What is hotel distribution?

Hotel distribution is the practice of selling your rooms through a variety of ‘distribution channels’. This can be done via offline channels such as retail travel agents, phone bookings, or walk-ins, but today is more commonly done online.

Where you distribute your rooms will have a direct impact on how many bookings you’re able to take, and how much revenue your business will make.

Some keys to making hotel distribution successful is understanding where your target market is likely to book, which channels will be most effective for your property, and how to manage your distribution efficiently and profitably.

This blog will cover everything you need to know. Let’s go!

What are hotel distribution channels?

The definition for hotel distribution channels is that they are places where you make your inventory available for sale. Distribution channels allow potential guests to find, view, and book your rooms.

Often, hoteliers use a mix of different channels to reach as many travellers as possible and maximise their booking potential. Over time, it has become less common for bookings to be made via travel agent, phone, walk-in, or email.

Instead, the majority of hotel bookings are now made online through online travel agents (OTAs), metasearch, and hotel websites. The global distribution system (GDS) is also commonly used, but often this is more for larger hotel groups and corporate business.

Online travel agents in particular have become commandingly popular, because they have a large selection of options for guests to compare and are easy and convenient to use.

Hotel distribution channels examples

Offline channels are quite self-explanatory so let’s focus on some examples of online hotel distribution channels. They include:

  • Leading OTAs such as Booking.com, Expedia, Airbnb
  • Niche online booking sites such as Mr & Mrs Smith, Lastminute.com, and Hostelworld
  • Your own property’s website
  • Your social media platforms
  • Metasearch sites like Google Hotel Ads, TripAdvisor, and Trivago
  • GDS’ such as Amadeus or Sabre
  • Wholesalers like Hotelbeds

Most small properties prioritise leading OTAs because they have such a large reach, but it’s equally as important to win direct bookings from your website and via metasearch. The more direct channels you can capture direct reservations from, the higher amount of profit you can drive.

Why does your hotel need online distribution?

It’s important that small accommodation providers develop an online distribution strategy in order to reach a global audience. 

Travellers from around the world are looking for unique destinations to visit, and small properties, such as boutique hotels, bed and breakfasts and guesthouses, are particularly alluring to those searching for an authentic experience. Without online distribution, small hotels will not have access to these motivated travellers.

Online distribution can also set up your business for success across many areas, including guest experiences and revenue management. For example, by using online distribution you can:

1. Collect online reviews

This will help more guests book your property, providing your reviews are positive. Reviews can make a huge difference in swaying the decisions of travellers, especially when they’re booking last minute.

2. Gain broader online feedback

Convincing guests to share their experiences and talk about your property will greatly increase your online visibility on OTAs, social media, and Google.

3. Build loyalty programs

Every guest that comes through your door is a chance to create a loyal customer. It’s a good idea to not only reward your current guests, but also encourage your guests to recommend your property to their family members and friends. Promo codes for repeat bookings as well as upgrade rewards are powerful loyalty program options.

4. Get instant bookings

Guests like using online booking engines because it’s more convenient for them. Instead of having to wait for you to be at your desk, they can quickly check your availability, book and confirm their stays.

It’s also easier for you, because you can literally accept bookings while you sleep! You don’t have to constantly be at your desk or checking your phone in order to sell out. 

5. Understand your property’s performance

By using online booking channels and managing them with online hotel software, you’ll get a lot of clarity into how well your business is performing.

You’ll be able to check which channels are bringing the most revenue as well insights into cancellation rates, lead times, and length of stay. This allows you to make strategic adjustments and make improvements.

How to excel at hotel room distribution management

There’s a lot to consider when trying to maximise your success when distributing your hotel rooms. Often the plan is to sell as many rooms as you can, to the right people, at the right time, at the right price in order to increase profit for your business.

Here are all the tips that will help you excel at hotel room distribution management.

Be aware of costs

Distribution doesn’t come free, especially when selling rooms online. Here are some costs you may face:

Commission fees

OTAs are the largest players in online distribution and they are also the most costly for small hotels. A commision fee between 15 to 30 percent is substantial for small hotels who are operating on a budget.

However, you will usually find that this cost is worth the exposure on the OTAs websites. OTAs invest in premier marketing resources, and they are always going to appear at the top of the search engine results page. 

