The need for agile hotel distribution is more important now than ever, as the hotel industry continues to strategize and map out roads to recovery across every segment of the market amidst Covid. When was the last time a hotel revenue strategy team was able to rebuild their distribution and channel strategies from sub 50% occupancy levels? It’s been decades for most properties unless you are a new build. We, as an industry, should look at this as an opportunity to better position ourselves, while thinking about both short- and long-term distribution strategies. Hoteliers’ abilities to quickly move – and fail – then pivot, will help lead the way for our industry’s recovery. This might sound a bit hokey, but continuing to do things how they’ve been done for the past decade will not get it done this time. We must be agile!
What does “being agile” really mean as it relates to the current hotel distribution landscape? After all, “quick” and “easy” are not the first words that come to mind when thinking about hotel technology. Instead, what does come to mind is the brain power and wealth of tribal knowledge that hoteliers will need to leverage over the next few quarters and years to optimize revenue.
The first step in getting your organization to wrap their heads around an agile distribution framework is getting buy in from leadership and owners. For any agile strategy to be successful, the organization must require patience and execution across all levels of the organization. It’s important for leadership to understand that there will be mistakes, but if you course-correct quickly, you can learn and keep on moving. This is a part of the process.
Reestablish Your Baseline
Your goal is to build distribution and channel strategies for profitability. Hoteliers should look at net revenue per available room (Net RevPAR) or gross operating profit per available room (GOPPAR) instead of RevPAR when making this analysis. This accounts for all costs associated to a distribution channel, including customer acquisition costs and marketing efforts. This process will help reestablish your baseline!
Make Sure Direct (Actually) Is Best
With years of brands beating the “direct booking is best” drum, it might be easy for hoteliers to assume that direct bookings are the best and most profitable pieces of business for the hotel. While in a lot of cases this may be true, hoteliers should analyze the total cost of a direct booking by including costs of loyalty programs, website development and maintenance, marketing and social media campaigns, and call centers. This might be a refresher for some, but now is the appropriate time to make sure you have the numbers right here.
Optimizing The “Why”
Hoteliers are great at understanding the who, where and when, but to truly optimize channels for profitability, you must get the “why”. The “why” offers insights on path-to-purchase behavioral data and conversion metrics, which allow customer segmentations for a profitable and deliberate distribution strategy. To build on the “why”, hoteliers should look at the full contribution from each channel and prioritize channels that bring guests with the highest ancillary spend – think Total Revenue Management.
Hoteliers that stay agile and attentive on pulling the inventory levers within their distribution and channel strategies will lead the way (and lead with rate) to recovery. Remember to stay agile by moving quickly and easily. And if you chase demand that is not the most profitable… it’s ok… just pull your levers fast to go find more!