All the hype over direct distribution was somewhat deflated during the first day of the PhoCusWright conference, as leading hoteliers admitted they don’t really know the true cost of pushing inventory through direct channels.
Earlier in the day, TravelCLICK had estimated the cost of direct distribution to be about one-third of the average GDS fee (including representatives’ fees) and a quarter of the price of OTAs.
But hotel delegates pointed out that the direct distribution costs, which TravelCLICK had estimated to be about USD$7.50, does not include the cost of building and maintaining a supplier’s own site, or the cost of paying a third party for top placement (eg Google, which some suppliers say can cost around €5, depending on the search term).
“We don’t know what the direct cost of distribution is, because we need to take into account so many different factors, such as marketing costs and incentives,” Kristie Goshow, group director, e-business development of Jumeirah told attendees during an afternoon panel.
“Let’s not kid ourselves, direct is not necessarily the cheapest option, [at least not initially].”
Tricia Holly Davis, freelance journalist
