Hotel Distribution

Direct Channel vs Intermediaries. The Reservation Battle Continues Round 2


22 April 2014 at 10:00, by and

Boxing. Google Plus.

Boxing. Google Plus.

There is not a second of truce in this particular battle. Innwise specialists, Alberto Scappini and Pedro Carmona, are still mulling over these types of hotel distribution. On this occasion, addressing the different variants in terms of profitability, prices and customer profile that captures them and the intermediaries.

As I said in the first assault, Scappini, Direct Channel optimization expert says it is essential to differentiate the potential volume of reservations from direct or indirect channels and that there is a balance. “One channel can be more profitable than another because it has higher costs or because it reaches customers low cost. However,  it can generate a high volume of hotel reservations and at the same time help a hotel to have a good occupation percentage”.

Furthermore, he also indicates that there is always an inclination of giving priority to channels that register the highest ammount of reservations before a specific day. ” As the date of stay gets closer and the reservations increase on the book of the hotel,  priority is given to the most profitable channels versus the less profitable channels or the potential volume of reservations versus customer value.”

Carmona, Revenue Management expert, refers to the difficulty hoteliers have to always reach their perfect target. “In spite of having a well defined strategy marketing segmentation or mailing it’s still very difficult to get the customer the hoteliers are looking for  There will always be someone who could have possibly paid more for a room than the person who has reserved their cheapest room.” he says.

Carmona also thinks it is virtually impossible to fight against every guest review created for different accommodation establishments they go to. “They are merely subjective. Therefore it is very difficult to always meet the previously established segmentation criteria. In fact, most times, you end up just losing customers “.

Another feature Carmona highlights is the price difference between the OTAs (intermediaries) and direct channel. Carmona explains that Online Travel Agencies take large commissions for every booking. Therefore, it is essential to know what the traveller needs at every moment, because at certain times both direct and indirect channels stand out.

“Hotels can put up the OTAs commission so as to appear in top positions”

The Revenue Management specialist gives the following example: “On special occasions such as a high level sport event or important conferences there is a posibility of it being more profitable to assume the costs of taking the customer from the OTA, bearing in mind that on certain dates, hotels can rise OTAs’ commission so as to appear in the top positions, ” he says.

In the case of the direct channel, their maximum activity moment is during the summer months, in the high season. Reason for why some hoteliers believe it is not necessary to introduce improvements, according to Carmona. ” Their direct channel promotion doesn’t worry them at all, at least in the high season, as all the rooms are sold daily in exchange for a commission and without any extra work on their behalf, they feel they don’t need the direct channel.”

Finally, the two Innwise experts insist that the direct channel cost is smaller than the intermediary cost, but it requires more effort to be in an optimal working order.  Scappini emphasizes the likely increase in profitability and its importance as an element for enhancing the hotel loyalty with the customer.” Carmona places emphasis on the elimination of reservations costs through the hotel’s website. “Imagine the things that could be paid for with that reservation commission” he concludes.




Idiso Digital

Idiso Digital

Marketing & Distribution Services

Idiso Digital

Idiso Digital

Marketing & Distribution Services

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