A new study from Kalibri Labs shows that the collective effort of hotel companies to sway people to book direct is working. The study, “Book Direct Campaigns: The Cost & Benefits of Loyalty,” was conducted between May and December 2016, and authored by Cindy Estis Green, CEO and co-founder of Kalibri Labs, alongside Mark Mazzocco, VP of revenue strategy at Kalibri Labs.
What Estis Green’s team at Kalibri found was at odds with many of the anecdotal reports they were reading about in the marketplace. The study, which consisted of 12,000 hotels, noted healthy room night and revenue growth from May through December 2016, with room nights up 7.8 percent and a net revenue growth of 9.3 percent. Loyalty member rates through the direct bookings push yielded net average daily rates 8.6 percent greater than those booked through OTA channels, despite offering discounts to attract guests. In addition, the growth in OTA share of room nights in 2016 slowed considerably when compared to the year before, while brand.com room night share grew at a much faster pace.
“When looking at what happens when a loyalty guest books on brand.com, I expected loyalty members were searching for the lowest rate, but it turns out many were paying a premium,” Estis Green said. “When someone visits Brand.com, they may start out looking for a lower rate, but when they see what is on offer, such as a room with parking, an upgraded suite for a modest upcharge or a third night for 50 percent off, they may decide there is a better value there even if the rate turns out to be higher.”
Because net ADR includes loyalty costs and booking fees, this metric gives a better look into gross margins and profits from bookings, something Drew Pinto, SVP of distribution strategy at Marriott International, said the hospitality industry is just now growing savvy to.
