Channels and distribution basics

Hotel Peaqplus City filled to 100% last Saturday. 80 rooms, 80 guest contracts, ~EUR 8,760 in gross room revenue. A surface read: success. A deeper read says: let’s see whom we sold to, and from where.

Daniel opens the channel breakdown in the morning, and this is the picture in front of him:

Channel	Rooms	Gross ADR	Channel cost	Net ADR	Net revenue
Booking.com	34	EUR 115	15% commission	EUR 97.75	EUR 3,323.50
Expedia	8	EUR 118	18% commission	EUR 96.76	EUR 774.08
Direct (own web)	22	EUR 105	3% (online payment)	EUR 101.85	EUR 2,240.70
Corporate (Acme Ltd.)	10	EUR 88	0%	EUR 88.00	EUR 880.00
Walk-in	4	EUR 125	0%	EUR 125.00	EUR 500.00
Phone booking	2	EUR 110	0%	EUR 110.00	EUR 220.00
Total	80	~EUR 110	—	~EUR 99	EUR 7,938.28

The gross ADR is ~EUR 110, the net ADR ~EUR 99. The difference — ~EUR 11 per room × 80 rooms = ~EUR 880 — is what the channel system, as intermediary, “takes” for a single Saturday night. Over a year, at 80% average occupancy: ~EUR 257,000.

The goal of this lesson is to make you see: a hotel doesn’t just “sell” — a hotel reaches its guests through channels. And every channel is worth something different, brings something different, and plays a different role in the strategy.

What a “channel” is

A channel (distribution channel) is a route of intermediation between the hotel and the guest. The guest somehow finds out the hotel exists, compares it with other options, sees a rate, and books. Each step of this process can be handled by a different player — and that determines which “channel” made the sale.

The main channel types in a modern city hotel:

1. OTA (Online Travel Agency)

Booking.com, Expedia, Hotels.com, Agoda and the rest — global, online hotel marketplaces. Here the guest searches and books themselves on a web interface, and the OTA intermediates toward the hotel. (“city-centre hotel, October 18–20” → 50–200 results → comparison → booking.”)

• Commission: 12–25% of the booked gross value (Booking ~15%, Expedia ~18–20%, Agoda 15–20%). “Genius” / “Preferred” programmes push the commission upward in exchange for extra visibility.
• Guest type: leisure-heavy, with OTA-loving business travellers. The direct relationship with the guest is weak — the OTA owns the guest, not the hotel.
• Booking window: wide, from a few days to a few months (average ~21–45 days).
• Typical share: 35–60% (often the largest channel).

2. Direct (own website)

The guest books directly on the hotel’s own website — via SEO (Google), targeted marketing (PPC, email), or because they already know the hotel.

• Commission: ~0%. There’s a technical cost (booking engine, payment gateway, ~2–3%), but no OTA-level commission.
• Guest type: the most valuable segment — higher F&B spend, more loyal, repeat bookings. (From lesson 4: the direct TRevPAR contribution is ~EUR 145/room, versus the OTA standard’s ~EUR 115.)
• Booking window: the longest average lead time — the direct guest often plans ahead.
• Typical share: 15–30%. Growing this is a quality hotel’s goal.

3. Corporate (negotiated contract)

Corporate clients with whom the sales team signs a contract: a discounted rate (corporate rate, BAR −10/15/20%) in exchange for a minimum-volume promise. The client books through their internal travel booking system or a travel management company (CWT, BCD).

• Commission: variable (the TMC sometimes takes 5–8%, sometimes there’s only the discounted rate).
• Guest type: business traveller, weekday (Monday–Thursday), short stay. F&B spend is medium, but it brings predictable volume.
• Booking window: narrow, 1–7 days.
• Typical share: 5–25%, depending on the hotel’s position.

4. Group

Booking 10+ rooms through a single contract: a conference, a wedding, a tour-operator package, a sports team. Covered in detail in lesson 29.

• Commission: 10–25% with tour operators (rebate); 0% with a direct group contract.
• Guest type: leisure (wedding, family event) or MICE (meeting / incentive / conference / exhibition). The MICE group is very valuable in TRevPAR terms (lesson 4).
• Booking window: the widest — weddings 12–18 months, conferences 6–18 months ahead.
• Typical share: 5–20%, or 25–40% in a MICE-oriented hotel.

5. GDS (Global Distribution System)

Sabre, Amadeus, Travelport — originally airline reservation systems, today the backbone of corporate travel. Travel agents book through them for corporate clients and high-end leisure travellers.

• Commission: 8–12%, plus a GDS transaction fee (~EUR 5–8 / booking).
• Guest type: business + high-end leisure, often in luxury hotels.
• Booking window: medium, 5–30 days.
• Typical share: 0–5% in an average 4-star hotel; 10–25% in a 5-star / international-branded one.

6. Metasearch (comparison portals)

Google Hotel Ads, Trivago, TripAdvisor, Kayak. Not a booking platform — a comparison engine that hands the guest off to the hotel’s direct site or to an OTA.

