Unpacking the true cost of hotel distribution

Why direct bookings aren’t always cheaper, loyalty comes at a price, and smarter benchmarking is the key to long-term profitability

Understanding the true cost of hotel bookings goes far beyond comparing OTAs to direct channels. As Diego Acosta and members of the HSMAI Revenue Optimization Advisory Board discussed, distribution costs are multifaceted—often underestimated and unevenly measured. From marketing spend and labor to loyalty perks and new ad tools like Google PMAX, hoteliers must move beyond assumptions and embrace better benchmarking tools and strategies to make informed, profitable decisions.

Key takeaways

• Direct Bookings are not always more profitable: The cost of ads, loyalty programs, tech tools, and payroll can erode margins - making some OTA bookings comparatively more efficient.
• Granular data matters - but balance effort and value: Tools like Juyo Analytics and Kalibri Labs’ Hummingbird help estimate reservation-level costs, but full granularity is resource-intensive. It’s important to start somewhere rather than wait for perfect data.
• NRevPAR is not the only benchmark: While useful, it doesn’t fully account for channel efficiency. Metrics like RevPAR with markups vs. Net RevPAR or Net RevPAR per turn (for extended stays) can provide deeper insights.
• Loyalty and labor costs are often overlooked: Discounts, perks, and group sales payroll can significantly impact profitability but are rarely factored into distribution cost models.
• Google Performance Max (PMAX) campaigns are worth watching: PMAX can help hotels reach high-intent travelers across channels, offering a more competitive edge against OTAs.
• Final thought: Start tracking and refining now - perfection isn’t required to make meaningful progress. Agility and transparency are key to optimizing long-term distribution performance.

Get the full story at HSMAI