Over the last few years there has been a significant change in industries operating a major chunk of their businesses online; one such industry that has been significantly affected is the Hotel Industry.
NB: This is an article from ARO Digital
There’s a constant debate on whether the Global Distribution System (GDS) surpasses a book direct strategy or is it the other way around. According to SiteMinder, GDS is a Worldwide channel between travel bookers and suppliers, such as hotels and other accommodation providers.
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Travel agents and online booking engines receive live products, pricing and availability data from hotels which allows for automated transactions.
With an enormous amount of information on the internet, users are becoming more and more aware about direct booking engines on hotel websites.
Hotels are able to provide rooms with more value than that available with an Online Travel Agency (OTA). Let’s look at how hotels can leverage a direct book strategy via their internet booking engine (IBE) to the benefit of their customers and hence themselves.
LOWER COMMISION RATES
Under the GDS model, hotels are paying approximately 13-20% commission on every booking that they get.
They either have to increase the room rate or take a hit on their bottom line. With a direct booking engine, the commission paid per booking drops significantly from the mentioned 20% to typically 1%- 3% per booking.
This represents significantly more revenue per booking for the hotel.
Furthermore, our own research shows that direct booking customers spend more in the hotel than GDS guests who tend to be on tightly scheduled tours.
It’s not only about revenue. With a direct booking engine, hotels can easily and efficiently monitor their success with all the data available under their control.
They can review the collected information and hence create strategies around that data.
For example, with a direct booking strategy, you will not only be able to track the details of your direct consumer i.e., hotel guests but also create marketing campaigns around what these customers like and during what time of the year.
This data is exclusive to your brand and can help you understand the buying behaviour of you customers and connect with them authentically.
Another great benefit of having a direct booking engine is that you can exclusively collect customer information such as emails, geographical location and other useful details of your customers before their visit. GDS does not give you all that detail and restricts you to limited information – usually the arrival date and time and number of guests arriving.
With contact information provided by the customer directly to the hotel, these hotels can contact the customer via email before their arrival for any added services that the customer can be offered. The hotel can also easily re-target the customer with post departure emails for any surveys or follow up offers. This service is not possible when booking guest via GDS.
With a direct booking engine on your website, you are giving the customer an access to all your content and services at one place.
Your website is the most trusted source of information for your customers provided it is effectively managed.
For example, say a customer is looking for recreational services in your area and they land on your website.
Not only can you target this customer with display adverts, but while they are on your website, you can hook them by providing content around what they are looking for.
High quality images, blogs, videos and finally a ‘Book Now’ call to action goes a long way to keep the customer engaged on your website, hence the conversion.
The price of GDS should be considered a deterrent along with the lack of control of your own guests.
A book direct strategy will grow your business and profit so you consider investing in different areas of the property than paying an exorbitant amount of GDS commission.
If you work with a select number of travel agents why not consider setting up an exclusive login to your IBE for them so they can book tours or groups direct rather than via GDS?
One of our top performing clients is Ballynahinch Castle. They wholeheartedly believe in the website first strategy and prioritise their internet booking engine over any GDS or OTA bookings.
They understand that it makes more sense for their rooms to be available on their own direct booking platform.