Hotel distribution channels
Hotel distribution channels are the cornerstone of a hotel’s sales and revenue strategy.
In just six decades, travel has seen a dramatic rise both in breadth and scope. A mere 25 million people travelled the globe in 1950, and mainly to and from the traditional destinations of Europe and North America. Now, more than 1 billion people travel each year, with emerging economies increasingly capturing the imagination of travellers.
Obviously you have 10, 20, 50, 100, or more, rooms to sell for each night of the year your property is open. To this end you need to advertise and promote your rooms through online channels where travellers are most likely to be searching.
However, as travellers become more savvy and demanding, and more intermediaries such as online travel agents (OTAs) enter the field, your hotel must fight a more complex challenge to achieve the right mix of direct and third-party bookings.
Here’s what hotels need to take note of…
Hotel Challenge #1: There is no uniform approach to optimise distribution
With the huge amount of interconnected interactions between guests, hotels and travel sites, along with the diversity of travellers, it’s impossible to expect a blanket method of distributing rooms to be successful. What works on one channel, or in one region, may not work on another. Often it’s the type of trip that’s being taken which is the catalyst for the channel a traveller uses. This makes it very hard for hotels to determine a definitive answer to what is successful or what is the most cost-effective approach when distributing their rooms.
Hotel Challenge #2: Hotels are expected to do everything at once
To drive revenue hotels need to attract as many customers as possible. To increase profit they need to do this for the lowest price possible. They need to stand out from the crowd and be visible everywhere travellers are searching for accommodation. At the same time, your hotel must be providing an exemplary guest experience and fostering a positive workplace environment. If you fall behind on one, the others will suffer. No wonder it’s a 24/7 job being a hotel manager!
While it may not seem like guest experience is linked to distribution, it truly is. If the bulk of your guests make reservations through Booking.com but are leaving negative reviews, your strongest point of distribution is being weakened.
Hotel Challenge #3: Hotels must recognise the growing market of booking channels
OTAs continue to dominate online sales. At the same time, the distribution space is getting even more crowded with metasearch entrants like TripAdvisor and Google. Even still, hotels have to prioritise direct bookings through their website, while also being aware of offline channels such as phone and walk-in, and of course, the still-relevant GDS network. A large and constant online presence is paramount, as is understanding true distribution costs.
Table of contents
Hotel distribution channel definition
A hotel distribution channel can be any method or platform by which your hotel sells its rooms.
There are online and offline channels where travellers will make a booking, though today online channels are much more popular.
This means your landline phone is technically a distribution channel, if you accept bookings in this way. However, most of the time travellers will source your number online, typically from your website.
A list of distribution channels you might use at your hotel might include:
- An online travel agent (OTA)
- Your website
- Your social media page
- A phone or email reservation
- Metasearch engine
- Global distribution system (GDS)
Hotel distribution channels examples
To extend further, here’s a bit more detail on the examples listed above and what they mean for your hotel.
Online travel agents
OTAs are third-party sites which hotels can list their rooms to be sold on. For each booking that is made, the OTA will take some of the reservation fee as commission. Commission fees can sometimes be as high as 20% of the booking price. For example, if you list your room for $120/night and a traveller books your room, the OTA might charge you a 15% commission fee of $18.
Examples of OTAs include Booking.com and Expedia. The benefits of these channels is that your hotel will be put in front of millions of travellers who may not have discovered it otherwise.
Your website and social media pages
These are self explanatory but the real booking channel for these is an online booking engine, which enables travellers to book directly with your hotel on your website. The great thing about this is that you get all the customer data and all the revenue – so it is beneficial to drive a high number of booking engine reservations.
A metasearch engine takes a user’s query and produces aggregated results from many other data sources. This brings everything together for the user in one place. An example would be a traveller typing “Hotel in Los Angeles” into Google, and Google would pull in data from many websites to give the potential guest a rundown of their options. In this way, signing up to Google Hotel Ads can be very useful, to ensure your hotel is found by travellers making general search queries.
Global distribution system
The GDS is a worldwide conduit between travel bookers and suppliers, such as hotels and other accommodation providers. It communicates live product, price and availability data to travel agents and online booking engines, and allows for automated transactions.
The GDS is often used to tap into the corporate travel market because it has the ability to present hotels, flights, and car rentals in one simple interface which is convenient. Many companies organising trips for their staff will use the GDS as their preferred booking method.