Administrative costs

Someone needs to be responsible for helping you implement the online distribution strategy. Whether it’s you or another staff member, this person will spend time working with OTAs.

This involves speaking with OTA marketing managers in order to update your property’s rate schedule, and they also will need to research and analyse market trends in order to identify travel segments to target.

Also, if you don’t have a channel manager, a lot of time will be spent on administrative tasks, like manually updating your rates and inventory.

Technology investment

In order to distribute your rooms online effectively, you need to invest in a technology solution that will allow your strategy to come to life. A channel manager allows you to conveniently connect with the most powerful OTAs in the industry, seamlessly and without risk of overbooking.

Look for an all-in-one solution that also includes a front desk system, booking engine, and optional website builder. This gives you the power to increase your direct bookings and minimise the commission fees you are required to pay.

Develop strategies and actionable plans

You’ll see a lot more success if you approach hotel distribution with a plan of action and an idea of how to optimise your performance along the way. Here are seven pieces of advice that will help.

1. Collect data and utilise it effectively

The best way to enhance and improve your distribution strategy is to collect data and initiate a better understanding of your guests and distribution partners. Through data collection, you will be able to understand which channels drive the most revenue, and when.

Be sure to run regular reports so that you can make frequent adjustments based on the most relevant, accurate and recent data available.

2. Consider your target market segment

Certain distribution partners will appeal more to different market segments, so it’s important to form partnerships with the right channels for your property.

For example, if your business appeals to international travellers from China and India who are searching for luxury experiences, you will want to find OTAs that attract those specific individuals.

Forming the right distribution partnerships will increase the amount of traffic your website receives and will help generate more bookings for your brand.

3. Increase opportunities for direct bookings

Many travellers use large distribution agents, such as OTAs, as a starting point for their travel-related research. Once they discover your listing they may also head to your website or begin following your social media pages in order to learn more about your brand.

At these key moments, make sure your potential guests know they can book directly with you and provide them with a simple process to do so via a hotel booking engine. This is known as utilising the ‘billboard effect’.

4. Use OTA marketing strategies to your advantage

The fact of the matter is, OTAs have more money to spend on marketing than you do. Use this to your advantage, and let them promote your property for you. Leverage their marketing spending in order to increase bookings at your brand, without increasing your own hotel’s marketing budget.

5. Develop an engaging social media strategy 

Some operators assume their distribution strategy and their social media strategy are two separate entities that work alongside each other rather than together.

However, you definitely should be using your social media strategy in order to enhance the distribution of your inventory.

Engaging travellers on popular social networking sites like Instagram and Facebook will help you improve your brand presence around the globe and will assist you in selling rooms both directly and through distribution agents.

6. Use new technology to improve communication with prospective travellers

Many travellers who discover your property through an OTA will be directed to your website to learn more information about you and what you offer. Instant connection is important, which is why you should consider adding chatbots to your website.

These automated messaging systems can provide your prospective guests with instant gratification for all of their customer service needs.

7. Encourage your guests to offer feedback online

Nearly every B&B distribution partner you have is going to rely on your online reviews in order to offer prospective guests social proof of the experience they will have at your property.

You need to actively solicit feedback from your guests on popular review sites like TripAdvisor, Google and Facebook. You also need to monitor your feedback and engage with travellers when necessary.

Hotel distribution companies

Besides online travel agents, there are plenty of other companies and partners that can help you distribute and sell your hotel rooms. Here are some examples, including a few you may not have thought of:

1. Metasearch sites

Metasearch sites help travellers find and compare rates between a number of different properties within a destination. Some metasearch engines, like TripAdvisor and Google, are now displaying instant booking buttons that allow travellers to book directly from the metasearch results. This is a chance for you to score some business.

2. Government websites of your region

These resources are particularly valuable for tourists who are looking into visiting your destination. If you can spark a relationship, you can list on these sites or become a recommended property. travellers visiting the site to learn about your business and potentially book with you.

3. Visitor Information Centres (VICs)

Many popular tourist locations will have their own brick and mortar Visitor information Centre, where travellers can get free information on things to do and places to stay in a particular area. They may be known as different organisations in different parts of the world. In the UK, for example, they are known as Tourist Information Centres. 

