3 online distribution challenges for independent hoteliers

The online distribution landscape is changing, fast - and it’s so cluttered that it’s hard to keep up.

Not only are you competing with other accommodation providers for traveller dollars, you’re also striving for a delicate balance when it comes to working with online travel agencies (OTAs) and metasearch sites. Because it’s not enough to partner with these sites and play ball - it’s a never-ending race to tap into market demand, ensuring you fill your rooms in the most profitable way.

Here are three of biggest challenges for revenue managers when it comes to navigating the online distribution landscape, and what you can do to come out on top.

Challenge #1: Figuring out which online booking sites to partner with

It’s a love-hate relationship between hoteliers and these booking giants, but the numbers speak for themselves: OTAs and metasearch sites are a core part of hotel room shopping globally, and because of this, they can’t be ignored. 

Across the board, OTAs and metasearch sites are the preferred method of booking, as opposed to your hotel’s website. This is probably because they dominate search engine rankings for “hotels in [your city]”.

So it’s obvious that you need to work with them. But how do you choose which ones you need to partner with? By looking at their customer mix, and seeing if it matches with the type of traveller that you’re looking for.

• Which regions do they have access to? For example, Ctrip is specifically for China, so if you’re looking to attract Chinese travellers, it’s a great OTA to partner with.
• Which age groups do they have access to? If you find that baby boomers are a lucrative market for you, ask the OTA what percentage of their customers are in that age group.
• Which niche do they have access to? If you want to attract deal-seeking travellers to get rid of your last-minute inventory, an OTA like LateRooms is perfect.

So, how do you make the ultimate choice? Should you just pick the giants (Expedia, Booking.com, Google and TripAdvisor) and leave it at that?

Unfortunately, going that route doesn’t stop lesser-known booking sites from buying your inventory at a wholesale price from a reseller, and selling your rooms anyway, undercutting you along the way:

This is why hoteliers are turning to tools like OTA Insight, which can help you monitor and enforce rate parity by allowing you to uncover such discrepancies.

To make sure your hotel’s rates aren’t distributed in this way;

• Have strong contracts in place.
• Partner directly with more OTAs so that they won’t try to buy your inventory off of a reseller, and you retain full control of your inventory.

Challenge #2: Understanding how to harness your data to increase revenue

There is a wealth of data that flows through your online channels that can be harnessed to drive profit for your hotel. This is why hoteliers turn to rate shopping and analytics platforms - not only to keep a pulse on market demand, but to monitor and optimise the performance of online channels, for revenue.

Say you have a handful of rooms left vacant for the next 2 nights - how do you decide which channels to close and which to leave open? Most would say to close all of your third party channels so that travellers book direct and you get to keep 100% of the booking - but what if you don’t get any walk-ins in time? Or you could just leave one of the major OTAs open - but what if the travellers that this OTA sends you are usually from overseas and never book last minute?

You need to have the data to back you up to know that you’re making the right decision. You have several levers available to you:

• Length of stay (LOS): How many room nights does each channel normally generate? 
• Day of week: Which ones are your channels driving business in? This will tell you which ones send you business as opposed to leisure travellers.
• Country: Which countries and sorts of lead times will channels drive?
• Room types: Which room types do your channels usually book out? Is there a pattern?
• Lead times: How far in advance do your guests book and via which channel?

The most powerful thing that your data will do is give you the information you need to make a decision with confidence.

Challenge #3: Optimising your direct channel

While working with booking sites is necessary, you can’t totally rely on them - it’s far too risky. If they have too much of the pie, it gives them leverage to increase their commission - or if they somehow go bust, then you have lost your customer base. This is why you need to invest in your own website.

The question is, how?

Because you’re bound by parity rules, the best way to win over guests in this situation is to offer a competitive package. For the same price, throw in extras, like a room upgrade, free breakfast, or a free shuttle from the airport.

Also, make sure you have an online booking engine on your site to make the booking process seamless. You’re competing with the OTAs and metasearch sites - you don’t want to force guests to call you or go back and forth over email just to make a booking. The booking engine should cater to international guests as well - allowing for currency and language conversion.

Your booking engine should be able to integrate with your rate shopping tool so that you can monitor all of your rates in one place. Having that data in one central location means that you can pick up on any violations of rate parity, and update your rates accordingly - all in real-time.

In conclusion…

It’s a tough gig for revenue managers, but navigating the online distribution landscape is a lot easier when you’re equipped with the knowledge - and tools - to take the guesswork out of it. If you’re interested in watching the full webinar, you can access it here.