The unexpected outbreak of the coronavirus pandemic has left hospitality businesses around the world struggling to generate income.
NB: This is an article from Profitroom
In difficult times, a strategic approach to generating direct booking is becoming ever more important as hoteliers and others look to rebuild their businesses.
A direct booking strategy focuses on acquiring bookings through an operation’s own sales channels, including the hotel’s website, social media channels, over the telephone or via email. Alongside this, hotels also use intermediary channels, such as online travel agents (OTAs), which, before the pandemic, helped to generate a significant proportion of bookings for hotels, especially those located in city centres.
What does the world look like without OTA?
The coronavirus, however, has caused a seismic shock to the global economy. Following border closures and government enforced restrictions on hotel operations (which saw most having to temporarily close), the number of bookings fell to almost zero – practically overnight. In addition to a halt on taking future bookings, cancellations of existing bookings also increased dramatically; a situation that heavily impacted hotels’ liquidity, leaving many teetering on the brink of insolvency.
With hotels unable to fulfill bookings, both OTAs and the hotels themselves paused marketing campaigns almost immediately; a move which caused stagnation in website traffic, as well as in sales from both direct and intermediary channels.
However, whilst the UK was still in lockdown, some countries in Europe were in a position where they could begin to reopen hospitality businesses, with Poland and Germany being amongst the first large countries to do so – on May 4th and 14th respectively. Since those dates, using statistics from our live dashboard analysis tool, we have observed a gradual recovery in the volume of bookings, with a clear trend towards a faster turnaround in direct bookings.
“Before the pandemic, we felt strong and safe with as much as 50% of the direct share of new bookings. We did not really anticipate reaching a level of 65% which allows us to be optimistic about the future.”
Łukasz Pawlina, Sales and Marketing Director at Grano Hotels in Gdansk
Surge in demand
The period between March and April, which marked the height of lockdown, was a disastrous time for the industry. Alongside a basic lack of bookings, guests didn’t even bother to visit hotel websites – something that really served to underline the drop in demand. At this point, things were looking very bleak for hospitality. However, as individual governments announced the lifting of restrictions, there was a significant turnaround, with website views starting to rise rapidly as prospective guests began to reconsider holiday plans and look to a time beyond lockdown. The chart below demonstrates the steady increase in the number of website views since mid-May.
It’s at this point, with website visits increasing as prospective guests start to explore their options, that an efficient direct booking strategy really came to the fore. Key to the success of this is the inclusion of online sales tools and automated quotations through the implementation of direct booking software. Relying on your reception desk is far less efficient and a lot more time consuming than utilising the benefits of an integrated solution. If we take Port Lympne, a hotel and reserve in Kent, as an example – they experienced a booking almost every 11 seconds in the wake of reopening. With this level of demand, reception would simply have been overwhelmed, with bookings lost as a consequence. Thankfully, Port Lympne has a robust direct booking strategy, which was perfectly positioned to manage the volume of bookings.
https://www.facebook.com/watch/?v=260579018729544
Greater value of direct bookings
To encourage direct bookings, hotels often look to add extras – so accommodation, but with additional attractions or offers featuring meals and spa, as they aim to target the things guests are seeking the most. These offers are made exclusively available through hotels’ direct sales channels, which, subsequently means the average rates gained via sales with Profitroom CRM or Profitroom Websites are substantially higher than those offered by intermediaries. The results we’ve seen in June confirm this, indicating an average 50% increase in Average Room Rate via direct booking channels compared to OTAs.
| Booking value/facility category | Direct channel/other |
| 5* | 135% |
| 4* | 187% |
| Aparthotels | 144% |
| 3* | 133% |
“As with all other hoteliers, the Corona crisis hit us in the worst month with a drop in sales of -66%. However, since April we have noticed a significant increase in direct bookings. We tripled our sales in May and doubled in June. We have seen a strong increase in total sales compared to last year. ”
Krzysztof Warzecha, Sales Manager, Balmer See Hotel • Golf • Spa Usedom
Direct is not only the cheapest but the safest!
The pandemic has demonstrated how important it is for hoteliers to generate direct bookings. With natural demand absent and international visitors restricted (and intermediary portals not in a position to generate bookings), the ability of hotels to create interest in their offering, especially with a new focus on local guests, has proven to be crucial.
Hotels with a strong brand and extensive databases of email contacts with the relevant consent for marketing can win valuable bookings in difficult times. A good way to achieve this is by sending out dedicated campaigns using the CRM system or by employing active marketing activities such as online campaigns and targeted remarketing.
Alongside better value, a central benefit of direct bookings during the current climate has been added security. Hotels themselves shape return policies, can communicate directly with guests, and can offer alternatives, helping to reduce any impact on cash flow, which is something that can be compromised in the return policies offered by leading OTAs. Put simply, dealing with bookings directly leaves both the power and the flexibility with the hotel itself.
The strength of the brand in difficult times
Since the advent of the coronavirus crisis, we’ve seen that hoteliers and other operators who have invested during the ‘quiet’ times in working to build a strong brand and to develop direct relations with guests have reaped the benefits. According to our data for instance, such hotels were the first to record a significant increase in bookings and were largely responsible for the global increase in bookings immediately after the reopening of hotels. Notably, not only were they the first to generate bookings, they also used the enfeeblement of OTAs, which were unable to create demand at the time, to drive a trend towards direct bookings. Consequently, we saw very high rates of direct bookings in the initial period after reopening – and it’s a trend we hope to see continue.
How to make the most of this high season and secure the future
Hotels should take advantage of the current heightened demand and look to expand their base of loyal guests. It’s important not only to maximise the number of direct bookings, but also to develop loyalty among guests who have been drawn in from other booking channels. Hotels can do this in several ways, not least with the help of reception and staff, but also by using automated systems such as Profitroom’s CRM to generate engagement. We’ve seen even before COVID-19, that one email contact with marketing consent is worth more than £10 to a hotel, and this value will only have increased.
A comprehensive direct booking strategy allows you to acquire bookings at a lower cost and, in addition, build relationships with guests – something that’s proven invaluable, especially in recent months. The current pandemic has shown how much direct booking can help to rebuild revenue in the wake of enforced closure. The success of the strategy is dependent on a variety of factors, but we’ve clearly seen that those hotels who work to implement it have seen rich reward since reopening. With margins under incredible pressure in current times – hotels need to do all they can to improve them, with direct bookings playing a large part in this.
