The Quest for an Optimal Channel Mix

The Quest for an Optimal Channel Mix

If there is one thing I learned researching and writing Distribution Channel Analysis: A Guide for Hotels, it is that each hotel has to examine its own channel mix in the context of the market in which it operates and compared to the hotels with which it competes. Aspiring to achieve the mix of the market leader may lead hotel management down rabbit holes that can cause them to burn through marketing funds with limited results. There are factors that a hotel should consider to derive and achieve an optimal channel mix.

By assessing its own channel mix first, and determining how much each type of business contributes to operating expenses and profit, a hotel can begin to set internal benchmarks. What constitutes channel contribution? Estimating the direct distribution costs such as commissions, transaction fees and other direct costs associated with acquiring each type of business, and in each channel will yield a net amount that feeds into the hotel’s operating expenses and profit. Once a hotel puts a stake in the ground as a starting point, it can test different tactical plans to steadily improve the overall contribution.

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