Building a hotel distribution strategy
Building a successful distribution strategy means finding the right balance between all the channels you use. How prominently will you advertise your hotel online and on what channels – and how much focus will you put on each?
It’s no secret that for today’s traveller, searching and booking online is the preferred way to organise their travel, so offline methods such as email, walk-in, and telephone probably don’t require as much attention as they used to.
And it’s not just about how you manage these considerations, you also need a sustainable way of tracking, recording, sharing, and updating data.
One of the first distribution lessons is that your strategy needs to take into account travellers from all areas of the globe — from those in your own neighbourhoods to those in the far reaching corners of the world.
When you attempt to appeal to a diverse range of travellers, you will find that your bookings increase and you are able to maximise your profits per guest.
Some tips for this…
1. Attract locals with events
Whether you are operating a large hotel with an expansive property, or you have an intimate boutique location in a quaint neighbourhood within the city, you can still appeal to local residents by hosting events at your hotel. Just be sure they suit the current COVID-19 restrictions in your market.
When you schedule events at your hotel, you generate buzz about your brand within the community and you provide yourself with an opportunity to earn extra revenue.
Events that you might consider planning include a pie-eating contest, a wine tasting, or a board game night.
You can sell tickets to these events, which adds additional revenue to your hotel, and you also will attract local travellers as well as visitors from abroad.
Work with local publications in order to promote your events, and don’t forget to send out reminders on social media about anything that is coming up at your hotel.
2. Encourage domestic travel with “staycations”
Travellers from Europe, the Middle East and Africa (EMEA), prefer to visit a variety of destinations across the globe, but they also aren’t opposed to exploring seemingly undiscovered destinations in their own regions.
Travellers from the EMEA enjoy taking quick breaks to cosmopolitan cities, such as London and Paris, and are always up for a quick weekend jaunt.
In order to encourage domestic travellers to stay at your property and enjoy a staycation for their next holiday, work with a channel manager in order to connect with OTAs who will promote your property to their customers.
3. Use the top booking sites to appeal to international travellers (if COVID-19 isn’t restricting your market)
With the threat of Coronavirus still very present, this option may not be immediately available to you.
Broadcasting your hotel to a global audience may seem overwhelming, but the process can be easy when you use the top booking sites in the industry.
Several of the top booking sites for international travellers include: Booking.com, Expedia, agoda.com, and HotelBeds.
Once you are able to reach these international travellers through the top booking sites, you need to make it easy for them to complete their reservations and process their payments. Chinese travellers, for example, are a powerful consumer group in the travel industry, and they value secure payment options over most other factors.
When you’re building a distribution strategy that will ultimately be effective in increasing your property’s bookings and revenue, there’s a lot of factors to consider.
Make sure you keep the following in mind:
- It’s important to implement proper tracking and measurement strategies
Know where your guests are coming from and how much it is costing you to acquire them. You should also research what influences travellers the most when booking a room at your hotel to identify how you can improve all your channels.
You can do this easily if you have a channel manager or booking engine to produce accurate reports for you. Over time you will discover how to balance the channels where the majority of your customers come from, and your most cost-effective channel. Hopefully they’re the same one!
- Trying to be strong everywhere might risk not being strong anywhere
It’s important for you to play to your strengths, and always act from a guest perspective. Think about what best allows your hotel to create value for guests and how to create competitive advantages or alternative options to your direct competitors.
Don’t try to fight impossible battles. If you’re an independent hotel, forget about replicating the power of big chains but try to ensure you’re making better offers than other independents. You can make this easier by using smart business intelligence and pricing tools.
- Market segmentation will help dramatically with understanding which channels to prioritise
Building personas and guest profiles as well as tracking consumer behaviour is vital here. For example the US sees a high percentage of shopping activity on hotel websites converting to purchases on those websites while in China, despite relatively high hotel website shopping activity, hotels are then sold more frequently through OTAs. Additionally it should be noted guests 18-34 years old are more than twice as likely to book through an OTA than directly via a hotel website. So if your guests are predominantly in this bracket, it makes sense to pay a lot of attention to your OTA profiles.
The power of diversifying your hotel’s distribution to drive success and maintain control of your inventory
One of the more crucial aspects of your hotel’s distribution is how you diversify the selling of your inventory.
With a more savvy, conscious, traveller emerging in the modern era it may not cut it to set and forget with one or two big players.
