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I had a discouraging discussion with an outstanding general manager recently who complained that her property’s struggles with rapidly shifting guest preferences, an evolving distribution landscape, and ever-rising distribution costs – particularly in the form of OTA margins and increased search spend – had made it almost impossible to compete. While running her hands through her hair – or possibly pulling it out by the roots – she pleaded, “Why do we even bother? How can we possibly be expected to keep up?”
While its hardly a welcoming thought, maybe it’s worth asking his question: Is it time to give up? Should we just outsource all our marketing activities to OTAs? After all, they are fantastic at marketing and merchandising hotels online, arguably better than many hotels will ever be. Should we simply hand over responsibility for filling our rooms and place our focus elsewhere?
Um… no. In fact, hell no.
Now, let’s be fair. OTA’s are undoubtedly very good at what they do. That’s a fact. But that doesn’t mean for a moment that you can’t drive profitable business on your own. What we need to do is stop behaving like OTAs are our only option. Direct channels and email and search and ratings and reviews and a host of other time-tested tactics and strategies play important roles in delivering strong business results. The key is focusing on those channels that do that most effectively.
First, though, hotels need to be clear about their distribution strategy. To paraphrase NYU professor Clay Shirky, distribution once was a career. Now it’s a button. Online, the distinction between marketing and distribution is essentially non-existent. Once you add a buy button to any marketing message – email, search, display, metasearch, etc. – you’re really just one click away from the sale. And at that point it’s not a marketing channel; it’s a distribution channel. There are certainly some in the industry who will try to confuse you with fancy marketing terms, but the simple fact remains that marketing and distribution are inextricably linked online. You can – and must – measure exactly which channels work best for your business.
The most effective way to ensure that you’re thinking about distribution correctly – and getting the greatest benefit for your property – is to ask three simple questions about your marketing and distribution channels:
- Where do your guests find you ?
- Where do guests choose to book you?
- How much profit do you make from each of those?
Notice I’m not talking about revenue from these channels. It’s time to look past revenue and instead focus on profit. Recent data shows that distribution costs have outpaced rate increases, putting heavy pressure on your properties’ profitability. If you focus solely on revenue, it’s easy to miss the underlying costs impacting your business – and give too much credit to channels that aren’t actually helping you grow.
You may find that for your property, OTAs play an incredibly valuable role in driving profitability particularly during shoulder or slow seasons. That’s OK. As I’ve said before, there’s no need to make OTAs the bad guys here. However, what we don’t want to do is become so dependent upon them – particularly during periods where we can drive more profitable revenue through other channels – that we neglect direct business completely. Understanding which channels work for your property represents the first step in creating a marketing and distribution strategy that actually increases your hotel’s overall profitability.
After spending time digging into the data with my GM friend, we discovered several underutilized tactics driving fantastic returns that simply required greater attention. We also found a few areas that consumed lots of her marketing team’s time for very little benefit. It’s much easier to keep up when you’re only focusing on the areas of greatest return.
Outsourcing your sales and marketing to an OTA is certainly one approach to fill your rooms. And they still will play a role. But realistically many other options exist that can help you grow. The key is focusing on profitable revenue. After looking at the data, I asked the GM, “Is it time to give up?” Her response: “Absolutely not. It’s time to get to work.”
If you’re looking for even more hospitality marketing goodness, you might also want to take a moment to review the slides from Tim’s recent seminar, “Digital Marketing Directions 2016: The Key Trends Driving Your Hotel Marketing Next Year” here:
Finally, you will definitely want to check out some of our past coverage of the mobile, local, social web and how to make it work for your hotel, including:
- Is Social a Waste of Time for Hotel Marketers?
- 5 Fantastic Insights Into 2016 Travel Marketing Trends: Hospitality Marketing Link Digest
- 6 Key Hotel E-commerce Tips: A Cheat Sheet to Drive Direct Business
- 5 Hospitality Marketing Trends You’ll Want to Keep in Mind: Hospitality Marketing Link Digest
- Expedia’s Accelerator Program: A Wolf in Wolf’s Clothing
- For Travel Marketers, Content is Still King
- Trends in Hospitality Digital Marketing for 2016
- 8 Great Posts About 2016’s Top Trends: Hospitality Marketing Link Digest
- 5 Key Facts About Mobile, Millennials, and Hotel Marketing
- How Safe Are Independent Hotels from Airbnb?