ATLANTA—Distribution data presented Tuesday at the American Hotel & Lodging Association Summer Summit takes the hotel industry one step closer to analyzing return on investment by distribution channel, according to research analysts.
Steve Hood, senior VP of research at STR, the parent company of HotelNewsNow.com, provided preliminary data on channel mix pulled from a larger Channel Distribution Study research project under way from the AH&LA and STR, which will analyze economics and distribution strategies based on data from approximately 25,000 U.S. hotels.
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Steve Hood senior VP of research STR |
The preliminary data from chain hotels in the United States shows the property-direct channel provides the greatest amount of demand and revenue (54.3% and 46.5%, respectively).
The online travel agency-merchant/retail channel accounts for 4.6% of total demand and 4.3% of revenue. The OTA-opaque channel accounts for 2% of demand and 1.2% of revenue.
The OTA-opaque channel also showed the greatest average daily rate increase of all the channels in 2010 versus 2009 with a 2.3% growth rate. Total U.S. ADR growth in 2010 was 1.9%.
The luxury and midscale chain scales have the greatest proportion of OTA-merchant/retail demand of their total demand, at 5.4% and 5.8%, respectively.
The preliminary data provided for the luxury chain scale suggests actual ADR and ADR growth vary widely across distribution channels in the segment, Hood said.
Cindy Estis Green, managing partner of The Estis Group, said the most effectual data is going to happen at the comp-set level so hotels can figure out the best channel mix.
“Every hotel needs the tools to figure that out and then manage it,” she said.
The Billboard Effect
Estis Green also took a close look at the “Billboard Effect” study from Cornell University, which concluded that having a presence on an OTA site benefits a hotel. The study showed for every one Expedia reservation, you’ll get three to eight reservations on Brand.com.
Estis Green examined the data used for the study and noted that customers visited a lot of sites, including OTAs and other hotel brand sites, in the course of making a transaction at Brand.com.
She concluded there is not a single billboard for one site, but there are many billboards, many sites, consumers use for the whole planning process.
Indeed, during a presentation earlier in the day, Chris Davidson, partner and chief client officer of Ypartnership, showed there are five different phases of the travel purchasing process, and the traveler consults different sources and sites at each step.
In further analysis of the STR distribution data, Estis Green showed the net revenue per booking was greatest at Brand.com and lowest for an opaque OTA. She noted the numbers do not include ancillary spend as a contributor to ROI.
“Net profit by channel is a new concept,” she said. “Hotels need to look at every single opportunity and what are the costs associated with it.”
The final Channel Distribution Study, to be published by the HSMAI Foundation, will be released in September. Estis Green said the goal is to have comp-set level data available by the end of summer.