By adding additional channels, including niche regional and market segmented sites that cater travellers from all parts of the globe, you’ll be able to sell your inventory more reliably and gain extra exposure for your brand.
From there, you can not only monitor performance to optimise how you sell your rooms and at what rates, but you will also be able to make longer term decisions with more confidence.
This might include thinking about:
- Reviewing content and messaging on your profiles
- Weighing up commission costs
- Balancing your third-party strategy with your direct booking strategy
- Determining acquisition costs
- Appraising cancellation rates of various channels
An added benefit of diversifying your distribution is being able to combat the impact of shared inventory…
What is shared inventory?
Shared inventory is when a major OTA shares a hotel’s inventory across all of their owned channels, even if the hotel has only activated a profile on one. This commonly occurs when a hotel is performing well and the OTA believes it can further maximise bookings by amplifying the listing onto additional channels.
By expanding your reach with additional channels that you choose, you can have more confidence and control of where and how your rooms are being sold. Knowing the source of your bookings is always important for performance analysis and optimising your strategy.
All of this is almost impossible to achieve without using hotel software, such as a channel manager.
A channel manager will enable you to list your entire inventory on as many channels as you like at the same time. Whenever a room is sold, the channel manager will automatically perform updates in real-time and feed data between your PMS and the OTAs on a two-way basis. You’ll also get quick and easy access to key reports, allowing you to make better business decisions fast.
Hotel distribution tips and advice
Competition is hot in the online booking space. Hotel bookers now have access to vast amounts of information through comparison websites (metasearch channels), search engines and online travel agencies. Now more than ever, hotel bookers are using more than one booking engine to plan their travel.
In fact, hotel bookers visit between 2.4 and 3.4 websites in each of the three booking stages: destination selection, shopping and purchasing. So it makes sense for accommodation providers to list their room inventory and rates on as many online travel agencies as possible, in order to increase your chances of capturing the fickle hotel booker.
Your distribution strategy, in many respects, is the key to your reservations success at your hotel.
The more you distribute the rooms and services that you offer at your hotel, the more guests you will attract and the more your hotel will grow.
Developing an effective distribution strategy is critical, and implementing it carefully is an even more important step.
Here are three key steps to creating a successful hotel distribution strategy:
1. Business mix optimisation
Understanding the different traveller segments who book at your property allows you to diversify your business mix and optimise your distribution strategy.
In most cases, travellers can be broken down into two different groups: lower-yield segments and higher-yield segments. Lower-yield segments often derive from wholesalers.
These guests will book your rooms early, but they also have a tendency to book your rooms throughout the entire year. Higher-yield segments are often generated from OTAs and even your own hotel booking engine.
These guests may book their rooms shortly before they arrive, and often pay higher prices for rooms because of their last-minute approach.
They may book just a few days before they arrive, and may have a tendency to book during the peak travel season in your region.
2. Overview of online and offline channels
Your distribution strategy needs to include a diverse range of channels, both online and offline. This allows you to promote your hotel property to the greatest number of guests from around the world.
Online channels to work with include OTAs, your own direct booking engine through your website and social media platforms. Offline channels that you should consider partnering with include voice reservation services as well as wholesalers and tour operators.
With online channels, your hotel marketing campaigns are able to reach every corner of the earth. An increasing number of travellers are relying on online travel sites in order to research prices, opportunities and activities for their upcoming trips.
While online channels are pivotal, offline channels are not obsolete. Offline channels have the ability to attract local residents as well as older travellers who may not be as comfortable working with the Internet.
3. Technology to tie it all together
Developing a pricing strategy and establishing distribution channels is an important part of your overall distribution strategy, but it’s not complete until you invest in the right technology to seamlessly tie all of these components together. New distribution technology is freeing up hotel resources, allowing hoteliers to concentrate on broadening their market reach by integrating their Property Management System (PMS) or Central Reservation System (CRS).
A business solution designed specifically for hotels will allow you to connect with your various distribution channels, update your pricing based on market demands and consumer trends, and maximise your bookings.
That’s why two-way integration is an essential tool for hotels and accommodation providers that want to compete in today’s massive online marketplace.
How two-way integration works
Using a channel manager solution builds a link between a hotel’s PMS/CRS and Revenue Management System (RMS) and the hotel’s chosen booking channels.
Information is then instantly exchanged over this two-way connection from the hotel to online travel agencies such as Expedia, Booking.com, HRS, Hotelbeds, Orbitz and Agoda.
