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Balancing Hotel Direct and Indirect Business


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How’s business these days? For many hoteliers, things are starting to get pretty good. Hoteliers I talk with are enjoying higher rates and occupancies, along with an overall improved business climate and increased optimism about the coming year. 

As tends to happen during good times, many of these hoteliers are taking this opportunity to evaluate their relationship with distribution partners and to explore ways to drive more business through direct channels. 

I applaud this focus. With increasing competition for high-performing search terms from online travel agencies and metasearch, hoteliers are seeing their costs to acquire guests continue to rise. The current business environment provides a perfect opportunity to evaluate each of your distribution options for its fit into your overall approach.

Take a new look at each of your channel partners with a clear eye and ask these questions: 

  • Can this OTA reach a guest you can’t? While the answer to this question is often yes, don’t assume OTAs always reach new business. Look for channels that deliver first-time bookers and look for opportunities to convert these to loyal guests. 
  • Are the guests they reach the guests you want? One GM I know once told me about his “cooler index.” He could accurately predict which booking channel his guests used by the number of beer coolers they dragged through the lobby at check-in; the more coolers, the lower rated the business—and the greater the effort needed to convert them into longer-term, higher-value customers.  
  • How much are you willing to pay to reach those guests? In other words, can the OTA reach those guests at a reasonable cost? Analyze your business to ensure an appropriate return on your cost of acquisition, whether paid as commission or as net rate margin.  

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