrictions, add-ons, channel usage, technology, and distribution costs that many hotels have considered this function large enough to split off on its own, increasing job roles that develop, execute and measure their comprehensive and intelligent distribution strategies.
The complexity of distribution channels, and the impact an effective distribution program can have on a property's ability to grow revenue, make it critical to understand how the quality of this role increases your overall profitability. Without the right staff and systems in place, your hotel will struggle to realize its full revenue potential. Not properly managing or accounting for distribution costs directly affects the net revenue results you can expect from your distribution strategy.