When accommodation is then purchased via one of these online booking websites, the hotel’s PMS updates itself, meaning the days of manually entering each booking are over.
Meanwhile, real time rates, availability and restrictions are automatically sent from the PMS to the hotel’s various online channels. Hoteliers can now maximise room inventory and revenue without the fear of overbooking.
Assessing different solutions is essential
Two-way integration saves hotels precious time and cuts down the cost of acquisition substantially; for every reservation that is automatically populated, the hotel can then use that time to manage their guests effectively.
There are many other advantages of two-way integration, such as retaining revenue that would otherwise have been lost due to delayed cancellations, as well as increasing revenue by maximising online exposure with automated inventory and rate updates.
However, not all distribution technologies are created equal.
Hotels should diligently assess software technologies that offer automation between distribution and reservation systems.
Your hotel distribution: Direct or indirect?
A lot of hoteliers may operate on the assumption that the benefits of a direct booking strategy will far outweigh distributing largely through third parties such as online travel agents (OTAs).
In particular, the costs associated with booking fees via OTAs are seen as a major pain point and that accepting a higher number of direct bookings will reduce costs and increase profit.
There can be repercussions of an all-out direct strategy however.
While hotels may save on commission fees by predominantly promoting a direct booking strategy, there are risks and extra costs attached.
Moving away from third parties will mean a hotel is likely to face a drop in occupancy, which would require increased spending in the areas of: customer acquisition, online marketing, technology development, and guest services. Usually these costs would be carried by the intermediary.
The hotel is also likely to lose revenue from a decrease in “The Billboard Effect”.
The Billboard Effect should not be understated
Up to 35% of hotel bookings are a result of a traveller discovering the hotel on a third party site and then visiting the hotel to book direct.
Without this effect, a hotel would have to increase spend on tactics like search engine optimisation to compensate for the lost bookings.
Each hotel and guest is a unique case
Differing guest profiles have a strong preference for particular channels, so costs will fluctuate depending who your hotel is hoping to target.
For instance, millennials are going to be on the hunt for value and could be more likely to join a lucrative loyalty program, if they don’t find a great deal on a third party site. In any case, the more “loyal” customers you have, the better off your hotel will be when it comes to costs.
It’s much more expensive to attract new customers than to retain existing ones, especially within an online environment. Google and other web search ads are now the main way to drive traffic to websites, since they’re most likely to be the consumer’s first touch point.
The most effective ads are paid and unbranded but these are expensive and are also “owned” mainly by the major OTAs (Expedia, Booking.com) and not the hotels themselves.
It should also be noted that hotel room revenues vary greatly by geographical location, by customer mix, market supply/demand and type of hotel. For instance, in Europe the average daily rate can be 100% higher in luxury and upper scale than economy and midscale properties. This will naturally have an impact on the costs the hotel incurs, and can afford.
Ultimately, finding the “best” distribution strategy will first require some in-depth analysis of your own property, its current position, and the potential to shift to new markets or new channels to optimise profit.
Maximising your direct distribution strategy in the hotel industry
According to Google, more than 60% of leisure travellers turn to the internet for inspiration. So what are the major ways to revamp and maximise your online distribution sales to make your hotel stand out from the travel pack?
Here are four key hotel marketing strategies to help you gain a better understanding and, in turn, maximise your direct online sales:
1. Promote your business online with social media
Social media platforms are the Holy Grail of the marketing world. By utilising social media sites such as Facebook, Twitter, LinkedIn, Pinterest and Google+ effectively, you can develop long-lasting relationships with your guests and boost both your brand awareness and loyalty.
It can be surprising how many companies miss the mark when it comes to representing their brand through social media. A boutique hotel that specialises in wellness and relaxation, for example, will have a vastly different target audience to that of a large hotel franchise. In this case, the boutique hotel may be better off being more targeted and posting to lifestyle and wellness communities in order to build a rapport with potential guests in this area.
Another consideration that is often overlooked is blogs. Creating a blog on your website that provides unique and engaging content will help potential guests develop an idea of your brand’s identity, and provide you with great content to post across your social media channels.
It’s also wise to support your online content with visual elements. The internet is primarily a visual medium, and investing in high-quality photography and video is imperative.
2. Sell more rooms online via social media channels
While hospitality must remain at the core of every hotel business, the ultimate goal for any hotel manager is, of course, sales, sales and more sales.
