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Distribution Cost Management

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Direct Reservation Costs

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Costs incurred when customers book directly with the service provider. Strategies include optimizing the booking process, training staff in sales skills, and investing in a user-friendly website.

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Online Travel Agent (OTA) Fees

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Commissions paid to OTAs for bookings through their platform. To save costs, negotiate better rates, incentivize direct bookings, and use targeted marketing to reach potential customers directly.

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Global Distribution System (GDS) Fees

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Fees for access to the GDS used by travel agents for bookings. Savings can be made by negotiating rate contracts, opting for less expensive distribution channels, or increasing direct bookings.

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Channel Management Costs

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Costs involved in managing multiple distribution channels. Streamline processes, use integrated software solutions, and regularly evaluate channel performance to cut costs.

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Reservation System Fees

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Fees paid to reservation system providers. Implement a reservation system with a fixed cost rather than transaction-based fees, optimize system usage, and assess the need for all system features.

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Travel Agent Commissions

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Financial incentives paid to travel agents. Keep commissions competitive but within budget, establish long-term relationships, and offer additional perks for high sales volume.

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Marketing and Advertising Expenses

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Costs associated with promoting the brand and services. Focus on high ROI marketing strategies, leverage social media, and target marketing to reach your ideal customer efficiently.

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Commission Overrides

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Additional commissions paid to agencies based on volume or performance. Strategies include setting clear override criteria, regular review of performance against cost, and exploring performance-based partnership opportunities.

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Loyalty Program Administration

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The cost of operating loyalty programs. To reduce expenses, ensure program design drives profitable behavior, simplify the program structure, and integrate the loyalty system with other IT systems.

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Discounts and Promotions

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Reduced revenue from special pricing offers. Carefully plan offers to attract profitable customer segments, use time-limited promotions to stimulate demand, and track promotion performance.

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Wholesaler Fees

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Payments to third-party wholesalers who package services. Optimize rates offered to wholesalers, maintain direct communication for higher margins, and regularly assess the performance of wholesaler partnerships.

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Credit Card Processing Fees

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Fees paid for processing credit card transactions. Negotiate better rates with providers, encourage other forms of payment, and consider a surcharge for credit card payments where legal.

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Ancillary Services Commission

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Commissions paid to partners or platforms for ancillary services booked. Maximize in-house service offerings, carefully evaluate partnerships, and incentivize guests to book services directly.

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Group Booking Discounts

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Reduced pricing offered for group reservations. Ensure that discounts are offset by the volume of business, enforce minimum group requirements, and manage dates and availability to maximize revenue.

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No-show and Cancellation Costs

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Losses from guests not arriving for bookings or cancelling. Implement a robust cancellation policy, overbook strategically, and offer partial refunds or rescheduling options to reduce the impact of no-shows.

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