4. Retail travel agents

Retail travel agents are travel agents operating in physical locations (for example, think of Flight Centre in Australia, and Virgin Holidays in the UK). Their customers can walk in or give them a call to discuss all elements of booking their trip, including accommodation.

While it is true that their market share is being challenged by the convenience of online travel agencies, many people who have complex itineraries prefer to speak to a person to get all the elements of their trip organised.

Travel agents will certainly charge you a commission per booking, because it’s how they get paid. The level of commission is worked out by you and the agent, but it’s typically 15% or more. The more you pay them, the more they will be motivated to sell for you.

5. Coupon sites

Discount coupon sites are another way to get people to book with you. Travellers on a budget will be on the lookout for discounts for accommodation in the area they’re going to. 

Coupon and discount sites will take a percentage of each deal sold – and it may seem harsh on top of the discount you’re already giving – but you can consider it a marketing cost.

6. Tour operators

It would be wise to partner with tour operators who operate in your region to drive occupancy at your property. Why? Because they package and run multi-day tours which include accommodation, distributing them either via travel agents, or directly to consumers. 

Striking a deal with them to be a part of their package will guarantee a stream of incoming bookings. In exchange, they may ask for a discounted rate.

Some potential partners come in the ‘unconventional’ category, but they are worth exploring if you are commonly battling low occupancy rates. Check out:

7. Funeral homes

It’s morose, but funerals regularly attract domestic and international travellers to your local community. And when there’s a death in the family, the last thing that family members want to stress about is where to stay.

Partner with your funeral home to offer services to arrange for accommodation for any funerals that take place as a service that they can upsell to their customers. You can offer a discount and additional services such as a shuttle bus to show your empathy and make their stay easier.

8. Wedding planners

On the other side of the spectrum, weddings are another way to get more group bookings at your property. Even if the wedding isn’t taking place at your property, if you’re nearby it can be a great place to stay for guests!

Partner with local wedding planners to mention your property should their customers enquire about nearby accommodation for their guests. Usually, they choose an expensive venue that not all of their guests can afford.

A small property like yours would be the perfect alternative. Why not create a special ‘wedding package’ for friends and family, with a 10% discount? Ask guests to present you with their wedding invitation for this to apply.

9. Universities

Universities are great partners because many students are from other towns, states, and even countries! Parents will periodically visit to check up on their children, especially for big events like graduation ceremonies.

Why not create a special ‘university package’ for friends and family, with a 10% discount? Ask students to present you with their student card to get this discount. Universities may not partner with you officially, but they may allow you to advertise on their bulletin boards, or on their website.

Hotel distribution solutions

Thankfully, there are plenty of solutions that can help you manage your hotel’s distribution. Trying to do it all on your own would soon become too much to juggle, but hotel software can make it much easier.

Here are the most important hotel distribution solutions:

1. Channel manager

When you are actively working to create an active, dynamic network of distribution partners, you need a way to automate the booking process for them.

Manual bookings will quickly become overwhelming and cumbersome, and will almost certainly lead to double bookings. Instead, use a channel manager that will provide your distribution partners with access to your live inventory, including your current rates.

2. Property management system (PMS)

A PMS will give you a central place of control where you can easily manage guest reservations, room availability, guest profiles and communication, housekeeping, payments and more.

Your PMS will also work seamlessly with your channel manager on a two-way basis to ensure your data is always accurate and up-to-date.

3. Booking engine

A hotel booking engine gives you the chance to capture valuable direct bookings. Connecting a booking engine to your website allows you to accept commission-free reservations that help increase your profit.

It also gives you a direct relationship with guests, so you can foster loyalty and repeat stays.

So where can you find these solutions and what is the best option for you?

By Dean Elphick

Dean is the Senior Content Marketing Specialist of Little Hotelier, the all-in-one software solution purpose-built to make the lives of small accommodation providers easier. Dean has made writing and creating content his passion for the entirety of his professional life, which includes more than six years at Little Hotelier. Through content, Dean aims to provide education, inspiration, assistance, and, ultimately, value for small accommodation businesses looking to improve the way they run their operations (and live their life).