Interacting with potential guests through social media channels is the first step.
Start by reaching them in the dreaming stage (the first of the 5 stages of travel), when they are just beginning to imagine their great escape and are inspired by social media posts and travel blogs.
The next step is to take advantage of the high engagement you get on social media. Implementing a booking engine that can capture bookings from your Facebook page. It’s also great news for your online booking targets.
3. Use online booking channels to increase sales
Direct bookings are an important consideration for any hotel looking to lower the costs they pay on commissions – and booking engines are crucial in this regard.
However, for optimised reach and exposure, hotels should also look to diversify their online distribution strategy and this is where a channel manager comes in handy. An efficient channel manager solution that connects to multiple online booking channels (or OTAs, as they are more commonly known) and meta-search engines, can dramatically increase your local and global reach and help your hotel engage with travellers when they are starting the buying process. Overall, the aim of a standout hotel marketing strategy is to be everywhere online, so potential customers can’t miss you.
4. Ensure your channel manager and booking engine are mobile-compatible
More than 40% of hotel guests now travel with three or more devices. This emerging shift to portable devices – such as iPhones, Androids and tablets – has changed the way travellers make online bookings, particularly when on-the-go, and made it a necessity for hotels to implement mobile platforms in order to boost revenue and cut costs.
Hotel distribution and technology
Thanks to technology, travel is today accessible to anyone in the world. But the accessibility of technology has also demanded that hotels pay closer attention to the guest buying journey more than ever before – in order to be visible at every stage and, ultimately, to maximise sales.
Even on opposite sides of the world, hotels have the same basic business goals to optimise distribution, drive bookings, and create a healthy revenue stream.
The avenue towards these objectives may vary strategically but the most successful properties have at least one thing in common: they all use sophisticated hotel technology and software.
In a travel landscape where distribution and booking technology is so prominent, any hotel not using the latest tools at its disposal is at a significant disadvantage.
Within an industry where time equals money, manual processing becomes an extremely expensive enterprise. Automation and integration are the buzzwords for any technology provider, but that’s because they truly are the key to achieving hotel business goals.
So how exactly are hotels using technology to establish a sustainable business?
Online distribution & channel management technology
One of the main issues hotels face without the help of distribution technology such as a channel manager is overbookings.
If a hotel has a really healthy occupancy rate and is receiving a lot of reservation information it can be impossible to manually enter it quickly enough before another customer has also made a reservation on the same room.
The use of a channel manager that integrates with the hotel’s property management system will automatically record the reservations and update inventory accordingly, meaning there is no need for hotel staff to stress or spend undue amounts of time on manual processing.
Here’s why it’s time to implement a channel manager for your hotel:
- You do not rely too heavily on traditional booking channels.
It’s important to diversify your distribution channels so that you aren’t relying too heavily on one source of bookings. And online bookings and mobile bookings are on the rise, while telephone bookings are quickly declining across the globe.
So when you put all of your efforts and resources into several traditional booking channels, such as telephone leads, email inquiries and print advertising, you are missing out on revenue from guests who primarily book online.
Through a channel manager, you have access to an infinite number of agents who are willing to book your rooms based on your live availability and current rates.
- You can integrate it with your direct booking engine.
Any business in the travel and tourism industry needs to have a direct booking engine in order to survive.
When you invest in a commission-free booking engine with a channel manager, you can boost your direct bookings while also connecting with agents throughout the industry who are interested in your products.
Since the booking engine should be commission-free, your direct bookings result in higher profits and increased revenue for your hotel.
While you may need to partner with OTAs via the channel manager in order to attract certain types of customers, you will begin to earn more direct bookings as customers discover your brand on their own.
- You can auto-magically manage your booking channels
There is no task more tedious than manually updating each booking channel that you use, and manual updates also leave you at risk for overbooking your rooms on any given day.
With a channel manager, all of your booking channels are instantly updated when someone makes a reservation. The guests booking through the channels connected to your channel manager constantly have access to your live availability and current rates, which ensures that you receive the most bookings without overselling your rooms.
This alone will save you valuable time on administrative tasks. You will be able to focus your efforts on more important, long-term projects, such as your social media strategy or your online distribution plan.
- It becomes a powerful business platform
A modern channel manager will be able to integrate with your existing property management system, central reservation system, or revenue management system – allowing you to have one central hub for all of your hotel’s operations.
