5 ways to improve OTA distribution

By. Patrick Mayock 15th Oct 2011

Driving average rate is easier said than done. Ask any hotel revenue manager facing pressures from a street-corner competitor or a cost-conscious consumer.

But there are two pitfalls in particular that trip up hoteliers in their race to recovery, according to Jay Hubbs, senior director of revenue management for Expedia Partner Services Group.

First, many revenue managers don’t truly understand their property’s demand drivers, he said. It’s not a one-size-fits-all industry. A 4-star hotel in downtown San Diego obviously has a different base of demand than a 2-star property off the interstate.

Second, many don’t have a firm grasp on the competitive landscape, Hubbs said during a break at last month’s Lodging Conference.

“Hotels that don’t do an effective job understanding where that optimal price point is for their (competitive) set are the ones that often end up either over indexing on the (online travel agency) business or under index on their (revenue-per-available-room) penetration because they’re not taking advantage of the opportunity,” he said.

A strong OTA distribution strategy requires revenue managers who can recognize and avoid those pitfalls, Hubbs said. And it certainly doesn’t hurt if they remember the following five pieces of advice as well:

1. Find your place in the “store”
Customers who shop on OTAs are typically less brand-loyal and more price- and review-sensitive, Hubbs said.

To catch that customer segment, it’s important for hoteliers to strategically distribute their rooms on the appropriate booking channels.

“Travelers definitely shop around, so recognize you need to have a place in the ‘store,’” Hubbs said.

2. Capture new customers
Every OTA is like an independent online marketplace, Hubbs said.

 Revenue managers should think of them as individual stores within one mall. If they reach customers in Store A, but want to branch out and target some customers in Store B, they must place their product accordingly.

A hotel won’t capture new guests if it doesn’t adapt its distribution strategy, Hubbs said.

“It’s an opportunity to participate in a marketplace and capture customers that you wouldn’t have captured otherwise,” he said.

3. Consult with your market manager
Market managers, whether they work with Expedia (www.expedia.com) or not, have a wealth of insight about a given hotel market, Hubbs said.

“They have deep market insight and analytics,” he said. “… They understand what’s going on from a demand-driver standpoint, whether it’s air capacity or other things going on in the city. Really gleaning that information is a huge part of how a hotel can be successful working with an online travel agency.”

4. Yield rates aggressively across various OTA channels
OTA channels are very “yieldable,” Hubbs said.

“These are the channels that hotels can use to leverage their rate up or down very readily,” he said.

Last-minute booking channels can provide a perfect complement to long-term negotiated rates, Hubbs said.

5. Drive demand during peak dates
Not many revenue managers think to switch on OTA channels during peak dates, but doing so can yield dividends when trying to drive demand and rates, Hubbs said.

“A lot of hotels like to think, ‘I’m going to be really full over these dates. I should shut OTAs out,’” he said. But that’s not always the case.

In Manhattan, for example, hotels that kept open their Expedia booking channels during compressed dates had a higher average daily rate than hotels than shut off those channels, Hubbs said. When incremental demand comes into a city or destination, it often presents an opportunity for hoteliers to drive ADR that much further.

About Patrick Mayock

Patrick Mayock is Associate News Editor with HotelNewsNow.com. Patrick specializes in writing articles and creating multimedia news content for HotelNewsNow.com’s Web site and daily newsletter. Patrick joined the HNN team after a tenure reporting for a business trade journal. He is a graduate of the E. W. Scripps School of Journalism at Ohio University. HotelNewsNow.com is a

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