How to Reduce OTA Commissions with Your Direct Sales Strategy
Editor’s Note: The following article was first published on xotels.com. Reproduced here with the kind permission of the author.
Here is the fact, Direct bookings have become a key objective for hotels large and small, and is one of the top recommendations at an efficient Revenue Management strategy. In an ultra-competitive sector, through moving room reservations away from online travel agencies (OTAs) and other third parties, direct hotel bookings make possible to take advantage of important opportunities such as repeat bookings, cross-selling and up-selling, and increased brand loyalty, which all ultimately lead to higher revenues and higher profits.
Does your hotel rely on OTAs for bookings? Would you prefer to have more reservations made directly with your hotel? In this article, we look at what your hotel can do to take the initiative back from OTAs (and your competitors) and implement a successful direct hotel bookings strategy once and for all.
- Forget about the classic loyalty programme
Independent Hotels yet to focus on direct bookings as part of their overall business strategy can learn from the chain groups that have already invested in their own programmes to drive occupancy levels and customer loyalty. Brands such as Hilton, Choice Hotels and Marriott have reported positive results so far with their own respective direct bookings process. Hilton, as an example, added nine million more members to its loyalty programme in 2016. Loyalty members drove 56 percent of the hotel’s system-wide occupancy rates and web-direct and mobile bookings were up by 200 basis points compared to 2015. By starting your own loyalty programme, you can include incentives to drive repeat bookings such as discounted room rates.
But, will the loyalty program of a chain work for an independent hotel? Obviously not, because boutique hotels with unique hotel concepts have refined customers who look for smart deals that amaze them. For more background on our thoughts on this topic, have a look at our article hotel loyalty programs.
Through cross-selling, you can also offer promotions across the hotel, advertise additional services, products and member-exclusive package deals.
Tip: Consumers nowadays are looking for an instant reward, and don’t really like to save up points or credits. So why not simply give them a 5% discount option to sign up for. And make sure it is available directly (don’t let them wait for the sign-up confirmation email).
- Squeeze your communication channels
From email marketing to social media, and from hotel review websites to your own website, the success or failure of your direct bookings strategy will depend in large part on the effectiveness of your ability to harness the communication channels at your disposal.
Your hotel marketing plan and strategy can include a focus on advertising your loyalty programme on social media and via email with a focus on driving customers directly to your website. You can invest in online targeted marketing, including the use of paid campaigns on Google and social networks. Your email strategy should include an after-sales correspondence campaign to increase guest engagement, generate feedback and drive future bookings. For a direct bookings strategy to work, it needs investment, which could end up being less than the commission that you pay OTAs with more profitable results.
Tip: Send a post-stay email requesting a guest review on TripAdvisor or Google, and include a discount code of 10% off for their next stay (which can obviously be shared with their friends and family).
- Let every detail be covered by the uniqueness of your hotel concept
Ask yourself, why would a guest want to return to our hotel instead of shopping around for somewhere else? What do we offer our guests that sets us apart? Do we offer an experience rather than a service? Do we have a unique history, a unique food menu, or other unique selling points (USPs) such as our hotel’s settings that can drive direct bookings? If you cannot reply yes to these questions, you clearly need to work on an innovative hotel concept.
Your USPs differentiate you from the rest and they can persuade a guest to book directly with you rather than visit an OTA to consider the competition.
Tip: Start with using your room-types as sales tools to position your hotel uniquely.
- Turn your customers into Brand Ambassadors
By offering current guests an incentive to recommend your hotel, you can drive direct bookings. An incentive can include anything from a discount on a future booking; an exclusive offer for other hotel services such as a meal, a relaxation session at the spa or a round of cocktails at the bar. You can go further and throw in a free diner if a recommendation leads to a booking, and so forth. What it all comes down to essentially is your cost of hotel customer acquisition. It might seem an expensive option at first to incentivise recommendations, but when you compare it with other marketing and sales costs, a referral programme can often be an inexpensive method to drive direct business and, accordingly, to increase your RevPAR.
Tip: When connecting to the Wi-Fi of the hotel, request a share with a pic or video on Facebook, Twitter or Instagram …
- Put to the OTAs on its right place on your revenue management strategy
While many hotels have reported positive results from their direct bookings strategies, it is also critical to understand the essential role that OTAs still and will play. Many hotel customers are open to, and interested in, joining loyalty programmes and booking directly, but there is also a large cohort of customers who prefer to book via OTAs. In addition, OTAs offer customers a quick means of carrying out research and comparing hotels. There will always be guests who prefer shopping around, despite best efforts to nudge them towards direct bookings. These OTA guests go a long way to filling occupancy levels, particularly in times of low activity, and their importance to the success of your hotel cannot be understated.
However, your hotel should follow its own strategy when it comes to pricing and distribution, and not pay too much attention to the ‘commercial’ advise of the OTA market manager. At no time should we give 3rd party channels rates that are lower than we have publicly available on our own website.
Tip: So this means no discounts for loyal OTA members (read Booking Genius etc), or other schemes and programs. They are designed to undercut your public BAR rate. So simply don’t do it if you want to grow your direct sales.
- Best rate direct
A good percentage of customers say they ended up booking through an OTA because they assumed (and because they did not check it) that the hotel website would have worse price or conditions (type of bed, payment method than in OTA).
That’s why hoteliers should do everything possible to highlight the advantages of direct booking on their website instead of the OTA.
Tip: Mention it clearly on your website, booking engine, emailing and advertising that to get the best rate they need to book with your hotel direct.
The final word: Foster your direct hotel bookings strategy to drive your hotel revenue
Direct bookings strategy has become essential to hotels, hostels and resorts around the world and it offers ample growth opportunity and client retention for independent hotels. It should be crucial at our revenue management strategy, turning one-time guests into loyal, repeat customers.
Be loyal to your own hotel concept. Lead your booking channels. Make your guests love you and recommend you. Spread hotel uniqueness… And see how your direct bookings and your hotel revenue increase.Patrick Landman is the CEO of Xotels, a game-changing hotel management company, since 2006. With their proven methodology in hospitality strategies and operations, they have built up a portfolio of over 75 properties, including boutique hotels, modern budget hotels and resorts. They turn around hotel performance by breaking with the status quo. If you need help with your hotel, they provide hotel management/owner representation services and revenue management consulting. Visit xotels.com for more information.