In the hotel room booking wars, online travel agencies (OTAs) seem to be giving up a little ground, and it’s a great opportunity for small, boutique and independent hotels.
Hotels that sell rooms through OTAs must pay a commission, so direct bookings mean higher profit margins. For many years, hotels gave up that extra profit in order to reach a wider audience.
However, new data shows that many rates are now cheaper when booking directly through the hotel website.
We’ll take a look at some possible causes for this shift. We also spoke to hospitality experts to get some tips for driving direct bookings.
Here’s what we’ll cover:
- What Is Causing Cheaper Direct Bookings?
- Video Interview With Kristofer Carlson, GM of Westin Austin Downtown
- Five Tips to Drive Direct Bookings for Small Hotels
What is Causing Cheaper Direct Bookings?
The true cause of this shift is hard to nail down, though some experts think a combination of a couple key factors may be leading to cheaper direct bookings:
- Effective regulation against rate parity clauses. Regulations against rate parity clauses—contract language that force hotels to maintain the same rates on all distribution channels—may be having an effect. This means some hotels could offer lower rates on their own website.
- OTAs are willingly easing up on commissions. OTAs often charge hotels an average of 15 to 25 percent per booking, so it’s easy to see why hotels would want travelers to book direct—it means they make a higher profit. It’s possible the OTAs believe reducing commission rates won’t matter, since their volume of business is so high.
This shift is an opportunity for small and independent hotels to educate potential guests and market these cheaper direct booking rates to them.
Many major hotel brands expect the majority of their guests to be millennials in the near future. Why is this important?