Distribution strategy helps to improve the way customers interact with your business, leading to customer satisfaction and repeat business. It can also help you streamline your business to make it more efficient. Through a more efficient business and improved customer satisfaction, this strategy can lead to higher profits.
Research has shown that better customer satisfaction creates more customer loyalty and positive word-of-mouth referrals, which both result in improved profits, according to The Association for Consumer Research.
In this case, distribution strategy can apply to hotel bookings. Your distribution strategy for customers booking rooms can involve a short or long distribution channel depending on your strategy.
In this post, we’ll define distribution strategy, give examples of how it relates to the hospitality industry and hotels in particular, and give five types of distribution strategies that can work for hotels.
What is distribution strategy?
Distribution strategy involves coming up with an efficient method of disseminating your company’s products or services. The goal of this type of strategy is to maximize revenue while maintaining loyal customers. Your business creates a strategy based on your target customer, and you may use more than one strategy to reach more than one type of target customer.
Your strategy approach should focus on factors such as how your ideal customer buys your products or services and how your customer would prefer to buy them. Consider these kinds of questions when planning your distribution strategy:
- Who is your ideal customer?
- How does the product or service fit the person’s lifestyle?
- What type of purchase decision does it require?
- What are the main priorities for your customers? For example, do your customers care more about cost or convenience?
- Can you improve the purchasing process to make it better and easier for your customer?
Generally, distribution software helps businesses streamline their distribution strategies when they implement them.
What is distribution strategy in the hospitality industry?
How does the concept of distribution strategy relate to the hospitality industry? Hotel distribution helps you create a method for selling hotel rooms, which you determine by analyzing costs of each distribution channel for selling hotel rooms. Finding the right distribution channels and choosing the most cost-effective ones at high-demand times will help you determine when to sell rooms and through which channels to improve profits. Nonetheless, cost is not the only factor. You may also consider the type of hotel, your customer base and where your base tends to book hotel rooms.
How does it work?
With the way hotel distribution works, some customers will book directly through your hotel website, whereas many will instead use a different distribution channel. Distribution may go through layers of third parties, such as wholesalers, a global distribution system, travel management companies and a tour operator or travel agent. The distribution can vary by the type of traveler and other factors. All of the distribution channels get the information from your hotel’s system, and you can switch between different distribution channels to maximize profits and improve the customer experience for your target audience.
What are the types of distribution strategies?
Your hospitality business has many distribution strategy types to choose from, including:
- Direct distribution strategy
This is the strategy where a customer books a hotel room directly through your hotel website. This tends to happen with loyal customers who know your hotel well and are returning.
- Indirect distribution strategy
This is a long distribution channel with numerous layers. There could be various third parties between the customer and your hotel. For example, a leisure traveler’s distribution channel may go through a wholesaler and a tour operator, or through an online travel agency and an affiliate online travel agency. A business traveler’s channel may include a DHISCO switch, a global distribution system and a corporate self-booking channel.
- Intensive distribution strategy
This strategy is focused on the goals and capabilities of the distribution method. Intensive distribution involves reaching the maximum number of customers regardless of the size or layers of the distribution channel.
- Exclusive distribution strategy
This method is generally used for high-end brands that focus on brand standards with a small, specific ideal customer base. This strategy only includes exclusive offerings that are often region-based, so a hotel may only reach certain customers in specific cities.
- Selective distribution strategy
This is a strategy that can vary to fit the brand. The distribution strategy is determined by the brand and marketing strategy, so a high-end brand will focus on a certain area to fit its consumer base while a neighborhood brand will pop up in many locations throughout every city.
Who are the actors of distribution strategy?
There can be many actors within a hotel distribution strategy. These include your own hotel website for direct bookings, global distribution systems, and online travel agents and metasearch. The size of the distribution channel and number of actors involved can vary with the type of strategy.
Distribution strategy provides a way for your hotel to streamline the booking process to help it fit your ideal customers and to maximize your profits. You can choose distribution strategies to fit your brand and ideal customers. You may use more than one strategy to fit different types of customers, and you can also adapt distribution channels to meet peak and non-peak times.
