Your product might be the best in your location and your rates competitive, but the success of any hotel is dictated by having the right distribution strategy in place.
Distribution channels today go well beyond the high street travel agents and tour operators many hotels once relied upon, with hotels’ own websites and online travel agents (OTAs) now thrown into the mix. This means properties of all shapes and sizes need to carefully consider how and where they’re selling rooms, especially in a world where the average consumer might conduct more than 52 searches online and consider multiple brands over a course of five months before actually booking anything.
Optimum channel mix
“It all depends on the type of hotel,” says Adam Turner, a hotel sales consultant who has worked for the likes of Ritz-Carlton and Jumeirah in destinations ranging from Dubai to the Maldives.
“In the Maldives, for example, you’d get very little corporate business so there’s no point in even going after it,” he explains. “You might get a bit of group business coming in, but that’s something that’s nice to have and you wouldn’t focus your sales team onto that. Whereas a city hotel would be exactly the opposite."
Knowing your strengths and then focusing on driving business through the relevant channels to maximise your revenue per available room is crucial, adds Turner. Spanish hotels group Palladium has a diverse portfolio of properties throughout Spain, from central city hotels to beach resorts in Ibiza, so different tactics are needed for each.
“Our city-based business properties are not going to be booked in the same way as our beachside resorts,” explains Rafael Rubi, Corporate Director of e-commerce. “We also attract different types of customers at different times of year and they may have different booking habits."
He adds: “In the summer holidays, we attract a strong family market who would travel for a seven or 14-night holiday, often via a tour operator. Outside of the main season, we may get shorter stays which might be booked via other channels. We need to ensure we offer a competitive proposition including direct-sell, online and via the tour operation to maintain competitive and give the customer what they want.”
Ultimately, he says, the key is to know your product, know your audience and their booking preferences and know the travel and tourism infrastructure to the destination that you are operating.
Using different channels
Different channels can add value to your distribution mix. For example, working with OTAs allows The Langham Hotel to best reach the leisure market, says Jamie Blackmore, Director of Revenue Management at The Langham Hotel in London, while other channels offer different types of business.
He says: “[A] Global Distribution System gives us access to corporate clients, our brand website allows us to showcase the entire hotel offering, wholesale agents are essential in capturing some of the developing markets and Middle Eastern business, and partnerships with luxury agents via sources such as the Virtuoso network are also vital in the five-star market.”
Channel mix also depends on size: a small, independent hotel group will likely utilise channels differently to larger chains and world-renowned brands.
“Global names such as Hilton or Radisson have the autonomy and power to encourage people to book direct because they have the marketing budgets,” says Mike Brackney, Group Revenue Manager at Nelson Hotels – a small group of three hotels in Cheshire, England.
“A lot of independent hotel groups like ourselves, and smaller properties, rely on OTAs quite heavily instead,” he says.
Flexibility is important, too. If a hotel relies too heavily on one type of business, they can be left in the lurch if that business suddenly slows down. “You can’t base all your business on wholesale, or MICE (meetings, incentives, conferences, and exhibitions), because if that suddenly drops off you haven’t got anywhere to turn fast enough,” says Turner.
“You’ve got to have a mix of those channels you know you can bank on, and then you’ve got to make sure your pricing is correct, and you’ve got to make sure your sales team is out there ensuring those channels know your product.”
'You can’t base all your business on wholesale, or MICE...' says hotel sales consultant Adam Turner. Photo: Alessandro Bogliari, Unsplash
Technology is here to help with this, making revenue management a far more fluid affair. “There’s technology that wasn’t available seven or eight years ago that means today we can close down or open up rates as and when we need to,” says Brackney.
Other technologies out there allow hotels to benchmark distribution against their competitors and address any gaps in the distribution strategy.
The challenges for hoteliers goes beyond knowing where to distribute, though. Turner explains that in-house teams must work closely and collaboratively to ensure they’re selling in the right places at the right price. He says it’s important the sales team and revenue team work "hand-in-glove".
“It’s quite an interesting dynamic because revenue directors and sales directors often go head-to-head because they want different things. The sales director might have some really key clients they need to keep sweet, whether it be on a tour operator basis or corporate clients coming in, and the revenue manager would sometimes look at that business and say it’s too cheap,” he reveals.
“One of the key things hotels need to work on is getting those two areas working together for the common good on a long-term basis, rather than a transactional basis.”
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You might also like to read:
- Getting the most from your revenue management strategy
- Spotlight on: property management systems
- Securing last-minute bookings during peak season
- Distribution channel mix can make or break a hotel’s financial success
- The optimum mix differs from hotel to hotel and is dictated by product offering, location and scale of the business
- In-house teams need to be collaborative on a long-term basis to optimise distribution
- Flexibility is key, and distribution mix shouldn’t be weighted too heavily towards just one type of business