Distribution, a strategic lever in travel ?
Why is distribution a key strategic lever in the travel sector?
In many organizations in the travel sector (transport, hotels, parks, etc.), distribution is still too often relegated to the background. Dedicated positions are rare, distribution policies are vague or absent, and performance by channel is not sufficiently monitored.
Yet distribution is an essential link between supply and demand. It links marketing, revenue management (RMP), technology and, of course, sales.
Here are 5 key reasons to proactively and strategically manage your distribution:
1. Distribution is a marketing showcase
Distribution, whether direct or indirect, is the first showcase for your products and services. While content is often well mastered in direct channels, this is not always the case in indirect channels.
In the airline industry, for example, GDS flows (via EDIFACT) do not allow for « on-the-fly » personalization, hence the emergence of XML-based NDC. In all sectors, the quality of descriptions, visuals and highlights requires constant attention, even with the help of tools like channel managers.
2. Distribution costs are significant
Distribution costs can account for up to 20% of sales. In hotels, Booking’s average commission is 15%. In the airline sector, although the basic commission is often zero, costs linked to GDSs, NDC aggregators, incentives or in-house staff can quickly push the bill up to 10%.
What’s more, the costs of direct distribution (advertising, IT, staff, physical agencies, etc.) are often underestimated, or even higher than those of indirect distribution. Direct sales offer advantages such as customer loyalty and knowledge, but they are not always the most profitable.
3. The right distribution mix optimizes sales
Commercial success depends on a complementary distribution strategy. A policy that favors direct sales is logical, but it cannot cover all segments.
A well-structured third-party distribution network (Tour-Operating, specific sales such as seafarers in the airline industry, etc.) can generate incremental sales without cannibalization. The important thing is to have a segmented, animated and well-managed approach.
4. Distributors are a valuable source of inspiration
Distributors are often experts in their field. They understand customer expectations, user experience and technological innovations.
In the hotel industry, for example, taking inspiration from Booking’s best practices can considerably improve the performance of your own site. Their expertise is an asset for all departments: marketing, tech, customer service…
5. Distribution is at the heart of technological choices
The mapping of distribution tools in the travel sector resembles a complex spider’s web. Choosing the right technologies is fundamental to controlling content, costs and the customer experience.
With the arrival of AI, new channels are emerging (such as conversational agents). This means we need to review our technological architecture, making it scalable and customer-oriented.
How can you regain control of your distribution?
To optimize your distribution strategy, here are the key steps:
- Draw up a clear distribution policy and share it internally
- Monitor costs and revenues via channel-specific dashboards
- Define roles and responsibilities internally
- Build solid, high-performance partnerships
- Implement a scalable technological architecture
- Animate, control and monitor each distribution network in real time
At IMPACT CONSULTANTS, we have developed tried-and-tested methodologies to help travel industry players move towards more efficient, agile and controlled distribution.
Our main piece of advice: don’t be subjected to your distribution, drive it!
An article wrote by Rodolphe Lenoir