The rising success of OTAs has encouraged hotels to take a back seat when it comes to direct bookings. After all, why would you go to all that trouble when a third-party can do the hard work for you?
NB: This is an article from Net Affinity
While handing over the steering wheel to OTAs might remove some of the pressure, it’s a precarious game giving someone else all the power!
Think about it: When you put OTAs in charge, your bookings are at their mercy.
They change their algorithm? You lose out on guests.
They go bust? You lose your main stream of revenue.
This is why it’s so important for hotels to innovate and bring customers to their own websites. It’s okay to lean on OTAs to fluff out your bookings every now and again, but your main focus should be on securing and maintaining a consistent flow of direct bookings – particularly if you want to improve your bottom line.
Why Growing Your Hotel’s Direct Booking Improves Your Bottom Line
1. Less Cost Per Acquisition
Almost 70% of independent hotel reservations come from an OTA.
Let that sink in for a moment.
This is precisely the reason why hotels cave in to OTAs and suck up the high commission costs. Most OTAs today take around 15-30% from each booking – a number that’s grown since 5% when third-party booking sites first emerged. As a result, hotels are losing out on revenue for each guest that books a stay through an OTA. When you drive up your direct bookings, you get more of that cash in your pocket and your bottom line increases.
2. More Control
Hotel guests can be fickle these days. Because they tend to use OTAs to book stays, they have no loyalty to any particular brand. Instead, they filter through the cheapest options, or by location or facilities. When you focus on generating more direct bookings, you instantly have more control over the guest experience and the relationship you build with your customers! In most industries, returning customers are worth more than new customers, and the hotel industry is no different. Someone who has had an enjoyable stay with you is far more likely to come back again, which pushes up their lifetime value.
When OTAs are in charge of the experience, you lose out on providing guests with personal touches that deepen your relationship.
3. Lower Cancellation Rates
OTAs have a cancellation rate of between 20% and 40%. That means if you rely heavily on third-party booking sites to get guests, you’re also going to be up against a hefty number of cancellations. This is because customers are often able to book nights in advance with a free cancellation policy. While that works well for guests, it’s not so good for you. In some cases, guests might reserve several rooms at multiple different hotels through an OTA and decide nearer the time which one they prefer. You can eliminate the high chance of cancellations by securing guests directly. People are less likely to cancel if they’ve booked through a hotel and have paid a deposit or the full room rate. For more on how to reduce your cancellation rates, read this!
How to Grow Your Direct Bookings to Improve Your Bottom Line
1. Analyse What’s Working
First things first, you’ve got to know what’s working for you already! If you can identify which channels are bringing the most direct bookings to your site, you have something to build on. Start by checking out your site analytics to determine where your direct bookings are coming from. It might be Google, social media, or another referrer.
Once you’ve determined where your direct bookings are coming from, take note of the volume of direct bookings you’re getting versus bookings from OTAs. Try and report on this data weekly so you can accurately measure what’s working for you.
2. Provide An Incentive For Guests to Book Direct
Earlier, we mentioned the extortionate commission that OTAs sweep off the top of bookings. This gives you some leeway to offer discounts to customers who book direct.
Think about it:
You can offer customers that book direct a small discount that would otherwise go straight to the OTA. It’s a win-win situation, as your guests get a cheaper stay and your bottom line remains unaffected. If you’d rather avoid offering discounts, you can offer other incentives for guests that book direct, like a free breakfast, late checkouts, free parking, or even a complimentary bottle of champagne!
This hotel in Ubud, Bali, offers a range of perks if guests book direct.
3. Take Advantage of What You Already Have
As a hotel, you have the advantage of being a part of the exciting travel industry. This lends itself perfectly to amazingly rich content, like travel guides and beautiful photos, and you can use this content to generate more direct bookings! The more excitement and anticipation you can muster up in prospects, the more likely they are to book via your website. And, when you’re producing great content that’s housed on your site, you’ll automatically get more direct bookings.
Consider this guest journey:
Customer X is interested in visiting Venice, but they’re not sure what activities they can do there so they Google “things to do in Venice”. As chance would have it, you recently published a full guide on the best things to do in Venice, and they end up clicking on that to find out more. They quickly get absorbed in the amazing things they can do in the floating city and, at the bottom of the guide, there’s a widget that lets them check the availability of your hotel and book on-site. They’re caught up in the excitement about visiting Venice and – oops! – they’ve just booked direct.
Providing guests with information they want and need will help you ramp up those direct bookings.
4. Focus On Creating an Engaging Booking Experience
Customer experience is everything these days (in fact, in a recent survey, business owners claimed it was the most exciting opportunity on the horizon).
Remember, though: the guest experience begins long before check in. In fact, it starts when prospects begin searching for a hotel in their chosen destination. This gives you plenty of opportunity to integrate tools and tactics that create an irresistible customer experience.
We’re talking about things like:
- Chatbots that answer key questions potential guests have in-the-moment so you can maintain their booking momentum
- Content personalisation and segmentation so you can serve relevant content to different people at different stages of the funnel (someone who is just beginning their search requires different information to someone who has their wallet out and is ready to book)
- Interactive content that taps into the pain points of potential guests and keeps building on the booking excitement
- Email marketing to re-engage customers who don’t book straight away and to stay front-of-mind for future guests
- Integrating an intelligent booking engine that means guests can check availability and book quickly and easily without having to jump through hoops
5. Create a Long-Term Strategy
It all boils down to this:
To improve your bottom line, you have to have a consistent stream of direct bookings coming in. This requires forward-thinking and planning for the future. A consistent input leads to a consistent output, and you can use the steps laid out here to start creating your long-term plan!
Firstly, use your channel analysis to make a list of the most popular places so you can focus your time and energy on those.
Then, weave these channels into your booking experience by creating a number of engaging touch points along the way (touchpoints like Chatbots, compelling email messages, and juicy, informative content that you can distribute on your most popular channels). Big-name hotel chains like Marriott and Hilton have dramatically increased their direct bookings by running ongoing, engaging marketing campaigns that specifically educate customers on the benefits of booking direct. Marriott has even created an entire online magazine that serves as a key acquisition funnel. It gets travel-ready prospects on to their site, stirs up excitement, and offers a direct way to book on-site!
Marriott’s online magazine is content-rich and emphasises booking direct.
Want to Improve Your Bottom Line? Start Nurturing Direct Bookings
Direct bookings eliminate the crazy-high commission costs of OTAs, decrease the amount of cancellations, and create customer loyalty, all of which serve to increase your bottom line. The cash you save from OTA commission rates boosts your revenue, while loyal customers tend to come with a higher lifetime value. This means that, in the long-run, direct bookings are the key to boosting your bottom line!
Start by mapping out your strategy, highlighting major touchpoints, and working on creating content that builds excitement.
