Turning chaos into cash flow: Mastering accommodation distribution channels

Welcome to accommodation management, where stakes are higher than ever, and the margin for error is razor-thin. In this hungry industry, mastering distribution channels and rate optimisation isn’t just a goal, it’s a necessity.

Mismanage these aspects, and you’ll face chaos, plummeting revenues, and a damaged reputation. But get it right, and success is within your grasp.

The Winter Issue of AccomNews is out now. Read it HERE

Let’s explore the pitfalls and consequences of ineffective distribution channels and rate management—an accommodation manager’s worst nightmare.

Overbooking: Imagine guests arriving with no room available. They’re furious, reviews are scathing, and booking platforms slap you with penalties.

Low occupancy rates: Rooms sit empty because they’re not listed across all channels, turning peak season into peak stress.

Revenue loss: Every unsold room is money lost. No business can afford that kind of leakage.

Administrative burden: Manually updating inventory and rates is tedious and time-consuming. Time that should be spent wowing guests.

Errors and inconsistencies: One misstep, and guests are confused and frustrated, dragging your service quality through the mud.

Missed market opportunities: Without market insights, you’re flying blind, missing out on lucrative segments like corporate, leisure, bleisure, and wholesale travellers.

Reduced competitiveness: Falling behind because your channel management is outdated while competitors race ahead.

Uncompetitive pricing: Set prices too high and rooms stay empty. Too low, and you’re bleeding cash. It’s a balancing act.

Suboptimal Revenue per Available Room (RevPAR): Not maximising RevPAR? You might as well be flushing money away.

Inconsistent pricing across channels: Guests get confused, trust erodes, and your relationships with Online Travel Agencies (OTAs) take a nosedive.

Negative reviews: Overbooking, inconsistent pricing and operational hiccups lead to a flood of negative reviews.

Long-term effects: Once your reputation takes a hit, attracting and retaining guests becomes an uphill battle.

Persistent revenue losses: Ineffective management is a direct line to dwindling profits and financial instability.

Falling behind: While you’re bogged down, more agile competitors are speeding ahead.

But wait… proficient managers can turn challenges into opportunities. Our chosen experts share their insights.

 

Chris de Closey, Director of Switch Hotel Solutions, offers his expertise on leveraging different channels and technologies to enhance hotel performance and revenue.

To effectively manage distribution channels, it’s crucial to consider the types of guests each channel attracts. Major providers like Booking.com, Expedia, and Agoda are essential for broad market reach. However, also explore other channels that align with your target customers.

For wholesale connections, platforms like Flight Centre or Ignite Travel might be ideal. For corporate guests, a Global Distribution System (GDS) connection is beneficial.

Don’t underestimate the power of direct distribution channels; they are among the most important. By targeting a mix of leisure, corporate, and wholesale businesses, you can ensure a steady stream of guests.

Dynamic pricing strategies

Relatively new to many operators in Australia and New Zealand, dynamic pricing is now rapidly evolving. One of the latest strategies focuses on longer length of stay pricing, especially during low seasons. This approach helps drive occupancy by replacing bookings lost due to slow demand and increased living costs, ensuring investors are satisfied with their returns.

Balancing Direct Bookings with OTAs management

While it’s true that “direct is best” due to lower acquisition costs, OTAs are far from the enemy. Their marketing prowess can be leveraged through the billboard effect to maximise visibility and drive direct bookings. OTAs provide unparalleled support in bringing more guests to your property. The key is to continue marketing to these guests post-stay, capturing their data for future engagement. This dual approach ensures you benefit from both direct and OTA bookings.

Technological integration for profitability

Technology plays a pivotal role in improving profitability and decision-making. Revenue Management technologies that assist with dynamic pricing and market tracking allow for informed decisions, letting you focus on core operations. By utilising these software solutions, you save time and drive more revenue—a win-win scenario.

Innovative Channel Management System (CMS)

Emerging strategies in channel management focus on increasing distribution and diversifying market mixes. By leveraging different segments—corporate, wholesale, and leisure—you can boost occupancy across various days, ultimately increasing revenue. Ensuring comprehensive coverage of these segments helps in maintaining a steady flow of bookings.

Advice for small accommodation providers

It’s easy to get bogged down in comparing software solutions. Instead, dive in and try different pieces until you find one that suits your needs. Implementing technology is crucial, and any improvement is better than none. Take the leap!

 

Insights from Samuel Steel, Founder and Director of Resly

Utilising a centralised channel manager integrated with your Property Management System (PMS) is essential for managing inventory in real time across all distribution channels. This reduces the risk of overbooking by ensuring accurate and timely updates. To balance inventory and minimise overbooking, it’s wise to reserve specific rooms for direct bookings and others for OTA bookings.

