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Friday, August 31, 2012

What if there were a Distribution Doctor?

Yesterday at Mike Pusateri's memorial service I was talking with Gideon Dean and he was telling me about his firm's HotelDoctor™ program - an intensive multi-day program to help a hotel property turn around to reach profitability. I was intrigued. 

[And lest you think that it was disrespectful to talk business at a memorial service, Gideon and I agreed that it would have made Mike very happy to see that people that he had introduced were finding ways to do new things together).

It made me think of what the Rx would look like for suppliers for distribution. 

1. Make your products/services as accessible as possible to professional travel agents (yes, even through GDS). Trust me on this one the yield IS higher and covers the cost of distribution.)

2. Know your fully burdened internal cost of attracting customers to each of your channels and especially the web.   Don't forget to include both online and offline brand spending aimed at driving online traffic.  Consumer direct is fine, but can be your lowest yield if you guarantee the lowest rate. Having your products on sale 7x24x365 simply can't produce the best yield.

3. Weigh the volume that you can get from OTAs (where you pay nothing for the aggregation of those buyers because they invest tens of millions to attract consumers) and make sure that the commission or merchant/net rate deal doesn't exceed your internal costs and that your direct yield is actually higher than the OTA. It is pretty silly to pay to shift channels AND get a lower rate for your product.

4.  Revisit your position on the use of metasearch (whether you do or you don't participate) and measure the cost against your other distribution costs.

5. Know your break even occupancy/ capacity and understand opaque, deals sites and last minute options to fill excess capacity (even at lower price). But beware, it must be gravy to you. This is a bad basic strategy in isolation of the others.

6. Don't be a sheep. Sheep follow other sheep. Think for yourself. Do your own math.

Tweak, Rinse, Repeat.....

Need help? Just give the distribution doctor a call.

Chicke Fitzgerald
www.solutionz.com

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