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?

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