Understanding your audience and then being able to sell suitable inventory to them, on the right platform and at the right price the key to a profitable distribution strategy.
As the distribution landscape continues to evolve and complexities and costs grow, effective distribution and pricing strategies are more important than ever. To lay the foundation for success, make sure your strategy covers off these areas.
Understand Your Target Audience
What does your guest look like? What does this guest want? Once you understand this, find them on the platform they are most likely to visit. Selling a luxury suite on hostels.com is not a smart distribution strategy. Based on your product type, try and find niche platforms that will be suitable.
Your target audience will define the ecosystem of your most relevant distribution channels. Then keeping in mind the below points, you choose the ones that work best for you.
What’s Your Cost of Acquisition?
In this dynamic world, no distribution channel comes free of cost. Even direct bookings have a cost associated with it (website development and marketing). Understanding your costs, changing commission levels of online travel agents (OTAs) and other costs is essential.
NetRevPar is a good metric to understand this cost. It is defined as revenue per available room after subtracting the cost to acquire a guest. The formula often looks like this: rooms revenue – distribution costs (cost-per-click + native marketing + third-party commissions) / available rooms.
Once your cost per channel is established, making the choice to get highest yield for your room becomes easier. Use your channel manager insights to derive this metric.
Get More Direct Bookings
It may not be free, but the reservations that come in directly through your website or offline channels have the highest margins. Direct is widely accepted as the most profitable way to sell your room (albeit, it lacks the reach of OTAs!). Here are some points to consider of you want to build this channel further:
- Build a strong loyalty programme, one that benefits both the guest and you
- Segment your guest and customise your offering to each group. Remember, you understand the guest better than any OTA – use this to your advantage
- Offer value adds to guests to ‘win’ their trust – it’s all about loyalty and them spreading the good word about your property.
Keep Your Eyes on the Booking Conversion Rate
Converting lookers into bookers should be your goal. After spending considerable resource – time and money – in getting a user to your website, it would be shameful if they left without taking any action. To improve stickiness of users on your website, keep these simple tips in mind:
- Deliver an excellent web experience, on mobile and other devices
- Have a short look to book journey – your booking engine should be easy to find and even easier to book on
- Make sure you have a secure site and booking engine
- Use smart tools like WatchMyRate to show users competitor rates, highlighting rate parity and reducing the ‘switching’ behaviour common to modern travellers
Flex Your Daily Rates
Flexible daily pricing allows hotels to charge a lower rate on the days with more availability and yield up on the high demand days. As a result, it empowers hotels to optimise every single booking and better manage distribution across all channels.
A similar approach should be applied to channel management, so in high times your distribution platforms should be yielded up, not shut down. When the demand is low, leverage discount channels to drive occupancy.
What are you doing to achieve an effective distribution network and resulting high-yield revenue? We’d love to hear about and share your tips and experiences. Email us at firstname.lastname@example.org