An introduction to the travel distribution system
An introduction to the travel distribution system
August 31, 2018

An introduction to the travel distribution system

The travel distribution system is an evolving beast; there are always new players, consolidations, new technologies and devices. So how do you, as a tourism operator, keep pace?

The first step is to understand the landscape and who the main players in online travel distribution are.

Online bookings continue to grow

Here are some interesting facts and figures: Did you know that currently 57% of all travel bookings are made online? This highlights the importance of having a great online booking system. The average growth in online bookings has been 12.8% for the last 5 years and the projected growth for the next 5 is 8.5%.

So, what does this mean to you, as a business operator? Well, now is the time to get your head around the travel distribution system.

Online travel agency brands are consolidating into less companies.

This is good news. There are take overs, mergers, consolidations and startups, but you are probably aware of the major players like:

  • TripAdvisor
  • Expedia
  • Wotif
  • Agoda

and then there are the aggregators who seem to advertise on TV all the time!

  • Trivago
  • Hotels combined

Try this simple exercise, go to Google and search your own business. Does your own website feature highly in the results? If not, then you should look into your SEO (Search engine optimization). It sounds complicated, but it just means that the search engines like Google can easily find your website when a customer enters a relevant keyword.

If your business is showing up on the big players websites, congratulations! Your booking engine is working well and you should be receiving bookings through these channels.

So, what do you do if this is not the case? You need to learn more about the distribution system and develop a channel strategy.

What is a Channel Strategy?

A Channel Strategy is a plan that identifies the best websites, social networks and apps on which to market your business to move the customer to purchase your product. It’s about ensuring your product can be found in the places your customers are looking.

The simplest approach is the direct channel

A direct channel means that you bring the customer direct to your own booking engine on your website, thus reducing commissions and fees. Your own website is an important place for customers to book online, as you have reduced costs and usually deposit money direct into your bank account. But, given the millions of websites, even with effective SEO, it’ll be wise to work with the larger players.

It is recommended that you develop a balanced portfolio of distribution channels to build sustainability

If you find your own website in the Google search then your SEO is fine, but if you’re not appearing on the big players websites, you need to do the following:

  • The first step is to see where your current bookings are coming from and what commissions you are paying just so you understand your current state of play.
  • The second step is to ensure your booking system enables your product to reach the third parties you have identified as important. You can do this by checking their websites; most will already be technically connected usually under “distribution partners”.
  • Price your product correctly. Remember, customers search on average 7-13 websites and websites like trivago that compares prices before they make a booking!Tip – Don’t promise every distribution partner the best rate and don’t advertise you’ll get the best rates direct with us or you may be in breach of distribution agreements.
  • Once your rates are correct on your website, adjust your booking system to enable distribution that matches your strategy.
  • Most booking systems have reports that enable you to see where your bookings are coming from and the cost per booking. Review these reports to ensure you understand what’s going on and adjust your strategy if necessary.

If the reverse is the case and your appearing on the “big players” websites and your own website is buried then you need to work on your SEO, quick smart.

To recap

  • Know where your business is currently coming from and what it is costing you
  • Research your own business online and understand your personal priorities
  • Develop your own strategy which has a balanced portfolio of both direct and indirect bookings
  • Focus your efforts on the best return on investment