HomeHotelSteps to follow to be an advanced hotelier in distribution

Steps to follow to be an advanced hotelier in distribution

Pablo Sanchezhead of Mirai Consulting, raises the dichotomy that hoteliers face between spend on OTA commissions or invest in their direct sales. He is clear about it and details how they do it to those he calls “advanced hoteliers”.

At Mirai, as he explains, “we know quite a few advanced hoteliers who are aware of the intermediation expensesof the profitability of the different channels and all the possibilities at your disposal to control and maximize your income net (better profitability)”.

The usual history of these hoteliers, he explains, “usually goes back to an initial period with dependence on OTAs, especially from Booking.com. But there is a key moment in which they muster up their courage and decide regain control of your income, doing what is necessary. Slowly but surely. To achieve this, they invest in online marketing between 5% and 10% of your direct sales (mainly in SEM for its brand and in metasearch engines) and around the 5% in technology (web, engine…) and dedicated staff. In total they allocate between 10 and 15% of your direct salesalways less than or equal to the commission they pay to distributors.”

Advanced hoteliers achieve an average direct sale of around 25-35%, with an average cost in digital marketing below 10% of the sales generated. Source: Mirai.

It is also common that, as he adds, “these hoteliers have started investing in commission models (no risksuch as the commission for stay -CPS-), but with time and knowledge they become more efficient modelsespecially in channels like metasearch engines, where they realized that they could win the battle against any OTA, even giants like Booking.com or Expedia. That is what many of our clients are doing, who are managing to increase their investment and sales while maintaining the efficiency close to 5% of its sales (CPC in Google Hotel Ads optimized with our partner koddi)”.

For these advanced hotels, as Pablo Sánchez details, “OTAs still account for about a third of its revenue but its direct sales are the first booking channel, with a share close to the total of OTAs. Furthermore, with a good CRM strategy they are achieving that customers repeat reservations on your direct channelobviously at a much lower commercial cost than the initial one.”

Investment or commission… Everything in its right measure!

The market, as the director of Mirai Consulting points out, “has evolved a lot in recent years, especially after the pandemic. The Internet has matured and so have customers. British and Scandinavian They have been booking mostly online for a long time but others, such as Germans and Spaniards, have made a qualitative leap in this regard. At the moment 80% of customers get information online and 70% end up buying or reserving something”.

Online marketing, as he highlights, “has also evolved, providing formulas with very controlled risk and with platforms and functionalities that allow optimize your efficiency to any advertiser. This is something that They know well and exploit OTAswho invest a large amount of their income in this section”, as published HOSTELTUR tourism news in How much money do the large online platforms invest in Google?

“OTAs must be quite happy with the return on their investment, around 50% of their income, since they do not stop increasing it while their profits skyrocket,” according to Pablo Sánchez.

From Mirai they consider that “you can achieve a good amount of qualified traffic to the hotel’s direct channels (web/contact center) at very reasonable average costs, below 10% of the sales generated. With this approach we achieve that the market share of direct sales in the advanced establishments that work with us is between 25-35% on average, depending on the type of hotel, destination and necessary markets.”

Obviously, Sánchez concludes, “there is room for everyone so, after the 25-35% of direct sales, it is important to have a set of good distributors who collaborate constructively with the hotelierto whom he will be happy to pay the agreed commission, probably less than the current 20%.”

Other Mirai news:

– How a hotel can boost conversion rates and maximize revenue

– How the hotelier can obtain maximum profitability in digital marketing

– Replicate the success model of Booking, the crux of direct sales in hotels

– Distribution tactics that work: dynamic model and imitate Booking

– Loyalty results in a lower average price but greater profitability

Reference information is available at Mirai website.

Source: Hosteltur

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