These days, the guest journey has grown more complex. On a typical day in 2015, millions of people worldwide will book lodging accommodations. The exponential growth of the internet and the use of mobile devices by travelers who shop, plan, and book online shines a light on the challenges hoteliers face in their fragmented, complex distribution environment.
Over the last decade, the direct channels have received significant attention, but much of the focus has been on the digital realm – online bookings, websites, PPC and banner advertising. Unfortunately, one growing portion of the digital world is eroding all that we have worked so hard to build and protect: OTAs are commoditizing the industry by promoting price as the primary differentiator, demanding ‘best price’ from properties and in some cases dictating volume, and then taking 20 to 25% of your revenue. In a recent membership survey by the Hospitality Asset Managers Association, more than half (54.4 percent) felt that third-party commissions were the most concerning issue they face potentially threatening bottom lines.
At the same time, studies have shown that online travel purchasers tend to be price driven. For example, according to Yesawich, Pepperdine & Brown, almost six out of ten leisure travellers now actively seek the “lowest possible price” for travel services and a study by the Joint Hospitality Industry Congress found that there is a real expectation among consumers that Internet prices will be lower than those in the “bricks and mortar” world.
Most recently, Google is also entering into the game with online hotel bookings. The company is seeking to have hotel searchers book and pay via Google rather than handing off the lead to a third party travel site or hotel site. This was first featured by travel news site Tnooz.
So while the digital world offers some necessary and worthwhile business building tools, our clients have identified some significant challenges:
- digital marketing receives 75% of the marketing budget while only 25% of bookings come in via the online channel
- skyrocketing distribution costs (OTAs) are eroding margins
- labor costs on the rise
- shorter booking windows
- how to sell experience over rate
At NAVIS, we know hoteliers have access to a huge opportunity sitting right under their noses. However, unfortunately, we’ve found most don’t have the right tools and technology to make this possible. This is where NAVIS comes in.
Shifting the Focus to the Most Profitable Channel
Capturing market share, revenue and driving personal service means shifting strategies to emphasize the most profitable reservations; these are direct (phone) and personal. The direct channel costs 10-15 times less than OTAs and 4- 10 times less than GDS travel agents. In addition to being more cost-effective, phone channel bookings have a 45.4% premium over OTA bookings and 8.25% premium over web bookings.
Read full article at: Hospitality Net