Following a remarkable post-COVID-19 recovery, the global hotel industry has moved beyond "survival mode" and entered a new, more intense, sophisticated, and strategically demanding competitive cycle. In Vietnam, the market landscape is even more dynamic and challenging. According to the Vietnam National Authority of Tourism, 2025 saw over 12.6 million international arrivals and more than 108 million domestic tourists – figures indicating strong demand recovery. However, this has been accompanied by a rapid increase in supply, particularly in the 4–5 star hotel segment in key destinations such as Hanoi, Ho Chi Minh City, Da Nang, Phu Quoc, and Ha Long. With numerous new projects continuously coming online, the market is experiencing "localised oversupply" at various times of the year, intensifying competition beyond merely attracting guests to fiercely contending for every booking.

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In this context, the question is no longer simply "are there guests or not", but rather "where do guests come from, at what cost, and who controls that journey?". The choice of distribution channels, restructuring the proportion between channels, and optimising the effectiveness of each customer touchpoint are becoming critical strategic challenges for hotels. Therefore, in the article "DECODING REVENUE-DRIVING STRATEGIES IN THE HOSPITALITY INDUSTRY – PART 5: DISTRIBUTION CHANNEL STRATEGY TRENDS FOR 4–5 STAR HOTELS IN 2026", we will not only view room sales channels as "revenue-generating tools", but will delve into how hotels are redefining "Place" – from a single point of sale to a multi-layered distribution ecosystem, where technology, data, and customer experience are closely connected to create a sustainable competitive advantage.

Hotel Distribution Channels: The Imbalance Between Growth and Control

Currently, a "dissection" of the distribution channel structure of 4–5 star hotels in Vietnam and across the ASEAN region reveals a seemingly familiar picture, yet one fraught with profound changes. The distribution system still revolves around three main pillars: OTAs (Online Travel Agencies), direct channels (website, hotline, walk-in), and traditional intermediary channels (TAs, TOs, MICE). However, the crucial point is not "which channels exist," but rather "where power is shifting" within this structure. Over the past five years, OTAs have emerged as the almost absolute leading channel for booking volume. According to reports by STR Global and Hotel Tech Report (2025), OTA platforms now account for an average of 45% to 65% of total bookings for the upscale and luxury segments in the Asia-Pacific region. Notably, data from Phocuswright (2025) indicates that Asia is the fastest-growing OTA market globally, with a compound annual growth rate (CAGR) exceeding 12% between 2022 and 2025.

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In Vietnam, this picture is even more pronounced. According to internal statistics from international hotel management units and market data from Savills Hotels (2025), the proportion of bookings via OTAs at independent hotels can reach 65–70% during the low season, especially in tourist destinations such as Da Nang, Nha Trang, or Phu Quoc. This is due to these hotels lacking a sufficiently strong direct sales ecosystem, forcing them to rely on OTAs to ensure occupancy. However, this comes with high distribution costs – typically ranging from 15% to 25% of the booking value, according to a report by Expedia Group (2025). This means that for every 1 billion VND in revenue from OTAs, hotels may have to "pay" 150–250 million VND in intermediary fees. Meanwhile, direct channels – considered a "profit goldmine" due to low costs and the ability to control customer data – are being neglected or underutilised. According to Google Travel Insights (2024), the average conversion rate on hotel websites in Southeast Asia is only about 2–3%, significantly lower than the 5–6% in Europe and approximately 4–5% in North America. A Deloitte report (2025) also indicates that over 60% of visitors to hotel websites in Asia leave without completing a booking, largely due to sub-optimal user experience, lack of competitive offers compared to OTAs, and complex booking processes. Not only websites, but "traditional" direct channels such as hotlines, fan pages, and walk-ins are also not operated as professional sales systems. According to a survey by Meta and Bain & Company (2024), up to 48% of customers in Southeast Asia use social media as a channel to search for and contact travel services, but the quick response rate (under 15 minutes) from hotel businesses is only about 20–30%. This creates a significant "revenue gap" that many hotels have not fully recognised.

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Conversely, traditional intermediary channels – including travel agencies (TA/TO), inbound agents, and MICE – while still playing a crucial role, especially in providing stable group and international guests, are gradually seeing their market share shrink. According to a McKinsey report (2025), the proportion of bookings through traditional travel agencies globally decreased from 34% in 2019 to approximately 24% in 2024, and is projected to continue declining in the coming years. The reasons stem not only from technological advancements but also from a lack of flexibility in cooperation models, insufficient data transparency, and limitations in measuring return on investment (ROI). In Vietnam, this issue is even more pronounced as many hotels maintain relationships with travel partners in a "traditional" manner – lacking market segmentation strategies, flexible pricing policies, and almost no system to track the effectiveness of each channel. Meanwhile, key inbound markets such as South Korea, China, and Europe are recovering rapidly post-pandemic, creating a paradox: potential customers exist, but the ability to capitalise on them is not commensurate. All these factors are leading to a thought-provoking reality: room revenue may be growing, occupancy may be improving, but control over distribution channels – and further, control over customers – is gradually shifting to intermediary platforms. When hotels do not own customer data and cannot control the booking journey, all long-term marketing, sales, and branding strategies become passive. This is the core "bottleneck" in the current distribution channel challenge – and also why restructuring the "Place" strategy is no longer an option, but has become a mandatory requirement if hotels want to achieve sustainable development in the coming period.