• Cost: CPC (cost-per-click), CPA, or commission-per-booking models — typically 3–12% if the booking happens.
• Guest type: price-sensitive leisure who want to compare.
• Strategic role: meta isn’t a standalone channel but a tool for growing direct — handled well, you can route the meta guest into a direct booking.

7. Wholesale / bedbank

Hotelbeds, WebBeds and the like — B2B distributors who buy availability in bulk and resell it to tour operators and small OTAs.

• Cost: 25–40% (a deep discount). The logic: “Give me 50% off on 100 room-nights, and I’ll sell it somehow.”
• Guest type: opaque (the guest often doesn’t know in advance which hotel they’ll stay at). Low ADR.
• Strategic role: supplementary distribution, mainly for the low season. Dangerous if it grows too large a share — it clogs the high-rate channels.

8. Walk-in

The guest comes up to the front desk and asks for a room.

• Commission: 0%.
• Guest type: high variance. The walk-in ADR is higher than the public BAR (they need it now, with no time to compare) — this is an ad-hoc pricing situation that comes down to the front desk.
• Typical share: 1–3%.

The matrix view of channels

Put all this on a board and a strategic matrix emerges:

Channel	Cost	Booking window	Guest value (TRevPAR)	Volume reliability
Direct	Low	Long	High	Medium
OTA (standard)	Medium-high	Medium	Medium	High
Corporate	Low	Short	Medium	High (weekdays)
Group MICE	Low	Very long	Very high	High (contracted)
Group leisure	Medium (tour op.)	Long	Medium-low	Medium
GDS	Medium-high	Medium	Medium-high	Low
Meta	Low (CPC)	Medium	Direct-dependent	Variable
Wholesale	High	Long	Low	High (low season)
Walk-in	None	Immediate	High	Low

A revenue manager doesn’t sell “everything from everywhere” — they make a strategic choice about which channel to strengthen and which to throttle. The basis of the choice:

• The hotel segment: a luxury hotel builds it differently than a hostel.
• The market: a downtown 4-star has a different mix than an island resort.
• The season: in the low season wholesale and tour-operator contracts are more critical; in the high season it’s direct and high-rate OTA.
• The hotel’s goals: if the owner wants brand-building, direct is the priority; if fast cash flow is needed, “switching off” the OTA would be a catastrophe.

Distribution — the “two-legged” system

The channels all connect to the hotel’s two main systems:

• PMS (Property Management System) — the hotel’s “central database”: rooms, bookings, guests, invoices. Examples: SabeeApp, Previo, Hostware, Opera.
• Channel Manager (CHM) — the “interpreter” between the PMS and the channels. It pushes the hotel’s rates and availability from a single place to the OTAs, GDSs and the hotel’s own website. Examples: SiteMinder, Cubilis, RateGain.

“Distribution” as a term refers to these two systems plus the channels together. A hotel is in “modern distribution” when:

• Every channel is in real-time sync with current availability (no double-booking).
• Rate handling is centralized — you set rates in one place and they update automatically on every channel.
• Restrictions are differentiated — some channels can be closed out, others get a higher rate (markup) or a package/member rate.

More on this in lesson 15 (The RM ecosystem — PMS, CHM, RMS, BI).

Back to last Saturday’s picture

At the start of the lesson you saw Hotel Peaqplus City’s channel breakdown for last Saturday. Now you read something different from it:

• OTA (Booking + Expedia) 52.5% share — healthy? In a downtown 4-star hotel, rather high. The OTA commission took EUR 880 on one Saturday — ~EUR 257,000 a year. Reducing the OTA share in favour of direct is equivalent to earning money directly.
• Direct 27.5% (22 / 80) — medium. In a mature hotel it’s worth lifting to 35–40% — with targeted marketing, a member rate, a loyalty programme (lesson 49).
• Corporate 12.5% — low for a weekday-strong city hotel. Either corporate sales is weak, or the hotel’s position is more leisure-oriented (which isn’t necessarily a problem).
• Walk-in 5% and phone 2.5% — low, but high ADR; these are “bonus” segments.

This is not a “bad mix” — an average urban downtown 4-star probably looks exactly like this. But this is where the revenue manager’s craft begins: asking whether it can be better. And it always can.

Key takeaways

• A hotel doesn’t just “sell” — it delivers rooms to guests through channels. Every channel comes with a different cost, guest type, booking window and guest value.
• The direct booking is the most valuable channel — low commission, high TRevPAR contribution, a long booking window. A mature hotel builds this actively.
• The OTA is unavoidable but expensive — the commission can take EUR 100,000–500,000 a year in a mid-size hotel. The goal is not to drop it but to control its share.
• The channel mix is a function of the market, hotel segment, season and the hotel’s goals. There is no single “correct” ratio — there is what’s optimal for that hotel in its situation.
• The distribution ecosystem (PMS + Channel Manager) is what makes centralized, real-time, differentiated channel handling possible. Without it, modern revenue management doesn’t exist.