6 steps to build an effective distribution strategy
Our Customer Success Team is highly motivated to empower our hotel clients to optimize their revenue and profit via our business intelligence solutions.
From years of working alongside revenue and distribution managers in the smallest and largest chains, we’ve learned that this is best achieved through the acquisition of accurate and insightful data, which is used to build a robust and holistic marketing and distribution strategy.
Driven to help the hotel sector succeed, we want to share our insights. So here are the six steps hoteliers need to take to build a really effective distribution strategy.
1. Stop working in silos, integrate your data and collaborate for maximum impact
Hotels need to fight back hard from Covid if they’re going to build a recovery, but it’s certain that their teams are smaller now, so they need smarter ways of working. Time and again we see hotels undermining their own efforts to optimize their profits by working in silos. Revenue managers run promotions without informing marketing, distribution managers add length of stay restrictions without telling revenue and suddenly bookings or profits are sliding and we need to investigate to learn why.
Create a more effective commercial team which includes revenue, distribution and marketing, who will collaborate to build a holistic multi-channel strategy. Work together for common aims. Integrate your revenue, distribution and competitive intelligence data, and use the insights to pull the right lever for greatest commercial impact.
FornovaRI our Revenue Intelligence solution captures your internal data and offers fully customizable reporting for optimum analysis. When designing your strategy, remember that both revenue and profit are influenced by distribution cost, and marketing is a distribution cost for your direct channels.
2. Drill down deep on your data and make better, faster pricing and promotion decisions
We often see the least effective distribution strategy which teams regularly adopt is to use broad brush strokes, making knee-jerk sweeping changes across the board. This approach is guaranteed to damage your profits.
Instead, teams need to drill down on their business intelligence data - which includes data from your competitors - to make really precise and targeted adjustments based on micro-segmentation of the guests, bookings and pickup. When reservations are down, look at which channel is trailing. Which point of sale has fewer bookings? Which market segment is going to a competitor? FornovaCI our Competitor Intelligence solution can quickly and easily highlight these issues.
Identifying these insights means that rather than dropping prices across every channel and room type on a slow date, you can instead focus on the specific challenge without damaging revenue coming from other markets. Remember, it is all about having the right rate and correct commission/promotion in the right channel. They should also be different for each channel.
If bookings on Expedia from the US are high, but are slow on Booking.com in Europe, run a promotion that encourages sales from that segment and POS. If you’re seeing single overnight stays from businessmen but you want to attract longer stays from families, consider your USPs and how you can market those in the channels which are best suited to that audience. Use a high quality rate shopper which can shop from different points of sale to check for price parity between your channels and on Brand.com.
Use your PMS data insights to try dynamic retargeting of customers. In our experience this brings 30% better traffic and conversion over static retargeting, whilst the conversion cost is the same. Don’t forget to upsell. The user journey doesn’t stop once they’ve booked. These targeted marketing tactics will increase your profit per customer.
3. Actively manage your inventory for next week, next month and beyond
Give your customer every opportunity to book with you directly rather than through a channel where you’re paying for the acquisition. Direct bookings give you ownership of every stage of the customer journey with opportunities to boost brand reputation - and loyalty - as well as upselling and repeat bookings. Overseas guests tend to book for longer, to spend more money and they have longer lead times, so make sure your website booking engine is loaded with inventory for the next 14 months to maximize opportunities for bookings.
Watch out for inventory disparity between your own Brand.com website and OTAs. We often see hotels showing sold-out on their own site, whilst rooms are still available via OTAs. This can be due to colleagues adding Length of Stay restrictions on Brand.com, so it’s important to watch Last Room Availability and Sold-Out dates to minimize these situations. And it’s important to make sure that your best rates available to loyalty program members are offered on your own site. FornovaDI can help monitor allocation issues.
4. Increase your conversion across all online channels
This sounds like obvious advice but there are many reasons why working on the e-Commerce aspects of your commercial strategy proves effective.
