The direct booking battle has been going on for over 20 years now. Online travel agencies (OTAs) have been taking over the hotel industry—at its peak, 4 out of 5 bookings were made through OTAs. OTAs have gained momentum and in return, hotels are paying more and more commission. A direct booking does not only bring advantages to customers, but it also brings big advantages to the hotels. Instead of only investing in commissions for OTAs, hoteliers should invest in their direct bookings and building a sustainable future for their hotels.
A survey from early 2021 found that consumers' attitudes towards OTAs have shifted largely due to the pandemic. In 2019, OTAs were the most popular booking option. Now, 39% of consumers would prefer to book directly, compared to 17% who would opt for OTAs. The frustrations experienced by consumers during the pandemic in regards to trip adjustments has driven this decrease in confidence. Hoteliers should be focussing on direct bookings more so now than ever. Here’s why direct bookings are so important for hoteliers:
1. Build a loyal customer base
In general, customers who book directly through your website are more likely to become returning guests. When your customers book directly, you can offer them specials by means of a loyalty program. A role model in this field is Marriott Hotels. Their direct booking guests have immediate special advantages such as special check-in and check-out times and they can earn points for every stay which they can trade for special offers such as an extra night stay, a discount or a special offer such as a scuba-diving trip, culinary workshop or tickets to a musical.
This is what your guests want too. An Oracle survey found that 78% of people prefer immediate benefits over accumulating points. When your guests book directly, you have the opportunity to reward them and start building loyalty from the moment they land on your website. Plus, since you also have your customers’ data, you can contact them and target them with campaigns for returning visitors.
2. Get closer to your guests
When your hotel has worked together with OTAs before, this contract statement might look familiar to you: “Direct Marketing to Guests. The Accommodation agrees not to specifically target Guests that have been obtained via [OTA] in either online or offline marketing promotions or solicited or unsolicited mail.” This clause in the contract specifically states that the hotel should not contact the guests that booked through the OTA and cannot target them for any marketing purposes. Sometimes this clause even includes that the OTA will be the only owner of the guest’s data and this is where you should be careful.
When your customers book directly, you have direct access to your guests. Most importantly, this includes their contact information and their booking preferences. You can use this information to your advantage and get to know your guests better. Think of the possibilities this opens up for your hotel—from sending pre-arrival emails with upsell opportunities to retargeting returning guests to making their stay personalised and special. Getting closer to your guests is a win for both them and you.
3. Lower Customer Acquisition Costs
OTAs charge incredibly high commission costs—ranging from 10 to 30%. Save on this and increase your direct revenue by focusing on direct bookings for your hotel. Even if you use other services or various offers to convince your website visitors to book direct, the distribution costs will still be lower. For example, you can offer a discount of 10% to get your visitor to book directly through your website (same as the Booking.com Genius discount), while otherwise, you might have spent 15% on commissions to an OTA. Direct bookings have the lowest cost associated with acquiring new guests, whereas OTAs require up to 6.5x more investment.
Hotelchamp Convert offers strategies and software for a fixed price of €99 per month that will convince your visitors to book directly. “Our customers are earning back three to five times these costs,” says Kristian Valk, Hotelchamp CEO. “We always offer a fixed price for greater transparency. Our end goal is to focus on being independent from OTAs, increasing their profitability and improving their guest relations.”
4. Protect your brand
Your hotel has spent countless hours and money building your brand. When guests visit your website, they feel the ambience of your brand and experience the expertise of your hotel staff. This, in contrast with OTAs, where all hotels are displayed in the same way, you will just be one of many with no opportunity to make an emotional connection. In a 2010 psychological study, it was discovered that the anticipation of a trip actually makes travellers happier than the trip itself. When guest books directly, you have the opportunity to manage the entire guest experience, including the pre-arrival anticipation phase that makes guests the happiest. From the moment they land on your website to when they check out, there are countless touchpoints that you can influence to make sure they have the best experience. By investing in your direct booking strategy, you’re also investing in your brand.
All in all, when focusing on direct bookings, you have the chance to build stronger relationships with your guests and save a huge amount on commission costs. This all will help to build a sustainable future for your hotel. To find out more about how we can help you with your direct booking strategy and get closer to your guests, click here.
Editors note: This post was originally published in April 2017 and has been refreshed and updated for accuracy and new best practices.