Everyone in hospitality has an opinion about 2016’s direct booking campaigns. Some hailed them as a long-overdue blow against aggressive intermediaries; others voiced concern that discounting tactics would put long-term downward pressure on rates. So who was right? Thanks to a report from Kalibri Labs, we have a convincing answer: the campaigns’ backers called it correctly, at least in the short term.
According to Kalibri, on a transactional basis the 2016 activity achieved a shift away from OTAs and towards Brand.com – and that shift helped deliver a net revenue benefit of $9,000-$33,000 per hotel. That may not sound huge, but the bigger and more complex story is in the potential lifetime value of those new direct customers. We’ll return to that after a quick look at the study itself…
How seriously should we take the study?
Very. Kalibri worked with an extensive real-world dataset: 52 million real transactions across 12,000 properties, from May to December 2016. In analyzing them, it took into account commissions, transaction fees, channel costs (including search marketing) and loyalty costs, so what you’re looking at are real Net ADR/Revenue comparisons.
The study also uses several years of archive data to project each hotel’s likely performance without the direct booking campaign. So as well as identifying an overall year-on-year uplift, Kalibri is able to show – to a reasonable degree of certainty – the extent to which direct campaigns contributed to those gains.
Finally, the study also takes a long-term view. Most of the 2016 campaigns used loyalty program discounts to draw in customers, so to get a full picture of campaign effectiveness we need to understand the lifetime value of customers once they’ve been recruited to the program. Kalibri puts it neatly:
