How to optimize the distribution mix
According to an article by STAAH, a New Zealand-based technology company specializing in cloud-based channel management and booking engine for accommodation providers, no set formula for an optimal distribution mix applies to all hotels. Every hotel has its unique channel mix that is affected by several things, including its position in the marketplace relative to its competitors, geographical location, reputation in the industry, and service offerings. Achieving the optimal distribution mix for a hotel is a complex task. It requires understanding the target market, analyzing data from various sources, mapping against online channels, setting up the website for booking success, building a loyalty program, and regularly reviewing the distribution strategy. The article emphasizes that distribution is complex and will not be uniform for all structures. Still, it is one of the most critical decisions hoteliers can make to improve profitability and boost reservations. Here are some additional considerations when optimizing the distribution mix.
Lack of information
Capturing the demand
Digital distribution channels
Direct web bookings
- Loyal customers: Guests who have previously stayed at the hotel and have a personal relationship with the hotel or someone at the hotel may prefer to book directly through the website.
- Members of loyalty programs: Guests who are part of the hotel's loyalty program often book directly through the website to access member-exclusive rates and benefits and earn reward points.
- Guests seeking personalized experiences: Some guests may book directly through the hotel's website, believing it allows for more customized service or special requests. Guests would like to be able to reserve a table in the hotel restaurant and a spa treatment at the same time, but most hotel booking engines lack that functionality.
- Event attendees: Guests attending events or conferences at the hotel may book directly through the hotel website to access special event rates or room blocks if the hotel booking engine offers that functionality.
Online Travel Agencies (OTAs)
- Leisure travelers: OTAs offer leisure travelers an easy-to-use platform to compare and book hotels based on various factors like price, location, amenities, and guest reviews. They can filter options based on their preferences and find deals and discounts.
- Last-minute travelers: OTAs often have real-time information on hotel availability and rates, making them an attractive option for last-minute travelers looking for accommodations.
- Budget-conscious travelers: OTAs often feature special offers, discounts, and promotions, appealing to budget-conscious travelers who want to find the best deal possible.
- International travelers: OTAs often provide multilingual options and support multiple currencies, making it easier for international travelers to book hotels in their preferred language and currency.
- Independent and small group travelers: OTAs cater to independent travelers and small groups who plan and book their trips without the assistance of travel agents.
- First-time visitors: Guests unfamiliar with a destination may find it helpful to use OTAs as they offer an extensive selection of accommodations and in-depth information on each property, making choosing a hotel that fits their needs easier.
Global Distribution Systems (GDS)
- Business travelers: GDS allows business travelers to access various hotel options, compare prices, and book accommodations quickly and efficiently. Business travelers often have specific needs, such as proximity to meeting venues, and GDS can help them find suitable hotels based on their requirements.
- Corporate clients: Companies frequently use GDS to manage their employees' travel arrangements. It provides a centralized platform to book hotels, flights, and car rentals, streamlining the process for corporate travel managers. In addition, GDS often integrates with corporate booking tools, making it easier for companies to monitor and manage travel expenses.
- Travel agents: Travel agents use GDS to access real-time hotel availability and pricing information, allowing them to efficiently search for and book accommodations on behalf of their clients. GDS offers a comprehensive database of hotel options, making it a valuable resource for agents to serve their clients better.
Analog distribution channels
- Weddings and social gatherings: The wedding is a milestone for everyone, and there is a need to go through all the details once or several times.
- Group bookings and events: Hosting large meetings or conferences also need site inspections to sort out all details and assure the potential customer that the hotel will deliver according to expectations.
The key to finding the right distribution mix
- Could you look at your target market and understand their booking behavior?
- Could you assess the performance of your current distribution channels?
- Could you identify any gaps or potential opportunities in your current distribution strategy?
- Allocate resources to the most effective channels based on your analysis while considering potential costs and commissions.
- Please monitor and evaluate your distribution channels' performance to ensure they're effective and make adjustments as needed.
- Analyzing target markets/segments: By examining different target markets' booking behavior and preferences, Demand Calendar provides insights into which distribution channels are most effective for attracting specific guest segments. This allows hotels to prioritize and allocate resources to the channels that cater to their target audience.
- Monitoring channel performance: Demand Calendar tracks the performance of each distribution channel in terms of booking volume, revenue, and customer acquisition cost. This data enables hotels to evaluate the effectiveness of each channel and make informed decisions about where to focus their distribution efforts.
- Calculating customer acquisition cost: Demand Calendar identifies the most cost-effective channels for acquiring new guests by determining the customer acquisition cost per distribution channel. This information can guide hotels in adjusting their distribution strategies to maximize revenue and minimize expenses.
- Adjusting distribution strategies: Demand Calendar allows hotels to regularly review and adapt their distribution strategies based on data-driven insights. This continuous evaluation ensures that hotels maintain an optimal distribution mix that caters to changing market conditions and guest preferences.