Growing the direct channel isn't about moving bookings from one channel to another

Increasing direct sales tends to be among the goals of practically every accommodation business.

It makes sense. A direct booking gives you more control over the relationship with the guest, cuts certain commissions, makes repeat business easier and gives you more autonomy over how you sell.

We also work to grow the direct channel when there's an opportunity to do so.

But there's an important difference between growing direct sales and simply getting a booking that was going to come through another channel to come through our website instead.

Because if, to achieve that, we've had to offer a bigger discount than the commission we wanted to avoid, invest in acquisition without properly measuring its cost or introduce perks that eat too far into the margin, we may have improved the direct sales percentage without really improving the business.

And something even simpler can happen: we may be devoting a lot of resources to competing for demand we already had.

So the question shouldn't only be how much we sell direct.

We should be asking what demand we're able to generate through each channel and how much it costs us to get it.

A good distribution strategy isn't about winning the battle against the OTAs. It's about making every channel make sense for the business.

Not every OTA booking is one we could have won directly

We think this distinction is fundamental.

It's easy to look at an intermediated booking, see the commission and think we could have saved that cost if the guest had booked on our website.

But that assumes the guest would have found their way to us anyway.

And often they wouldn't.

OTAs aren't just a place where the customer completes a booking. They're also shop windows with an enormous ability to generate visibility and demand.

Some guests already know the property and use an OTA for convenience. Others discover it there for the first time. Some will compare and end up booking direct. And others probably wouldn't have known we existed without that intermediary.

Economically, these aren't the same situations.

If we eliminate a commission but lose the booking too, we haven't cut a cost: we've lost revenue.

That's why we don't believe a good distribution strategy simply means shifting as many bookings as possible from the OTAs to the direct channel.

It means understanding the role each channel plays in the property's demand.

Direct sales aren't free either

A website costs money.

So does a booking engine, search campaigns, metasearch, CRM actions, content, organic search, technology, staff and every initiative we use to attract and convert demand directly.

That doesn't mean we shouldn't invest in them. Often we should.

It means we need to measure them by the same yardstick we use for a commission.

If we invest to win a direct booking, that booking has an acquisition cost too.

And that cost isn't always the same.

A guest who already knows us and comes back direct may cost us very little. Winning someone for the first time who's looking for accommodation in an extremely competitive market may cost us quite a lot more.

Lumping both bookings into a percentage called direct sales can be useful for certain analyses, but on its own it doesn't tell you whether we're distributing better.

There are times when we need more intermediation, not less

This may be less intuitive.

When a property opens, enters a new market, has little brand awareness or goes through a period of insufficient demand, intermediated channels can be an extraordinarily effective tool for gaining visibility and reaching markets that would be very hard to reach any other way.

Trying to cut back on them too early can mean giving up demand we're not yet able to generate directly.

Over time, the situation can change. The property starts to become known. It builds up guests. Its reputation improves. It has more information about its customers. It can work on repeat business, develop its own acquisition strategy or invest more sensibly in its direct channel.

Then we may be able to shift the balance gradually.

But not because we've decided that a particular direct sales percentage is good.

Because the business has changed and we now have other possibilities.

Growing the direct channel should mean growing its capacity

For us, this is the most interesting point.

A strong direct channel isn't simply a website that manages to keep bookings that used to come in somewhere else.

It's a channel with its own capacity to attract, convert and win back demand.

That means working on the product, the value proposition, the website, the booking engine, availability, conditions, positioning, reputation, the relationship with past guests and, when it makes sense, investment in acquisition.

And it takes time.

Dependence on a channel isn't reduced by changing a condition overnight. It's reduced when the business develops real alternatives for reaching the market.

That's why we're far more interested in watching how that capacity evolves than in chasing an isolated percentage.

Distribution shouldn't become a battle between channels

In the end, every channel has a role and a cost.

There will be bookings that make a great deal of sense to win directly. Others for which an OTA will be an efficient way to reach demand we don't have. There will be markets where we need more intermediation and times when we can reduce it.

And that balance will keep shifting.

Our job isn't to decide which channel is good and which is bad.

It's to understand what demand each one brings, how much it costs us, what margin it leaves and what real alternatives the business has for getting it.

A good distribution strategy isn't about winning the battle against the OTAs. It's about making every channel make sense for the business.

And as the direct channel gains a real capacity to generate its own demand, its share will probably grow.

Not because we've moved bookings from one column to another.

But because we've built a stronger channel.