Efficient distribution is fundamental for the long-term health of your hotel chain. Getting each property’s inventory in front of the right guests at the right time at the right price means that you can convert more guests and enjoy profitable revenue management.
Managing distribution efficiently requires a unique skill that combines a nuanced approach with a deft touch and a data-driven mind. It is a superpower really; the ability to tailor your distribution so precisely that you maximize your revenue opportunities on all channels all the time. However, that’s always easier said than done. The continued complexity of distribution can make it quite difficult to manage effectively and profitably.
Technology has simultaneously contributed to this complexity (by reducing start-up costs and making it easy to launch new channels) and made it much easier to manage (by seamlessly connecting supply to demand). Given technology’s prominent role in distribution, it’s always worth periodically revisiting your approach to optimization.
A Few Ways to Optimize your Distribution
To assist you on your daily revenue optimization journey, here are seven helpful tactics. You may choose to implement just one of them or you may be ready to go full tilt and focus on improving the quality and health of your distribution connection. Either way, incremental improvements mean big gains over time. The key is to stay focused and make sure that you are using the right technology to amplify and not hinder your efforts.
1. Metric, metrics, metrics!
A little repetition never hurts, right? You’d be hard-pressed to find a revenue manager or hotel professional that doesn’t understand the power of metrics. Yet, when it comes to evaluating different distribution channels by performance, key channel-level metrics can be difficult to surface. Without access to relevant metrics, such as bookings, cancellations, ADR and RevPar for each channel in your distribution mix, you’re optimizing with one hand tied behind your back. And if your distribution connection provides this data on a delay, or the data is unreliable or inaccurate, it’s worse than having no data at all.
Channel-level metrics matter deeply to your distribution strategy. Be sure that you are getting all of the data you need to evaluate the contribution of each channel to your overall distribution strategy.
2. Know your look-to-book stats.
Another valuable metric that’s worth pulling out on its own is your look-to-book ratio. This shows you the proportion of people that make a booking after looking at your hotel chain. Of course, you have access to this insightful metric in your direct channel. You can use it to optimize your website, tweak your booking flow and test new offers and promotions. With each test, tweak and interaction, you can monitor how it affects your look to book. The more lookers you convert, the more bookings you get — and the more revenue you take in.
But what happens on 3rd party channels? This information is not easily obtained. You have to rely on each channel’s approach to data analytics. Whenever possible, you want to find this information and pull it into any discussions around distribution strategy. As you identify highly-converting channels, you can assign more inventory and incrementally optimize your distribution over time.
3. Benchmark to your compset at the channel level.
Benchmarking your hotel chain allows you to see what similar properties are doing with their distribution strategy. You should compare and contrast key metrics, like total bookings, ADR, RevPar, cancellations and channel mix. These benchmarks help you make more accurate pricing decisions, identify underused or overlooked distribution opportunities or discover new channels for experimentation. With a careful eye on the competition, you can be one step ahead of the game!
4. Opitmize your switch cache.
All too often, hotel chains overlook the power of cache optimization when they are connected to distribution partners via an intermediary such as a switch. This can lead to dramatic under performance, as your switch cache greatly influences how intermediaries access and onwardly distribute your inventory. Whether you deploy a push, pull or hybrid approach, your switch cache is the backbone of your distribution. A poorly-performing switch cache can be the root cause of an underperforming distribution strategy.
Proper switch cache monitoring revolves around a regular review of your switch cache settings report. You should be looking at the accuracy of your switch cache, as well as its speed and overall utilization. Certain distribution channels may prioritize higher-performing switch caches and you don’t want to get left behind by your competitors’ better-optimized switch caches. As you measure and improve your switch cache’s performance, you’ll see greater accuracy, faster performance and fewer missed bookings due to outdated switch caches. Better switch cache accuracy would mean no difference in prices between pre-booking and final booking page, which would result in lower dropout rates. Optimizing switch cache would reduce the load on the CRS thus protecting it from any outages and also freeing up bandwidth for connecting to more demand partners.
5. Review your error data report often.
Errors can impede even the most thoughtful distribution strategy! So, in addition to your cache report, regularly review your error data report. These are like cheat sheets, showing you exactly where you need to jump in and take action. Errors play a critical role in determining your connection quality. Every error that occurs could have been a confirmed booking and fixing these errors would result in direct spike in bookings received from existing channels.
DHISCO Insights provides a clear view of what channels are causing the most errors, the type of errors that are generated and the properties that experience high error percentages. This allows you to directly zero down on the issues and fix them right away. Fewer errors mean fewer missed booking opportunities! It’s an easy way to boost conversions and make more money for your properties.
6. Monitor CRS and connectivity performance.
Your CRS performance offers a direct view into how well your connections are optimized. There are two metrics to monitor when measuring CRS performance: overall response time and the individual response time at each point in your system. Watch for the response time in both your chain’s CRS and your connection partner, so that you can pinpoint opportunities for improvement.
You’ll also want to monitor how well other CRS systems are performing so that you can have a clear benchmark. With that frame of reference, you can know just how well your CRS is performing compared to others and identify any issues before they start to impact bookings.
7. Leverage channel-level intelligence
For hotel chains, channel-level intelligence offers insights into top performing channels on a property-by-property basis. Armed with this data, you can carefully analyze each channel’s contribution to your business. Since these patterns can change quickly, keep an eye on channel performance on a daily basis and optimize accordingly.
Remember that analyzing the performance of each channel in your chain’s distribution mix ensures that you are getting the most out of your connections. To further optimize connections, dive into your channel-level intelligence to understand which channels produce the most, which channels contribute to most of your traffic and which channels produce the most errors.
Knowing When to Try Something New
As you focus on channel optimization and efficient distribution, ask yourself whether the quality and health of your distribution connection is affecting your overall return on your investment. If you find that your distribution connection hobbles your optimization efforts, then you may find that it’s time to try something new.
Distribution is complex but your technology shouldn’t be. There’s no reason to suffer through poor connections that hobble your revenue management strategy. We’re certainly biased — but the right technology will assist you in optimizing your distribution for maximum profitability. Don’t settle for anything less!
To know more about how can we assist you in keeping your distribution healthy and profitable using DHISCO Insights & Optimization, write to amanda.smith@rategain.com
About the Author
Mark Haywood
General Manager/ SVP – Europe, Africa, Brazil
RateGain
In his current role, Mark manages the commercial team throughout Europe, North Africa, and Brazil and leads the overall strategy and growth across all three key business lines of distribution, business intelligence, & social media optimization in these regions.
Prior to joining RateGain’s international leadership team, Mark had 22 years of relevant and varied industry experience within the hospitality sector. He has capitalized on his experience by playing different e-commerce & SaaS technology company management, leadership & commercial roles in organizations such as TravelClick, Melia Hotels, The Ascott Group, and First Option Hotel Reservations.
Originally, from the United Kingdom, Mark has been based out of Barcelona, Spain for past few years. As such, he has native fluency in English and Spanish, however, is proficient in other key European languages too. Mark has been involved in multiple closed-group invitation-only events in the role of a speaker, moderator or thought leader. Exploring new places, learning & coaching new skills, and discovering new cultures has always fascinated Mark, and, as the e-commerce industry has evolved across the hospitality sector, he has been able to fuse his personal passions with the industry he loves.
