The hotel distribution landscape is undergoing a seismic shift, one that promises to redefine how properties connect with their guests. For too long, hotels have relied on intermediaries to fill their rooms, ceding control – and a substantial chunk of revenue – in the process. But as the industry evolves, so do the opportunities to reclaim the guest relationship and build a smarter, more sustainable model for growth.
This journey will be anything but simple, but it’s a challenge the industry must embrace to thrive in the years ahead. How should it start?
1. Healthier channel mix
The cost of distribution via OTAs keeps rising. OTA commissions that once ranged from 15-20% now reach 30% or higher. Recent studies find hotels paying up to 40% commission when accounting for volume discounts.
While high commission charges are the biggest challenge with third-party distribution, hoteliers also have lots of concerns about not having access to consumer data or control over the booking experience. The early promise of OTAs to democratize discovery has given way to an oligarchy controlling guest access. (Jochen de Peuter-Rutten and Youri Sawerschel, EHL Hospitality Business School)
Considering the above, hotels need to find the right mix of distribution channels, taking into account factors such as cost of acquisition, reach, and control over the guest experience.
According to Skift, by 2030, direct digital bookings will dominate hotel distribution, generating over $400 billion of hotel gross bookings — overtaking the online travel agencies which are expected to bring in a smaller $333 billion of hotel bookings.
Do we actually have a chance to achieve it?
One of the key drivers behind intermediaries’ dominance in the travel space is the need for centralized search – a single, convenient place for travelers to compare hotel properties using rich datasets. While hotels prefer bookings via their direct…
