As we see a resurgence of the tourism and hospitality industry worldwide, it’s natural to ask ourselves: What should be the steps to grow my business successfully?
NB: This is an article from asksuite
Although there is not only one answer to this, part of it necessarily involves increasing the share of hotel direct bookings in your company’s revenue. But what are hotel direct bookings? What is the difference between indirect bookings? Which are the direct booking channels? And how can you increase the contribution of hotel direct bookings to your revenue?
Subscribe to our weekly newsletter and stay up to date
That’s what our Ultimate Guide to Hotel Direct Bookings proposes to answer. In it, you will see:
- What are hotel direct bookings?
- Direct bookings vs. indirect bookings
- The role of direct bookings within a distribution strategy
- Direct booking channels
- The importance of the digital experience in direct bookings
- The importance of good service to increase direct bookings
What are hotel direct bookings?
Hotel direct bookings are nothing more than those made by guests directly with the means of accommodation — that is, the hotel or inn. They can be done by phone, email, social networks, WhatsApp, and, mainly, through your hotel’s website, using or not booking engines. There are no intermediaries.
Direct bookings vs. indirect bookings
Part of creating an effective distribution strategy is finding your customers wherever they are. Three of the most significant sources of bookings for hotels and other properties are online travel agencies (OTAs), metasearch sites, and your hotel’s website.
Each booking source has its advantages and challenges, so it’s essential to know the differences when creating your distribution strategy. Creating a dynamic mix of channels thou adjust to your hotel’s needs is crucial for developing a successful initiative.
Direct bookings allow the hotel to carry out the transaction directly with customers. The advantages of direct sales are twofold: the hotel does not pay commission to third parties and maintains a direct relationship with the customer.
However, these reservations are not entirely free. First, you must have an online booking engine on your website to receive your bookings and process payments, even if it does not charge commission. Second, you need to invest in marketing efforts to attract tourists and stay competitive in your market.
- Provide a direct relationship with your guests
- More upsell opportunities before arrival
- There is no commission paid to OTAs or other distributors, meaning more revenue and profit for your hotel
- Loyalty programs can lower the total cost by increasing the lifetime value of each guest.
- Require digital marketing skills to keep costs down compared to other channels
Online travel agencies (OTAs), such as Expedia and Booking, are widely used by tourists worldwide. Most OTA bookings come with a commission fee.
That means guests create their reservations and process payments through the OTA website, which maintains a negotiated commission per reservation before distributing the remaining payment amount to the hotels. Commission rates for some channels can reach 15% per booking.
- Easy access to tourists from all over the world
- Access to niche markets through region-specific OTAs
- Visibility for tourists who might not have known your hotel before the search (also known as the billboard effect, in which customers access an OTA for research but end up booking directly)
- Marketing promotions and inventory allocation give you control over the percentage of OTA sales in your distribution mix.
- High commission rates for the most famous OTAs that keep increasing annually
- Access to little information about guests who book your hotel on an OTA
- Less control over the guest experience as your first point of contact is with OTA
Metasearch sites such as Kayak, TripAdvisor, and Trivago allow consumers to compare prices from multiple websites. There, hotels bid for ad placement, and you only pay when a customer clicks on it.
On the other hand, Google announced the launch of its free links for bookings in Google Hotel Search in 2021. Metasearch differs from OTAs by working with a model that does not charge commission. Instead, you pay a cost-per-click (CPC). You can set a budget for how much you’d like to bid for each click and adjust bids to optimize your overall strategy.
- Visibility of your hotel during the search carried out by tourists
- The CPC model balances the field of action by leading tourists to book directly on your website, giving you priority in the relationship
- The CPC model also facilitates demand escalation as needed
- You just pay for performance.
- You are competing in an open auction, which usually rewards larger budgets
- Fluctuating CPC bids based on market demand means you must closely monitor your performance to avoid overspending.
The role of direct bookings within a distribution strategy
Websites like Booking and Expedia are additional distribution channels, but you should always focus on direct bookings. It may seem like an impossible mission, but just so you know, in Europe, the number of direct bookings is growing year by year. Some of the strategies to increase hotel direct booking are: