Ten years ago, online availability and reservation services were seemingly unnecessary.  Five years ago, it was 'cutting edge' to have such online distribution.  Today, it is the standard; a necessary sales tool as important as your telephone.  The market acceptance of this technology has also brought about increasing competition online.  What does this mean to the B&B/Inn owner?  How do you compete at Travelocity, Orbitz, or Expedia where millions of leisure trips are purchased?  Which distribution channel is best for you?  I'll tell you...

Online travel bookings reached $23 Billion in 2001 and they are projected to hit $65 billion by 2005.  This growth is fueled by an increasing number of people searching for and making reservations online.  In fact, 37 million of America's 162-million plus Internet users have already purchased travel online.  It is also spurred on by increasingly intelligent distribution methods.  Sites such as Expedia, Orbitz and Travelocity all provide the traveler with a host of services, search options, rankings, descriptions and very simple to use tools for the consumer.  These forces have conspired to increase the levels of competition and thus the levels of transactional commissions properties are willing to pay.  In fact, some properties are now paying up to 30% for commissions for distribution on relevant sites. What was once thought to be a tool to rid the market commissions only seems to have entrenched them. 

So, what can you do?  How does today's Innkeeper distribute inventory through the various networks and compete against the large chains? 

The first thing to understand is that you must be online.  If you do not have the ability to display real-time reservations on your website and transact a booking, you are losing business.  So get online; there are a number of ways to do this and a number of companies that will help you. 

Second: Realize that online distribution is much like traditional advertising, except that you typically pay only when you receive a booking.  This is the commission game.  The industry standard currently sits at 10%-15%, but due to a depressed economy and less travelers, the large hotels are paying up to 30%.  This means that you can get into the game at 10%, but need to continually evaluate how much business that rate is bringing you.  Search for your property online; if you routinely come up at the bottom of the search, perhaps you should look into increasing your transaction rate. 

Third:  Make sure that you go with a company that provides you with a flexible structure.  You want to be able to alter your transactional rate to the Network and even alter your rates through those channels (rate loading) so that you don't cut into your bottom line. 

Finally:  Seek to understand the game.  You won't be able to change the rules of the game, but you can work within them and profit from it.

In the end, the online distribution game is one we must all play.  It is the future of our industry and one of the keys to your success.  Understand how it works and learn to maximize your profitability through this channel.  It will pay you great dividends to do so.

Written by:  Mike Rubel

Mike is the VP of Business Development for BookingCenter, a provider of Property Management Software, online availability, booking tools and access to online distribution networks.