Hotel distribution: what each channel really contributes
A channel’s value depends on what it contributes to each hotel at a particular time. A reflection on profitability, demand, technology and commercial judgement.
A booking increases occupancy. Assessing whether it represents good business means looking further: at the revenue it leaves, the conditions it involves and the demand it helps attract.
Throughout my commercial career, I have worked with travel agencies, tour operators, inbound operators, bedbanks, OTAs and direct sales. That experience has taught me to question overly simple classifications. No channel is inherently good or bad. Its value depends on the property, the market and the timing.
Start with the hotel’s needs
Before bringing in a partner or expanding their role, it is worth defining what we hope to achieve.
We may need to reach a source market where we have little visibility. Or attract bookings further in advance. Or strengthen particular days of the week. Or improve demand during an especially challenging season.
Each objective calls for a different assessment. A channel may contribute little annual volume yet prove useful on specific dates. Another may generate many bookings but concentrate them precisely when the hotel already enjoys strong demand.
The commercial question is which need that partnership addresses.
Volume tells part of the story
Booking numbers are important, but they are not enough to decide how much business we want to develop through a channel.
We should also consider net revenue, cancellations, payment terms, booking lead times and the operational workload involved. Comparing commissions alone leaves out a significant part of the commercial relationship.
Direct sales also require resources: technology, visibility, communication and customer service. Their development deserves a strategy of its own, with costs and results measured as rigorously as those of other channels.
Technology needs commercial decisions
Implementing the Channel Manager at Fantasía Hoteles was one of the experiences that brought me closest to the relationship between distribution, technology and operations.
Centralising availability and rate management made the work easier. It also highlighted the importance of defining the commercial reasoning behind it: what to sell, to whom, on which dates and under what conditions.
A tool can execute and support a strategy. Choosing markets, partners and terms requires product knowledge and coordination between the people who sell and manage that product.
Review relationships with commercial judgement
A partnership that worked well for years may need adjusting. There may also be opportunities we have not developed because we continue to focus our time and attention on the same contacts.
Reviewing distribution means combining data with commercial conversations. Understanding what is changing in a market, the difficulties a partner faces and the opportunities our product offers helps us interpret results and decide what to do next.
My approach is to assess each channel by its contribution to the whole: profitability, access to relevant demand and alignment with the property’s objectives.
A sound distribution strategy requires us to know what we expect from each commercial relationship and check whether we are achieving it.