Setting booking rules, such as minimum stay requirements and advance booking limits, helps manage demand during high occupancy periods. Real-time synchronisation is also crucial, allowing instant updates of room availability and rates across all channels to maintain accuracy and maximise booking opportunities.

Dynamic pricing strategies are key to staying competitive. Adjusting rates based on historical data and current demand—known as yield management—means increasing prices during high-demand periods and offering discounts when demand is low. Monitoring competitors’ pricing and adjusting rates dynamically is essential to maximise revenue. Demand forecasting tools integrated with your PMS can predict occupancy trends and help adjust pricing accordingly, while automated revenue management systems optimise pricing based on market conditions and competitor rates.

Balancing Direct Bookings with OTA management brings several benefits, including higher profit margins due to lower acquisition costs, better customer relationship management, and greater control over the guest experience and brand presentation. However, attracting direct bookings requires significant marketing investment, and seamless integration between PMS, booking engine, and channel manager is necessary. Balancing inventory and rates across multiple channels can also be complex and time-consuming.

Integrating Revenue Management Systems (RMS) with your PMS provides real-time data on market trends, competitor pricing, and demand forecasts, enabling better pricing decisions. Housekeeping management tools integrated with your PMS optimise room cleaning schedules and reduce labour costs. Access to an open API allows integration with various third-party applications, enhancing customisation and operational efficiency.

Innovative channel management strategies include using AI and machine learning to analyse booking patterns and optimise distribution automatically. Mobile-friendly solutions allow managers to handle distribution channels on-the-go, and seamless API integrations ensure real-time updates with multiple OTAs and metasearch engines. Flexible promotional tools, such as customised promotions, mobile-only deals, and returning guest discounts, help target new markets and enhance guest satisfaction.

For small accommodation providers, seeking a robust all-in-one solution that integrates PMS, channel manager, and booking engine can streamline operations and reduce tech costs. Ensuring staff are well-trained in using new technologies maximises their benefits while leveraging automation tools for guest communication, reporting, and housekeeping management reduces manual workload and improves efficiency.

 

Timothy Swallow from Savvy Hospitality Solutions shares his expertise on how accommodation providers should leverage advanced strategies and technologies to maximise returns.

Optimising distribution

A robust CMS is a game-changer for accommodation providers. Acting as a central portal, a CMS distributes rates and availability across all OTAs and the property’s own booking engine. This centralisation reduces the risk of overbooking by ensuring real-time updates. Advanced CMS software can handle virtual rooms, allowing two different room grades to be sold from the same space, and integrates dynamic pricing algorithms to maximise returns by considering competitor rates.

Dynamic pricing

Demand is fundamental to occupancy. Mr Swallow emphasises the importance of tools that diligently monitor competitors’ actions, allowing you to make informed decisions and maximise RevPAR. This approach is more effective than relying solely on Average Daily Rate (ADR).

Maintaining rate parity

This is crucial for preserving rate integrity across various platforms and ensuring a balanced mix of business. Mr Swallow notes that while OTAs are an easy target for discounts, it’s vital to set correct rates that sustain business from these platforms. Offering similar discounts directly to clients can jeopardise RevPAR and risk losing support from key partners.

Direct Bookings

Mr Swallow argues against offering direct booking discounts equivalent to OTA commissions. Instead, structuring rates to maintain OTA support while attracting direct bookings ensures a balanced and profitable distribution mix. This strategy leverages OTAs’ marketing reach while maximising margins on direct bookings, yielding better results for all stakeholders.

Streamlining operations

All accommodation providers should choose software solutions that are flexible and modular. This allows for customisation according to specific needs and ensures seamless integration of all essential components, simplifying operations. Such solutions are critical for ease of operation and optimal performance.

OTA partnerships

OTAs play a vital role in a property’s distribution strategy. Effectively leveraging this opportunity is essential for maintaining a sustainable business model.

Emerging strategies in channel management

The focus is on leveraging tech-savvy solutions to meet property needs without necessitating changes in the PMS.

Mr Swallow points out that modern CMS software simplifies processes, making it easier to achieve desired results. These systems equip properties with the tools required to maximise returns.

Final thoughts

Adopting advanced strategies and leveraging cutting-edge technologies is crucial for accommodation providers aiming to excel. Chris de Closey highlights the importance of targeting the right channels, employing dynamic pricing, balancing direct and OTA bookings, and integrating technology. Similarly, Timothy Swallow’s emphasis on integrating dynamic pricing, maintaining rate parity, and streamlining operations with the right software solutions underscores how these approaches can ensure sustainable growth. As Sam Steel points out, using these strategies and technologies helps optimise occupancy rates and enhance overall profitability. By focusing on these key areas, accommodation businesses can stay competitive and achieve long-term success.