Such real-time integrations keep everything in sync and lower your cost of acquisition. They connect your hotel synergistically to all the systems needed to drive revenue, processing everything from reservations and guest information to check-in and check-out times.
You can then use your channel manager data to adjust your strategy accordingly – reduce availability, close out rooms, or increase rates on the channels that generate the least revenue – in favour of those that are more profitable.
Direct bookings technology
When hotels distribute their rooms through online travel agents the bookings they accept come at the cost of a commission to the booking channel.
This is only fair but the fee can be as high as 15% and put a strain on the overall profit the hotel makes from each room. It makes sense that hotels will want to attract as many bookings direct through their website as possible. For this they need a reliable, optimised, and integrated booking engine that will form part of their channel network.
An online booking engine that provides a fast and easy two-step booking experience for the guest will go a long way to increasing hotel website conversions for any of a hotel brand’s properties, and again saves a lot of man hours.
It also allows a hotel to have more control over its rates. With a modern booking engine hotels can set promotions, craft packaged deals, create last-minute rates, and use urgency messages to attract more customers.
There are countless real life examples of global hotels using the above technology to dramatically increase their bookings, revenue, and take more time to pay attention to the needs of guests.
If you are wasting too many hours of your day posting hotel availability information and current rates on various extranets, then this post is for you.
Distribution channels in the hotel industry: Optimising your mix
Fully optimising your hotel and achieving the ideal channel mix revolves around maximising the profitability of your business. If your profit is stagnant or even decreasing, it might be time to adjust your strategies.
What’s your ideal channel mix?
Determining the optimal channel mix will be unique to each hotel and trying to find a one-size fits all approach for your hotel is not the path to follow. Determining what percentage of business you want from each channel could be influenced by a number of factors.
What will bring the most steady form of revenue, and allow you room to profit? What will enable strong and recurring relationships with all distribution partners? How will it affect the market you need or want to attract? GDS and group bookings in particular may vary widely depending on hotel type and location.
Even though you pay a commission for OTA bookings, cutting them out of your distribution doesn’t mean you’ll increase your profit. Some third party businesses may prove more attractive than direct depending on the cost of acquisition.
For an independent it may be more worthwhile striving for a slightly higher proportion of direct business and as little as 20% from OTAs, but it’s all relative to your position in the marketplace, taking into account design, amenities and condition, management, brand strength, marketing power, and reputation.
Figuring it out can be difficult and managing to achieve it is the ultimate challenge.
Why a Channel Mix report is so important for your hotel
The insights you can gain from your distribution channels is incredibly valuable for your business. A Channel Mix report will help you monitor your distribution costs and understand which channels are working best for your property, and in your market. It will also give you healthy information on which channels your competitors are tapping into.
Some reasons why channel mix data is so important include:
- Having market data means you aren’t flying blind when creating strategies
- Forecasting and pricing can be based on much more informed decision making
- Identify factors that are having an impact on channel traffic and revenue. For example, a marketing campaign may see an influx of bookings to a particular channel.
Use the channel mix data to:
- Optimise your distribution by connecting with your OTA market manager to take advantage of any campaigns.
- Ascertain where and how competitors are earning revenue
- Identify opportunities to boost revenue through upsells and add-ons
Access to a Channel Mix report will also increase productivity since you won’t have to manually source the data or pull it all together to start analysing. Your channel manager should be able to handle all this.
Metasearch: A valuable hotel distribution channel
There are a few major players in the metasearch world and not all of them use exactly the same model, so it’s important hotels have a clear understanding of what’s best for their property.
Here are eight essential things your hotel needs to know about this online sales channel:
1. Metasearch is growing strongly
According to research from travel consultants PACE Dimensions, metasearch sites account for more than 45% of global unique visitors in travel, according to analysis of the top 10,000 travel websites. This is greater than the proportion of unique visitors for OTAs, both globally and in the US.
Estimates also predict a 30-40% rise in traffic during 2018, with more than 50% of survey respondents saying they’d dedicate at least 20% of their advertising budget to metasearch.
This growth is coinciding with a reduction in organic hotel website traffic. Between 2015 and 2017, the proportion of organic traffic to hotel websites dropped from 62% to 42%.
More and more travellers are using metasearch extensively because they can compare hotel room rates from various online travel agents (OTAs) and other booking sites all in one place.
