Tips for Hotels to Reduce Distribution Cost

Tips for Hotels to Reduce Distribution Cost

Abhishek Saurabh
Abhishek Saurabh

Are you fed up with a higher percentage of your revenue going to distribution costs? 

As a hotelier, we know you don’t want to spend huge amounts of money on distribution channels. That’s why you need strategies for your hotels to reduce distribution costs

Do you know online travel agencies (OTAs) are now used by more than 51% of travelers to book hotels? As a result, OTAs have become a major distribution channel for hotels. 

Previously, before the rise of OTAs, hotels used to sell rooms to wholesalers, who then sold them to tour operators. These tour operators then would resell them to travel agents, making them available to target consumers.

It’s a long and confusing process. Earlier, OTAs were regarded as a simple distribution channel because of this lengthy and complex procedure. But nowadays, OTAs charge high commission rates, resulting in a loss for your hotel.

Over-dependence on OTAs as a source of revenue is viewed as a threat to hotels worldwide, given the competitive pressure on hotel rates due to high distribution channel charges, higher booking volumes, and pricing transparency. 

So, here are 6 tips for hotels to reduce distribution costs and generate more profits.

1. You Must Invest in an Aesthetic Website

As a hotelier, your hotel’s website is your most valuable platform, allowing you to save money per booking. Your website must be visually attractive with high-resolution graphics, easy to navigate, and user-friendly. You must  also keep it updated with fresh content with special offers, blogs, and prices. To attract website traffic, you must highlight your services and best reviews. 

Moreover, your website must be easily accessible on mobile devices. Bookings from phones have increased rapidly in recent years, and visitors don’t spend much time on a website that is not mobile-friendly.

2. Get an Online Booking Engine Software to Better Customer Experience

Installing booking engine software is a great technique to ensure you’re getting more direct bookings. It has various advantages, including the ability to provide service 24X7, saving your time, collecting booking analytics, and improving your revenue per booking by cutting distribution costs. 

With a cloud-based online booking engine, your customers will have a better experience as it’s easy, quick, and safe. You can smoothly convert visitors into guests. If a guest visits your hotel’s website and books directly through it, they are less likely to cancel if you provide a better customer experience—an excellent cost-saving idea for hotels.  

3. Digital Marketing Is Important in This Digital World

With nearly 60% of hotel reservations done online, having a solid digital presence with a digital marketing strategy has become essential. It would be best to optimise your marketing strategy to target the right audience in ideal places.

Using social media to promote your hotel is a wonderful idea to build brand awareness and communicate with potential customers, particularly the young crowd. Promoting your special offers and discounts on social media will lead to direct hotel reservations, making you ahead of the competition. This is a superb way to reduce your marketing cost per booking (MCPB). To know more about using digital marketing for your hotel, keep reading. 

Search engine optimisation is another digital strategy to secure better ranking in Google search. Therefore, it’s important to do keyword research and optimise your website, including photos, with SEO. 

Lastly, Google Hotel Ads is the simplest and most efficient method to display your hotel availability and prices on Google search, Google maps, and Google Assistant. It is an excellent way to target people already planning to book. 

Google Hotel Ads is a powerful tool that can completely transform your hotel business by boosting direct reservations for your hotel, thereby reducing distribution channel costs.

4. Improve Customer Loyalty

Creating customer satisfaction by taking care of your customers is the best strategy to increase repeat business for your hotel. High user engagement can help you build customer loyalty for the business. 

Make it clear that booking directly from the hotel’s website is the best option. Reward those customers who do so frequently in the form of special deals or exclusive offers. This would help hotels to reduce distribution costs easily.

Several hotels have developed special loyalty programmes for repeat visitors, attracted by best price guarantees and membership discounts. 

5. Ensure to Install the Best Property Management System in The Market

The property management system allows for quick and clear communication across all departments, ensuring that they are all operating successfully and efficiently, saving time and providing a better and more customised experience for tourists and visitors.

You’re missing out on a lot of advantages if your property management system is not a cloud-based tech. There is no need for an IT specialist to manage or administer an automatic cloud-based system, and it will save you a lot of time, particularly if integrated with your other hotel management softwares. Without the need for any actual hardware, the expenses will be minimised and profits will increase.

Don’t you agree this is a good cost saving idea for hotels

6. Use a Revenue Management System

One of the goals of the hotel business is to increase profits while delivering the same number of services or products, such as hotel rooms. It’s all about balancing supply and demand, and effective revenue management requires knowledge of how consumers think and their values.

Now, what is revenue management system and what does it imply? In general, it is the use of insights that help identify consumer behaviours so that service and products availability and cost can be optimised to maximize income while reducing distribution cost.

As a strategy, RMS helps businesses use a data-driven technique on choosing what to offer. It ensures that educated decisions are made and your company does everything possible to increase profit while providing the same number of services and products.

Revenue management often focuses on predicting demand and maximising cost and availability to generate more revenue. Taking into account all spent revenue per area per room and all distribution or operating costs is a much more professional technique.

With AxisRooms, Reduce Hotel Distribution Costs

Want to reduce distribution cost and maximise profits? You can do this through direct bookings by collaborating with a hotel management system like AxisRooms, a complete platform to manage cost structure in the hospitality industry.

Try AxisRooms’ revenue management system to price your services effectively to maximise your profit and to reduce distribution cost of your hotel. Other than RMS, AxisRooms has a complete package of products and services to unleash the full potential of your business. Check it out now!