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How Much Does Online Distribution Cost for Small Hotels?

Posted in Costs

Small hotels must develop an online distribution strategy in order to reach a global audience.

Travelers from around the world are looking for unique destinations to visit, and small hotels, such as boutique hotels and bed and breakfasts, are particularly alluring to those searching for an authentic experience.

Without a distribution strategy in place, particularly one that emphasizes online distribution, small hotels will not have access to these motivated travelers.

However, there’s a cost involved with developing an online distribution strategy that must be considered.

Commission fees

Online Travel Agents, or 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, most of you will 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. It’s difficult — nearly impossible, in fact — to compete against OTAs.

For small hotels, the best thing to do is consider the commission fees an investment in your business and account for them in your overall online distribution plan.

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 analyze 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 minimize the commission fees you are required to pay.

Little Hotelier is an intuitive program that allows you to automate many of your administrative tasks, and works with you to implement an effective online distribution strategy. See how it works in our on-demand demo videos.

hotel reservation system demo

Or to keep learning about what makes up an all-in-one solution, download our free eBook:

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