2. There are a handful of key metasearch engines
There are tons of metasearch engines for a variety of industries, but when it comes to hotels and hospitality there are a few that rule the roost.
When looking into where you should advertise your hotel consider the following:
- Google Hotel Ads
It should be noted that in general, sites such as Kayak, which offer combined rates (accommodation + flights), aren’t as successful at providing hotels with a high share of top ad placements.
3. Metasearch advertising is largely based on a pay-per-click model
Pay-per-click (PPC) means the hotel will only pay for their hosted ad when someone clicks on it. This is good for tight budgets as the hotel only pays for guaranteed traffic to its site.
The other thing to know about advertising on search engines is that the hotel can ‘bid’ for ad placements on keywords. For example, a hotel may bid on ‘Sydney hotel’ to show up as a top result every time that keyword is searched.
This is where it can get complicated however, because hotels need to make sure the fee they’re paying for a click is worth the revenue the ad drives. Another factor is that if a keyword is very popular, a hotel would have to bid higher to secure the top placement, which is risky.
4. Other models include pay-per-impression
Pay-per-impression or cost-per-thousand (CPM) ads are based around charging a predetermined fee for a certain amount of impressions. This means the hotel will pay for how many people see the ad, not how many people click.
For example, the hotel will pay a set fee for every 1,000 ad impressions, regardless of how many clicks or how much revenue was driven.
CPM is usually a cheaper way to broadcast an ad, but the overall return on investment (ROI) can be lower, since there’s no guarantee any of the impressions will click through.
This is where hotels have to consider the objective of their advertising and what will suit them best. PPM is great for brand awareness and visibility while PPC is generally viewed as more cost-effective in the long-run.
5. Sites like Google or TripAdvisor can offer instant booking
When a traveller is using metasearch to find hotels and they click on a rate they like, they’re usually taken to either an online travel agent (OTA) or the hotel website to make a booking.
However, channels such as Google and TripAdvisor allow instant booking, meaning the traveller can stay on the same screen to complete their booking, providing a simpler and more seamless experience.
In this instance, the hotel would not operate a PPC model, but rather a commission-based system whereby Google or TripAdvisor take a percentage of the booking revenue, in the same way an OTA does.
6. Metasearch creates a level playing field for hotels
Metasearch is seen as a very valuable space for hotels because it allows them greater opportunity to compete with bigger travel companies and secure more direct bookings.
The bidding system gives hotels some control over where and when they show up on lists of hotel prices, making it a more efficient way to spend marketing budget. There’s a lot of freedom to adjust strategy and increase ROI over time.
7. Metasearch is a trending hive of activity
There’s a lot going on in metasearch right now. Smaller sites are being bought by larger ones, creating an influx of money. This allows the sites more ammunition to market and build public awareness.
Companies such as TripAdvisor are working on becoming a one-stop shop for researching and booking hotels, making it the perfect time for hotels to start investing in metasearch.
8. It’s important to use the right tools
To reliably use metasearch sites hotels need the right property management system (PMS) or central reservation system (CRS) to not only allow them to connect to the biggest players in the metasearch field, but also help monitor the key performance metrics of their channels.
A direct booking tool is also important if hotels want to access the instant booking ability of some metasearch sites, and maintain price integrity across channels.
- As travellers become more savvy and demanding, and more intermediaries such as online travel agents (OTAs) enter the field, your hotel must fight a more complex challenge to achieve the right mix of direct and third-party bookings.
- A hotel distribution channel can be any method or platform by which your hotel sells its rooms. Examples include online travel agents, booking engines (website + social media), phone/email/walk-ins, metasearch, global distribution system.
- Building a successful distribution strategy means finding the right balance between all the channels you use, and how track, record, share, and update data.
- One of the first distribution lessons is that your strategy needs to take into account travellers from all areas of the globe – from those in your own neighbourhoods to those in the far reaching corners of the world.
- Distribution can be greatly aided by the right technology systems. The most successful properties have at least one thing in common: they all use sophisticated hotel technology and software.
- A lot of hoteliers may operate on the assumption that the benefits of a direct booking strategy will far outweigh distributing largely through third parties such as online travel agents (OTAs). There can be repercussions of an all-out direct strategy however.
- Promoting your business in a variety of ways is key to maximising distribution and sales at your hotel.
- Fully optimising your hotel and achieving the ideal channel mix revolves around maximising the profitability of your business. If your profit is stagnant or even decreasing, it might be time to adjust your strategies.