Good conversion is the key for revenue optimization at the lowest cost of distribution. It means you’re working well across your channels and are getting more direct bookings. But it needs consistency of content, product and price to get the best conversion results from both OTAs and direct.
OTAs remain a vital piece in your optimized distribution strategy puzzle. Treat them as your partners. They have tools and insights that can help increase your visibility and maximize your distribution mix. But this means ensuring rate parity. If OTAs see more favorable rates for your property on their rival platform, they will de-boost your listing, losing you bookings. You can pay to increase your OTA ranking, but then you’re eating into your profit margins. FornovaDI can monitor rates across the channels and provide detailed reports that hotels can share with their OTAs to reduce parity issues.
Content parity is also essential. With metasearch engines – particularly Google – playing an increasingly important role in hotels’ distribution, it’s more important than ever to maintain good visibility and ranking. But when listings across multiple platforms display inaccurate or inconsistent information, Google de-boosts the listing. If your hotel is showing up low in SERPs (Search Engine Results Pages) you’re losing sales. Ironically, if your clicks fail to convert to sales, Google also penalises your ranking.
Many consumers start with Google when researching a trip so it’s vital to maintain good visibility. You’re aiming for the best organic visibility for the lowest cost to achieve more direct sales without impacting the bottom line. FornovaHL, our Hotel Listings tool designed specifically for the hospitality industry can help save time checking and changing listings - and stop content disparity issues - by providing a single source of rich data that rolls out across all your various platforms.
Google’s dominance also means it’s vital to carefully manage your campaigns and your bids for ad listings. FornovaCI’s competitive insights can help you set favourable rates and optimize bidding to boost visibility in the right place at the right time. Our e-Commerce Optimizer can empower marketing teams to build dynamic ‘starting from’ rates campaigns to help prospect and retarget guests. We can also help with creating impactful email campaigns and measure their success to demonstrate ROI.
5. Maintain a dynamic and adaptable approach to distribution
Too often we see revenue management teams set rates and forget about them and fail to monitor how their inventory is performing across the channels. This is a sure-fire way to lose revenue. Actively manage allocations across the channels and monitor your rates, changing them to suit market demand to optimize your available revenue.
Don’t hang onto static contracts that aren’t working for you. This means investigating persistent offenders of rate violation issues – often amongst wholesalers – and reviewing their contracts accordingly. In particular try to monitor wholesaler leakages which introduce parity gaps of more than 20%. You can use FornovaDI’s automated test reservations to spot problematic wholesalers and take appropriate action.
Make sure that all hotels are aligned to the chain distribution strategy to maintain performance across the whole inventory.
6. In changing times be proactive to stay competitive
As we navigate a post-Covid world and travel updates change week to week, commercial teams will need to utilize all their skills and resources like never before.
Build a routine that helps you stay on top of shifting trends, adapting your strategy accordingly. Checking for and fixing rate parity issues is a daily task. Meeting your leading OTAs to discuss recurring issues and to negotiate promotions should happen bi-monthly. Watching your booking curve and lead times needs to happen week to week.
Use your data to stay a step ahead of market trends and guest preferences and switch gear to meet their needs. Monitor local events and shift your rates accordingly. Watch your comp set to see how they’re reacting. Will you respond to their moves or is your own strategy more successful? Don’t forget to keep your hotel listings up to date with your latest offers, packages and USPs. Keep your content fresh with high quality images.
Staying on top of your routine might seem overwhelming but with the right tools, these jobs become much simpler, and with marketing, revenue and distribution all working together, your strategy will remain competitive whatever happens in the wider market.
In hospitality today, business intelligence solutions are increasingly essential for companies to maintain a competitive edge. Hoteliers need to use the insights these solutions provide to target specific market segments and territories, cutting costs to the bottom line whilst boosting sales opportunities and maximizing revenue. Fornova’s suite of solutions is built on years of listening to our customers and really understanding the challenges they face in an increasingly complex environment. We’re here to help hotels succeed and our results are proven. Talk to us for more actionable insights.