Distribution channel and efficiency: An Analytic Hierarchy Process approach

Abstract

This paper investigates the efficiency of the ratio benefit to cost in a given hotel, taking into account (as a discriminatory variable), the distribution channels (DCs) available for that hotel; namely, direct, Expedia, Booking.com, Venere and other travel agencies. The microeconomic case study will address the concerns owners have about the efficiency of each channel. Operational and transactional factors are included to ensure the holistic nature of the analysis and the hierarchical aspect enables the splitting of either the cost or revenue into levels which include weights of each leaf in the tree. Operational costs include breakfast, cost of the occupied room, guest laundry services and other food/beverage consumption. Transactional cost includes commissions paid to credit card and distribution channels. The Analytic Hierarchy Process is a powerful tool, which is suitable for this kind of framework. The ratio between revenue and cost for each channel gives the final ranking of efficiency. The primary data are transactions collected from the property management system of the hotel over a six week period. Participant observation provided a precise view of different check-in times for each channel and this factor is also included in the framework of cost.