Friday, 30 December 2016

Hotel Distribution: How it costs?

There is a big debate for the Hotel Inventory Distribution and the costs of it. The hoteliers have been rightfully confused by the changing landscape of hotel distribution. New distribution channels appear and the role of the internet is becoming very powerful on the travel distribution sector. Maybe the most important question which comes out is "What is the cost of the distribution?". A recent report shows the following:


Direct online channel:

Hotel brand websites: US$2 to US$5 per booking. Since there is no publicly available data on the subject, these are expert assessments.

Independent hotels and resorts: US$8.50 to US$12.50 per booking (HeBS Research, based on 250,000 bookings in 2010 via hotel websites from a sample of HeBS’s full-service hotel client portfolio).

Voice channel:

Major hotel brands: US$6 to US$10 per booking. Again, there is no publicly available data on the subject. These assessments are based on call-center statistics from other travel suppliers.

Independent hotels and resorts: US$10 to US$15 per booking 

Indirect online channel/OTA s:

Hotel brands: US$40 to US$120 per booking. (Based on an average 20% merchant commission, two-night stays and ADR s ranging from US$100 to US$300 per night.)

Independent hotels and resorts: US$75 to US$150 per booking. (Based on an average 25% merchant commission, two-night stays and ADR s from US$150 to US$300 per night.)

GDS travel agent:

Hotel brands: US$24.50 to US$66 per booking. (Based on GDS pass through fees of US$4.50 to US$6, an average 10% travel agent commission, two-night stays and ADR s ranging from US$100 to US$300 per night.)

Independent hotels and resorts: US$42.85 to US$74.50 per booking. (Based on GDS pass-through fees of US$12.85 to US$14.50, an average 10% travel agent commission, two night stays and ADR s ranging from US$150 to US$300 per night.)

The direct online channel is by far the most cost-effective channel - 10 to 15 times cheaper than the OTA channel and four to 10 times cheaper than the GDS travel agent channel. The direct online channel contributes to a significant number of voice reservations, as much as 40% of additional bookings, as confirmed by industry research.

The next question should be "Which channels to use for Distribution?" What should be the channel mix for distributing the hotel inventory with the most efficient way to maximize the hotel's profit?

Monday, 12 December 2016

Internet and Mobile for Hotel Distribution and Sales

In 2016 almost 34% of the e-commerce globally transactions made through mobile devices. It is a very important finding, in order to begin (or we should already thought about) thinking of how the hotel inventory distribution and sales should be organized.
When it comes to sales, there are two different issues the hoteliers should work on. The first is the online presence and exposure. Actually, is the use of the online sales and distribution systems, as well as the direct sales channels (website booking engine). Considering the direct sales channel (website booking engine) it is very important that the website will be mobile responsive, to allow the mobile device users make their reservations online. The importance of the online sales and distribution systems (OTA, Wholesalers, GDS, niche market OTAs, etc) is quite big and it has to do with the type of the property, the location and the seasonality it operates.

The next thing to take think about is the time of the reservation made. More than 65% of the reservations made via mobile device is made at the same time of the check in. This is also an issue that the hoteliers should take into account when setting the release days on the online distribution channels. It also has to do with the occupancy added in these channels or the pricing policy for the last minute reservations.
Last but not least, is the simplicity of the procedure of making the reservation from a mobile device. Having in mind that the most usable devices for mobile bookings are the smart phones, with all restrictions they may have in terms of screen, speed, safety, etc.
To get the best result of the online distribution and sales, it is quite easy! An expert can give the right advise for organizing all the above and get the best outcome. At HotelAvailabilities, the team has the background and the expertise to guide the hoteliers for getting the best results of the online market.

Saturday, 3 December 2016

Hotel vs OTA, or Hotel + OTA

Analyzing the recent researches and findings, there is a big question to be answered! Should the hotels compete the OTAs or should they work together? First of all it is very important to see the statistics of the market and the results of the "players" involved in the hotel booking and distribution market.
Regarding the hotels, we see that there are two different groups of accommodation providers. On one side is the hotel groups and big brands, and on the other side there are the independent hotels.
The role of the OTAs, can be much more important in independent hotels in secondary locations where they may provide as much as 70% to 80% of total bookings. In any case, branded hotels in major urban markets get almost two-thirds of their online bookings through direct channels (hotel property or brand website). Another 12% of total booked revenues are booked through CROs (central reservations offices) via voice (call centres) chat or email. The independent hotels are struggling to increase the direct bookings percentage in order to increase the profit margin.

On the other hand, the properties, which are most likely affiliated to major brands, get about 60% of their bookings in monetary terms through direct channels. The biggest single channel remains direct bookings by conventional means, which include walk-ins, meetings/groups, direct call-in. Surprising to many no doubt is the fact that the GDS (global distribution systems) channel remains a more important channel than the OTAs for hotels in major urban markets, which have a significant business traveller clientele who still tend to book via the major GDS like Sabre, Galileo, Worldspan, Amadeus. The OTAs (e.g. Expedia, HRS, Priceline/Booking.com) are in fact a rather marginal channel for this category of hotels, accounting for only 12% of bookings in value terms.
The next question, which appears is "Which should be the dependency from the OTAs? Is it a matter of cooperation or what should the hoteliers do to get the more from the OTAs and also increase its profit margin?
Distribution tools, like channel managers (i.e. HotelAvailabilites), can assist the independent hotels to maximize the online exposure and to avoid the dependence from specific OTA and also increase the potential market. In addition, the right use of all internet based promotion and distribution tools, creating the right mix, could be the right move for the hotel's business development.