Trends Shaping Hotel Distribution Channels in 2026

Entering 2026, the hotel industry's distribution channel strategy is undergoing a fundamental transformation. While previously, the concept of "multi-channel" was considered the goal – meaning being present on as many platforms as possible – the game has now advanced: channel ecosystem optimisation. In other words, it's no longer about "where to be present," but "how effectively these channels are controlled and operated."

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According to forecasts by McKinsey & Company (2025), leading hotels in the coming period will focus on three strategic pillars: gradually reducing reliance on OTAs, increasing the proportion of direct bookings, and especially building the capacity to leverage customer data across all channels. This is not just about optimising costs, but also a foundation for hotels to regain control over customer experience and loyalty. One of the clearest manifestations of this trend is the strong wave of investment in channel and data management technology. Systems such as Channel Manager, CRS (Central Reservation System), and CDP (Customer Data Platform) are no longer "advanced options" but are gradually becoming core infrastructure. According to a report by Hotel Tech Report (2025), over 78% of 4–5 star hotels in Asia-Pacific have upgraded or are upgrading their channel management systems to ensure real-time synchronisation of room rates, inventory, and customer data. This integration helps minimise overbooking and price discrepancies between channels, while creating a "360-degree view" of the customer – a key factor for implementing personalisation strategies. Additionally, changing customer behaviour is leading to the emergence of new "touchpoints" in the booking journey. Metasearch – notably Google Hotel Ads and TripAdvisor – is increasingly acting as a "smart intermediary portal," where customers compare prices before making a decision. According to Google (2025), over 65% of users searching for hotels start their journey on Google, and among them, nearly 40% interact directly with metasearch results. Beyond search, social media is also becoming a potential distribution channel. A report by Expedia Group (2025) indicates that over 35% of Millennial and Gen Z travellers discover and decide to book through platforms like Facebook, Instagram, or TikTok. In Asia, the development of "super apps" like Grab, Traveloka, and local platforms is also deeply integrating booking services, creating a closed consumer ecosystem – where customers can search, compare, and pay in just a few steps.

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However, the most important aspect is not how many new channels emerge, but the shift in operational mindset. Distribution channels are no longer viewed as "independent sales points" but as interconnected links in a seamless customer journey. According to PwC (2025), over 70% of global travellers use 3–5 different channels before completing a booking, from searching for information, reading reviews, and comparing prices to making a reservation. This requires hotels to be able to connect and synchronise the experience across all touchpoints. In other words, the distribution strategy for 2026 is no longer about "selling rooms" but about "managing the customer journey." Each channel – whether OTA, website, social media, or travel agent – plays a role as part of the brand experience. And successful hotels will be those that not only have a presence across multiple channels but also know how to orchestrate them into a unified ecosystem, where data, technology, and customer experience converge to create a sustainable competitive advantage.

Challenges in Distribution Channel Strategy

1. Over-reliance on OTAs

OTAs provide large and stable customer traffic, but come with commissions ranging from 15% to 25%. According to Phocuswright's research (2025), OTA distribution costs are 3–5 times higher than direct channels. Over-reliance not only reduces profit margins but also causes hotels to lose ownership of customer data – a core element in long-term strategy.

2. Rate parity and channel conflict

Rate parity – the policy requiring consistent room rates across all channels – is becoming a "double-edged sword." While it helps ensure transparency, it limits the ability to implement flexible pricing strategies on direct channels. Many hotels find themselves "competing with themselves" when they fail to properly control prices between OTAs, their websites, and travel agents.

3. Under-utilisation of offline direct channels

Fan pages, hotlines, and walk-ins remain channels with high conversion rates, yet they are often underinvested. Internal statistics from hotel operators in Vietnam show that over 40% of potential customers message fan pages but do not receive a response within 1 hour, leading to a significant loss of bookings.

4. Limitations in cooperation with traditional travel agencies

Amidst a strong recovery in inbound tourism, particularly from South Korea, China, and European markets, the lack of a strategic partnership with travel agencies causes many hotels to miss out on a stable, long-term customer base. MICE – a high-value segment – is also not being fully exploited due to insufficient connections with professional event organisers.

5. Lack of diversification of secondary channels and new platforms

Many hotels still focus on traditional channels and have not experimented with new platforms like TikTok Shop, livestream booking, or collaborations with KOLs/KOCs. Meanwhile, according to an Expedia Group report (2025), over 35% of Gen Z and Millennials search for hotels via social media before booking.

Conclusion: Redefining "Place" in the New Era

Distribution channels are no longer an operational challenge, but a strategic one. In a market where customer acquisition costs are rising and consumer behaviour is constantly changing, building a flexible, diverse, and controlled distribution ecosystem will determine a hotel's ability to achieve sustainable growth. "Place" – if understood correctly – is not just where rooms are sold, but where the customer's brand experience journey begins. And in this game, hotels that master their distribution channels will be those that control pricing, data, and their own future.

 

References

  • Skift Research (2025). Global Hotel Distribution Outlook Report
  • McKinsey & Company (2025). The Future of Travel Distribution
  • Deloitte (2025). Hospitality Industry Outlook Asia-Pacific
  • STR Global (2025). Hotel Distribution & Performance Report
  • Google Travel Insights (2024). Travel Conversion Benchmarks Southeast Asia
  • Phocuswright (2025). The State of OTA vs Direct Booking
  • Expedia Group (2025). Traveler Value Index Report
  • Vietnam National Authority of Tourism (2025). Vietnam Tourism Report 2025