Calculating the Real Cost of Third Party Distribution

Peter O’Connor, Professor and Director of the MBA in Hospitality Management at Essec Business SchoolHotels are being put under increasing pressure to up their game in the online market, as online travel agencies continue to have the edge. The question many are asking is, “What action do hotels need to take?”

At a recent conference, Peter O’Connor, Professor and Director of the MBA in Hospitality Management at Essec Business School, explained how each hotel needs to look at its own business case before it takes action.

He gave the example of two hotels — one running at 50% occupancy and the other running at 90% occupancy with 40% of its bookings coming through OTAs. For the first, his recommendation was that the hotel should sign up with an OTA at any price. For the second, they should focus more on their own direct marketing efforts to replace more OTA bookings with self-generated ones.

However, his advice goes further. Hotels need to calculate the real distribution costs of using a third party against the cost of self-generated business.

I caught up with him to find out more.
Read the full version from the author’s website.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s