Could hotels be back in the distribution driving seat?
Some unexpected trends are emerging as the hotel industry begins its slow recovery from the pandemic. Despite early predictions that the online travel agencies (OTAs) would dominate the distribution landscape, direct bookings are on the up and phone reservations are seeing a resurgence. Hotels have a window of opportunity to gain control over their distribution channels, but they need to be smart about where they focus their efforts.
In these uncertain times, travelers are choosing to book their trips online, directly with hotels and through online travel agencies (OTAs) rather than tour operators and wholesalers as they look for the reassurance of a free cancelation policy and health and cleanliness protocols. This has also sparked a surprise return on call centers with our customers reporting a significant increase in direct phone bookings perhaps for the reassurance of personal interaction.
With recovery starting in the local and drive-to markets hotels should be able to build a sustained feed of direct bookings and avoid the OTAs’ commission costs. Being smarter about using the most appropriate channel for each market can pay dividends.
It’s not a case of pushing OTA partners out but rather, playing to each other’s strengths. The OTAs provide exceptional reach and visibility in the international feeder markets that hotels would struggle to penetrate. But, attracting guests who are on their doorstep should be within a hotel’s marketing capability.
While direct bookings have had an impact on OTAs they still have a bigger slice of the pie, albeit reduced, as other verticals have dropped off. It’s also worth remembering that OTAs dominate leisure and with leisure travel expected to return more quickly than business and corporate bookings, they will have a key part to play in the recovery.
Google is another area that Distribution Managers should review. It is likely to play a larger role in distribution as the recovery gathers pace, with pay-per-stay (PPS) moving Google from a marketing function to a distribution responsibility. Hotels must leverage PPS and other metasearch engines to promote free cancelations and other enhanced services. The increased influence of Google in distribution isn’t surprising - it is the place people go to answer questions and solve problems for so many things in life, so why should this sector be any different?
Having a healthy distribution is crucial if hotels are to continue to gain from direct bookings. In such a competitive, price-drive market they can’t afford to lose inventory to wholesaler leakage or being undercut on price by OTAs.
FornovaDI allows hotels to continuously monitor and benchmark distribution health across direct and indirect channels. Its unique Distribution Health Score allows hotels to monitor their performance at a glance. FornovaDI offers the industry’s most comprehensive global data set - tracking more than 100,000 brand.com and OTA websites. It means hotels can manage partner relationships more effectively and reduce wholesaler leakage.