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Case Study: Benefits of an Affiliate Program for Hotels

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A case study on the benefits of an Affiliate program and how shifting just a small percentage of room nights to the direct channel drives a significant revenue increase.

Publié dans : Voyages
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Case Study: Benefits of an Affiliate Program for Hotels

  1. 1. Benefits of FIT Bookings Converting an OTA Reservation to Direct Reservation $225 $279 $75 $- $50 $100 $150 $200 $250 $300 $350 Before (via OTA) After (with Affiliate Program) Agency Fee (2%) Affiliate Commission (5%) OTA Commission (25%) Revenue to Hotel After Expenses  This hotel improves room profit by $54 (+24%) by moving a guest from an OTA booking to the direct channel *Assumes $150 ADR & 2 Night Stay, total $300. +$54 Hotel Profit
  2. 2. Case Study: Decreasing the OTA Channel from 30% to 20% (125 room hotel, $105 RevPAR, $0 ancillary revenue, 30% EBITDA Margin. Before = 30%* OTA Bookings; After = 20% OTA & +10% Direct Bookings via Affiliate Program) ($000’s) Before (OTA = 30%) After (OTA = 20%, Direct = +10%) Impact Impact % Revenue $4,791 $4,791 $0 0% Expenses $3,353 $3,272 ($81) -2.4% EBITDA $1,437 $1,519 +$81 5.7% EBITA Margin 30% 31.7% 170bps Asset Value $20,121 $21,161 +$1,140 5.7% *Average Reliance on OTA’s is 32% of room notes per HSMAI. Rounded to 30% for simplicity. • Assumes all OTA’s are on 25% commission. If converting from net rates, then the impact is even more beneficial  At a 14x EBITDA multiple, the $81k annual savings generated from a 10% channel shift from OTA to Direct is worth $1.14M in hotel asset value

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