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Distribution Cost Management
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Flashcards
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Direct Reservation Costs
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.
Online Travel Agent (OTA) Fees
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.
Global Distribution System (GDS) Fees
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.
Channel Management Costs
Costs involved in managing multiple distribution channels. Streamline processes, use integrated software solutions, and regularly evaluate channel performance to cut costs.
Reservation System Fees
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.
Travel Agent Commissions
Financial incentives paid to travel agents. Keep commissions competitive but within budget, establish long-term relationships, and offer additional perks for high sales volume.
Marketing and Advertising Expenses
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.
Commission Overrides
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.
Loyalty Program Administration
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.
Discounts and Promotions
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.
Wholesaler Fees
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.
Credit Card Processing Fees
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.
Ancillary Services Commission
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.
Group Booking Discounts
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.
No-show and Cancellation Costs
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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