For many hotels, choosing the right booking engine often comes down to price. Rather than investing in the best product, the CRS vendor offering the cheapest deal can seem like the most attractive option.
But price shouldn’t be the only factor when you’re weighing up your booking engine’s potential ROI. Long-term, the performance of the product can have a major impact on your bottom line and direct booking revenue.
In the following article, we’ll describe why choosing a superior booking engine really matters, and we’ll also outline the ways it can have a dramatic and lasting impact on your business.
Why investing in a quality booking engine matters
OTAs continue to win far more direct bookings than hotels—primarily because they offer a superior user experience. The vast majority of people prefer using OTAs because they simply find them easier to use when they’re searching and booking rooms.
So when you weigh up ROI on your booking engine investment, consider whether it will significantly improve user experience for your potential guests, enough so that a guest who would have booked on an OTA books directly on your website instead. Put another way, will it shift high-commission OTA revenue to direct revenue? If your chosen booking engine doesn’t improve your direct business, you’re wasting your money.
Many CRS and booking engine models run on a commission model, generally charging a small percentage fee of the realized booking. While it can be tempting to simply pick your hotel’s booking engine based on the lowest commission fee, it is far wiser to first run an analysis to see the potential overall impact to your bottom line.
In this evaluation, you’ll want to run a rough calculation using your current distribution mix. Consider the percentage of bookings that your hotel typically receives from direct vs. channel manager/OTA, as well as the percentage commission paid on those bookings. Total the revenue after commission, and use this as your baseline.
Now it’s time to make a few assumptions: run the numbers to see what the revenue looks like if you were to shift 5 or 10% of your bookings from OTA channels to direct. With high commissions ranging from 15-30%, every percentage shift you make adds a significant amount of revenue to your bottom line.
