INTERVIEW: Insights on Hotel Distribution Strategy from Marco Rosso, SiteMinder

In this crowded and competitive market, what's the best approach when it comes to marketing your hotel online? Hoteliers would - if they could - just focus on direct bookings with their potential clients. But with a plethora of online travel agencies out there such as booking.com and Expedia, hoteliers are having to reach out to potential guests via OTAs, even though it often means paying commissions of 15-20 percent on bookings.

According to Marco Rosso, Regional Sales Director Iberia at SiteMinder and an EHL graduate, the OTAs are all useful channels. "We never say these are enemies." Instead, it all comes down, he says, to having an optimal channel mix, "so really ensuring that your hotel is going across all the different channels and platforms to maximize your revenue."

The Key? Various Channels

"Back in the day, the old-school way of thinking of revenue management was also about just changing your rates based on seasonality and on weekends/weekdays. Today it's become much more complex."

He urges hoteliers to keep their options open to distribute on "a good variety of channels" as different channels charge different commissions for each booking. "So it's really about making sure we're not giving all our inventory to booking.com and Expedia," but rather using those channels as well as some other OTAs.

"Maybe you're trying to attract the Chinese market or the APAC region, you might offer your prices on Ctrip, and obviously selling also directly because that's where you can also save money on commissions and you can try to boost and maximize that revenue."

That's where SiteMinder, which has formed strategic partnerships with Airbnb and BridgeStreet, comes in. It charges a fixed fee rather than commission on bookings for its website and booking channel services.

Essentially what we do is work very closely with hotels to help them increase their revenue, their direct bookings, their occupancy throughout the year.

SiteMinder: Channel Mix Optimization

SiteMinder, a SaaS or software as a service company, is currently working with 30,000 hotels around the world. Rosso says the company offers hoteliers a digital platform "to really help them optimize their channel mix, increase their occupancy throughout the year, and maybe even attract (customers from) international markets that they hadn't thought of before."

As for guest acquisition trends, Rosso expects hoteliers will continue trying to grow direct bookings to "balance the scales a bit" and claw back power (and, of course, avoid paying commissions).

The internet has really allowed the OTAs to get a kick-start - not to monopolize but get a strong foothold in the distribution landscape. Hoteliers are now starting to wake up and understand they can start investing in the technology, whether that be a really good set of websites or booking engines that make the process of booking much simpler, like the OTAs do themselves.

"A lot of hotels are now allowed to set their own price and decide to sell at a cheaper rate in the OTAs. Obviously we haven't seen this applied on a large scale yet but, again, it's still something that's quite new."

"Hotels, more and more, are going to start focusing on increasing their own direct bookings to avoid some of these commissions, maximize their revenue, and get more brand exposure for their own individual brand and hotel."

SiteMinder is particularly bullish about the Spanish market which, as one of the top two tourist destinations globally, has 'huge potential.'

Mobile Bookings and Other Trends

Mobile bookings are set to increase by 20 percent in 2018 and with an increase in direct bookings on the cards as well, third-party bookings are expected to fall below 50 percent within the next three years. According to SiteMinder's data, online bookings have virtually doubled since 2012.

"The Spanish market has historically had a huge dependency on tour operators and traditional travel agents. Some of the biggest destinations (and resorts) are the more seasonal ones. (This tends to be one of the - not weaknesses - but threats for the Spanish market because it's very seasonal."

The northern parts of Spain tend to be overlooked by tourists, he says, "but generally speaking, there's a big movement from the hotels in terms of taking back that ownership (of guest acquisition) to their own website: increasing direct bookings, making sure their websites are mobile responsive, and making sure they're offering and incentivizing packages on their website," as well as attracting tourists from new markets like China.

Technology Development: A Must

Dr. Meng-Mei Maggie Chen writes:

Most hoteliers excel when it comes to customer service and hotel operations, but are not comfortable with technology, especially as small- and medium-sized hotels do not have the financial resources to invest in technology development. Yet, technology related to digital marketing and distribution - such as websites, booking engines, and channel managers - have become mature, and hoteliers should leverage technology to improve their distribution strategies and enhance their customer relationships.

Having a website with an active booking engine and rich content, which can be easily viewed on mobile phones, is only the beginning. Hoteliers should work with channel managers and connect with different markets through a range of online travel agencies. Most travelers begin the booking process by using search engines or OTAs, and they probably won't consider hotels which are not listed on OTAs.

Working with OTAs does not prevent hotels from establishing more direct bookings. When travelers discover their ideal hotels, some will use search engines to locate the hotel website and may eventually book on the brand.com. Hence, smart hoteliers should optimize their hotel profiles on the OTAs to grab the attention of potential travelers, as well as leverage the right content and key words to attract traffic when travelers look for hotels on search engines.

As mentioned by SiteMinder's Marco Rosso, hoteliers should diversify their OTA relationships, and their decision to work with an OTA should not only be based on the commission percentage. As mentioned above, hoteliers need to work with a variety of OTAs to reach different markets. For example, MakeMyTrip will help hoteliers to reach Indian travelers. Being listed on OTAs does not require any financial investment and hoteliers only need to pay these online agencies when the OTAs deliver results, that is, bookings to their hotels.

In summary, hoteliers should actively work with OTAs to diversify their markets, increase occupancy rates and, ultimately, their overall revenue.

About SiteMinder

SiteMinder Limited (ASX:SDR) is the name behind SiteMinder, the only software platform that unlocks the full revenue potential of hotels, and Little Hotelier, an all-in-one hotel management software that makes the lives of small accommodation providers easier. The global company is headquartered in Sydney with offices in Bangalore, Bangkok, Barcelona, Berlin, Dallas, Galway, London and Manila. Through its technology and the largest partner ecosystem in the global hotel industry, SiteMinder generates more than 115 million reservations worth over US$45 billion in revenue for its hotel customers each year. For more information, visit siteminder.com.

Online Travel Agencies (OTA) Digital Marketing