What is a good channel mix for a hotel ?
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A hotel’s channel and its respective contribution from the various distribution channels is a sign of the health and diversity of your revenue.
Yes, it varies by hotel location, brand, mix of sales and a variety of other factors. But, let’s discuss what distribution channels make up the channel mix, how to build it, how the pie should be divided.
Types of distribution channels in the hospitality industry
Hotel distribution channel definition: The platforms or methods customers are using to transact and book hotel rooms. The main distribution channels that are used to calculate the channel mix are:
OTA (Online Travel Agency)
Direct / In-House
GDS (Global Distribution Systems)
Central Reservations System / Phone
When you break down each channel, each of them are needed in their own way.
Having a good channel mix is like making a layer cake. The base layer, the foundation, is the Direct / In-House efforts. This is the sales piece of the cake which includes corporate travel and group business.
The next layer of the cake comes from the hotel’s website efforts. This is generally your lowest cost of sale. It fuels information for the other areas. Over time, through proper operational efforts, loyal guests could be taught to use this channel on future bookings.
But the website alone cannot be the entire cake, or it will be a small cake.
The last layers, the smallest ones, are the remaining three: OTA, GDS, and phone. The combination of website, OTA and GDS are considered your online channels.
Many go through great efforts to shift OTA business to the website to reduce commissionable fees. Commendable, but it is impossible for any individual hotel to market themselves to match the exposure of an OTA. An OTA is a necessary evil and should be leveraged when needed.
It is possible to become overly dependent on the OTAs. But if you lack a group or corporate base, then this is generally the filler.
The GDS (Global Distribution Systems) can be broken down into Sabre, WorldSpan, Amadeus, and Apollo. Some of your corporate business also likely comes via this channel.
A balanced channel mix isn’t overly weighted in one area.
What is a good channel mix?
Each hotel and market will differ. Also, independent hotels will differ from branded hotels. Extended Stay and Select Service hotels will differ from Full Service hotels. A hotel with more meeting space will look different than one with none or limited space.
But, talking numbers :
Let’s put the baseline to be a Select Service Branded Hotel:
OTA (Online Travel Agency) 10%
Direct / In-House 40%
GDS (Global Distribution Systems) 10%
Central Reservations System / Phone 10%
Extended Stay Hotel: Hopefully, you have more extended stay base than a typical hotel. If this is the case, you will likely see this reflected in more direct/in-house efforts.
Full Service Hotel: It depends on your meeting space and your strategy with food and beverage revenue.
Independent/Boutique Hotel: You can expect a lower website contribution and higher OTA contribution due to lack of brand recognition and loyalty programs. Also, the channel distribution may differ and you may not be able to segment phone from channel mix as easily.