[MUSIC] Welcome back. In this final module of our MOOC on hotel distribution, we are going to attack the critical issue of how to work better with online travel agents to make sure that you are exploiting these valuable and fast growing points of sale to their maximum potential. You will remember that we saw in module one that the perishability of the hotel product coupled with its high operational and financial gearing makes it vitally important to try to sell every room, every night at the optimum price. In effect, leaving any room empty on a particular night means that the hotel forever forgoes this potential revenue. While at the same time, its relatively fixed costs still have to be paid. Thus, to ensure and maximize profitability, selling as many rooms as possible for as high as rate as possible is absolutely essential. For that reason, most hotels are placing increased emphasis on distribution. Making their rooms available for sale on multiple, and as we shall see, hopefully carefully selected, offline and online channels so they can reach out to additional markets and thus increase the chances that they will be sold. In module two, we had a deep dive into the hotel distribution environment, taking a detailed look at which distribution channels hotels are using today, as well as highlighting the relative advantages and disadvantages of each alternative route to the market place. We observed the growing importance of online channels in this mix, as more and more consumers move towards using web and mobile within their travel, shopping, and booking processes. We discussed the possibly undeserved over-focus on distribution costs associated with using indirect channels, and in particular, OTAs. And recommended that before jumping to conclusions, that hotels sit down and do the math to calculate their true customer acquisition cost from making use, and perhaps, also not making use of each particular channel. We saw that not all channels can be simply lumped together, and the hotels need to make an informed decision as to which are good value for their particular situation. And lastly, in module three, we examined the topic of direct distribution in detail. Using the web development process as a method of highlighting all the different things that a hotel needs to manage if it is to have an effective and efficient website capable of generating direct bookings. We observed that while many hotels perceive direct distribution to be relatively cheap, particularly compared to what they pay in OTA commissions. In reality, the net cost per reservation here could be surprisingly high, when all the development and marketing costs associated with facilitating that direct booking are totaled and divided by what in most cases is a relatively low number of actual bookings. Unless the hotel can drive significant volume through its direct brand.com website, which in effect means spending more on marketing, their direct distribution costs can in many cases be higher than if they had driven that same booking through an indirect channel. While direct distribution may be cheaper for some hotel chains, as well as for a small number of independent properties that are successful at driving high volumes of business to their direct online presences. And in this way, decreasing their net cost per reservation. Despite all the hype for the majority hotel properties, direct distribution may in fact be a false economy. In addition, direct distribution is risky, as there is no guarantee that having gone to all the trouble of developing a web presence and investing vast amounts of money in online marketing. That these efforts result in enough, or maybe even any bookings. Direct distribution also requires hoteliers to have access to specialized knowledge and expertise in website construction, in content development, and in online marketing, all of which need to be either acquired externally or hired internally. Again, increasing both organizational difficulty and the overall cost. And lastly, with their primary focus on day-to-day operations, many hoteliers simply do not have the time or the budget to do direct distribution right. With the result that few fledgling efforts they do undertake are, in effect, a total waste of time and money. Thus, in this module, we're going to revisit the subject of distributing through the online traveling agencies. And in particular, how to work with these powerful industry distribution power houses, so as to able to exploit them as effectively as possible, to ensure that your hotel gets as many bookings, or as many bookings as you want, from these formidable online sales and marketing machines. As we will see, this does not mean that you should totally abandon your direct distribution efforts, but that to be successful you should figure out how to use these two competing, but at the same time, complementary routes to the customer simultaneously to maximize the amount of business that flows to your hotel. For example, many hotels use OTAs as a way of attracting new customers, ones with whom they would not have done business with otherwise. Since these new customers have come and stayed in the hotel, and hopefully had a great time, the hotel can then make use of direct marketing techniques to stay in contact with them frequently through its loyalty or customer recognition program, and also through social media. And try to ensure that any subsequent bookings are made through its own direct channels. In this way, the hotel's customer acquisition cost for the second and subsequent booking is much lower than if they were trying to generate additional leads from scratch, changing around the economics of driving bookings directly. Despite all the negative media hype, used intelligently, OTAs can be a valuable partner. Particularly for small and independent hotels that do not have a powerful brand behind them, and need that additional push to gain visibility in front of the customer, and pique their initial interest. Like anything else how you're distributed on OTAs needs to be properly managed. Simply signing up and hoping for the best is unlikely to generate significant amounts of business. Thus, later in this module, we will examine how to maximize your presence on the OTAs in general, as well as hear from senior managers from Booking.com and Expedia on how to work effectively with their network of websites. Similarly, hotels need to be careful about getting overly dependent on the OTAs, particularly a single OTA as their primary source of business. At the end of the day, too much of a good thing is bad for you, and hotels need to be careful to avoid becoming over-dependent on any single external channel. A portfolio approach to both channels and partners is essential. And finding the happy balance between OTA spend and direct marketing spend is the key to optimizing bookings across all channels so as to maximize rev par and profitability. Thus, working with the OTAs is not simply a case of signing up and hoping that bookings will then automatically flow. To profit from the potential of these high potential systems, hotels need to devote time and resources to building their presence on the various platforms and figuring out how to work with each one of them to drive bookings. Later in this module, we'll look at some of the key success factors for maximizing business through OTA channels. But it's important to realize that OTAs are not simply set and forget, but that they require commitment from the hotel to maximize the potential of the relationship for both parties. But before that, we will look at what work the hotel needs to do to leverage the potential of the OTA's. First of all, let's step back and revisit why we're doing so in the first place by re-examining the advantages of working with OTAs as part of your distribution strategy.
