Tips for Hotel Owners Overcoming Wholesale Distribution Challenges

The wholesale distribution model, in particular, employs a middle person between a hotel and an OTA or travel agent. It sources the hotel room nights in bulk, packages them, negotiates rates, and then sells them to OTAs and travel agents.

This wholesale distribution model, however, can be confronted with several challenges. In the following section, we’ll determine what these challenges are and how to address them.

Wholesale distribution challenges

The wholesale distribution model allows hoteliers to reach a wide range of markets to get more bookings. Wholesalers also allow hoteliers to maximize their room occupancy with guaranteed rates. Despite these benefits, hoteliers can face the following challenges with a wholesale distribution model:

• Lack of distribution control: Hoteliers provide a heavily discounted rate to a hotel wholesaler. The wholesaler buys the rooms in bulk, applies a mark-up to its rates, and resells the rates to OTAs or travel agents. The guests, then, book the same hotel room at different prices. Chances are, the wholesaler sells the rates through wholesale aggregation channels and at times, sells the inventory to other agencies. As a hotelier, it can be very difficult for you to know which wholesaler specifically is providing the inventory.
• Rate disparity: As the wholesale distribution model deals with varied aggregation channels, you can expect different rates from OTAs and travel agents. Unfortunately, you have no control over the final price displayed to the traveler due to the long supply chains. This can confuse guests and potentially repel likely customers. It may not have an impact on your hotel’s profit, but it can significantly affect your hotel reputation.

Overcoming wholesale distribution challenges

Despite the two main challenges, there are a few practical ways through which you can optimize your wholesale distribution strategy. The following tips can ensure better control of the distribution as well as the right pricing:

• Deal with wholesalers who have the same philosophy: It helps to work with a wholesaler who has the same philosophy as yours. Make sure to deal with a merchant with the same ethical ideals and sales strategies and one who believes in taking care of people and enhancing guest experiences. If you can create a connection with such a wholesaler, maintain that partnership to help you in the long run.
• Seal a deal for dynamic rates with wholesalers: You should be firm in moving to dynamic-only rates with wholesalers. This is to reduce disparity and allow you to have full control over rates. Therefore, consolidate your wholesaler list and sign contracts only with those who agree to your pricing strategy.
• Invest in a rate parity monitoring tool: It helps to use a rate parity monitoring tool. This can help you deal with rate disparities and redesign your parity strategy.

Final Words

The wholesale distribution model can be a bit challenging. However, when you have full control over the distribution and pricing, you’ll see the benefits that you can get out of it. You can be assured of a wide range of markets that you can possibly reach out to. Follow the tips mentioned above to overcome the challenges in the wholesale distribution model.

If you’re looking for a digital marketing agency that specializes in hotel marketing & distribution, get in touch with us today to see how we can help.