Today's Revenue Management thought:-

Cost of acquisition ….

Following up on yesterdays post - a number of individuals contacted me to clarify acquisition costs, as they were of the opinion that these were solely commissions.

We may be putting out that same rates on different channels, but all rates are not created equal, as there are different costs associated with each “sale”.

Commissions are one of many cost associated with acquiring a paying guest. Amongst the other costs that can be considered are:-

• Website & booking engine maintenance & subscription fees

• Advertising - some will argue that this is a marketing cost, and should not weigh on the actual incoming reservations

• GDS transaction fees

• Last Minute Discounted rate, as opposed to BAR rate

• OTAs also give you the option of spending more to get higher visibility (ex. offering membership discounts or country specific discounts) and a host of other options that can confuse you.

In addition cost of may vary from property to property & you may be paying more than your competitor down the street to acquire a reservation from a specific source, simply because that other hotel negotiated better terms. This makes comparison even more challenging.

At the end of the day, you should always have a reasonably clear view on what it costs to generate a reservation (even walk-ins).

Have a profitable week.

✌🏼