Distribution
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Which distribution channels?
At this time, the hotel mainly relies on its own sales, in their distribution (so getting customers and occupancy in the hotel). So, in the variable costs you will see no costs for this at all.
This situation doesn't really match reality anymore. Looking at the market as a benchmark, it would be more realistic to have:
- 30% directly from their own reservation system (CRS), loyal customers, website etc.
- 20% via agents (OTA, travel companies, partners etc), who would get 10%-15% commission on average; mega partners like Expedia.com
- 30% via aggregators like Bookings.com, who would get 15% commission on average but, in many cases more
- 15% via affiliate links, who you would pay (cost per sale) commission would be like 5% on average
- 5% via Daydeal sites like Groupon
Some alternative for Bookings groups, being the biggest payer, are sites like Hotels.com and others.
There are initiatives, like TimetoMomo (Moonback) setting up a more 'fair' system, starting from a steward-ownerships structure.
Interesting read on Hospitality net is The economic impact of OTAs in the EU: summary report.
So looking ahead to the future, using these partners would also mean the prices would go up a bit to compensate for the commissions (costs) to be paid. Or, having a higher occupancy rate to compensate for the additional costs.
Distribution, leads or sales?
AI models, like Bard and ChatGPT, can inform people to the max, and make them really 'buy ready'. Just, for now, the last click will be towards he booking engine or platform. These leads might become much more important soon, as both brands mentioned are linked to Bing (ChatGPT) and Google (Bard). And, as anything of value, is also brings costs to the hotel (or vertical, or aggregator or OTA) 'getting' there (hot) suspects. These new PPC, or affiliating models are getting important. Maybe it will lead to a shake-out of some of the companies how now have just have an comparing or ordning role and no other added value in the chain.
Models in operating a hotel
Read the interesting article on profit-models, ownership and distribution White paper in Hospitality Management.
If you do not have much idea on how to define a distribution strategy, this toolkit might help you along.
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