Managing one’s distribution is key to maximizing demand throughout the year, for those hoteliers that wish to remain truly independent and make their own decisions, and are not just trying to build a brand that can join a Marriott or Hilton stable further down the line.
The seemingly settled attitude to distribution is that independent hotels should just accept that they have to pay the OTAs to be a shop window and dismiss the high cost as the cost of doing business.
I am not an OTA basher, and I understand the importance of these partners to support in our efforts to attract guests to our hotels, but it is frustrating that independent hotels feel that they need the OTAs to be able to compete with the bigbrand.com visibility that the large groups can garner. Instead your strategy should be more sophisticated — and profitable — than just putting your hotel on an OTA and walking away.
It will be interesting to see what Operator, ChatGPT’s latest launch, will do to potentially level the playing field for independent hotels, and AI searches for travel in general, but it is likely that the model will stay the same: if you want more visibility, you must pay more commission.
Currently, hotels are encouraged to participate in various genius and mobile programs, to add discounts to members participating in deals of the day or early booking discounts, all to attract the customer.
These are important drivers, but hotels must take a considered approach to distribution management if they are going to drive profits. It’s about understanding how necessary participation in these deals is at a given time of year, about understanding that if we take part in too many deals we could end up with a 30% discount where the OTAs are positioning our hotel at a cheaper price than we can position ourselves.
Unlike in Europe where we can offer lower prices on our own website to those that we offer through OTAs, within the U.K. we have to adhere to narrow rate parity rules determining the pricing when we are selling the same type of rooms both direct and through the OTAs. The price is the same for the consumer, but the profits are very different for the hotel. But rate parity applies to the available room type.
One way to control your inventory more effectively is to sell a different inventory through your website than you are selling on the OTAs. For example, turning what is a suite during the week into a family room on the weekends, in line with demand.
This is not the only area where hotels can reclaim some control. If you are an independent hotel or a small group, you need to make the decision of when you need to use an OTA at all. You may have been so successful with your own brand and marketing that customers flock to you without the need for the OTA. The Pig Hotels spring to mind, as do Premier Inn at the budget end of the market. You may be located in a strong destination, which takes care of the marketing aspect of why you might choose an OTA — Cornwall in July and August for example.
It’s also important to think about your source market. A lot of American travelers are loyal to their brands and may be unlikely to look for an independent hotel, but savvy hoteliers are now looking East for their guests. There is far more opportunity in growing markets such as India, Malaysia or China than there is from the West, where many people have already visited the U.K. and know where they want to stay.
So rather at looking at, say, Expedia, you might be looking at Ctrip because it brings an audience in from Asia. It's about understanding that you have multiple sources of supply and multiple distribution options as a result.
This may also change during the year. We know that in the summer we have a lot of people traveling from the Middle East to stay in London and escape from the extreme weather. How can we tailor our market presence and our distribution in the summer months to lend itself to the audience that is actually booking us?
It’s also important to understand the differences between distribution wholesalers and aggregators. In locations such as the Indian Ocean the majority of business comes through the wholesalers, who snap up all of the airline seats. And if your potential guest can't get a seat on the plane, then there's no point trying to sell them your hotel bedroom.
We are also seeing shifts in how corporate travel is booked — away from negotiated rates and toward online channels. Through Egencia, which is part of the Expedia group, and TravelPerk, which offers discounts to corporate partners, business travelers are booking through these online channels, which can distort your market segmentation reports. In order to know whether that's a business or a leisure traveler, you have to dig deeper to understand your audience.
And this is the message. What we had thought was a done deal, even a game lost, is anything but. The nuance of who is visiting, from where and why means that you can create a tailored distribution management strategy to deliver the most profitable guests through the most profitable funnel all year round.
Robert Holland is managing director for the U.K. and Ireland at HotelPartner Revenue Management.
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