In recent years, much focus has been put by hoteliers around the world in searching and implementing a direct booking strategy that works for their businesses. However, we know for decades, the hotel has been reliant on the help of the Online Travel Agencies (OTAs) since the emergence of Expedia in 1996, thus, what have driven hotels to be seemingly steering in the opposite direction?
Direct Booking vs OTAs
In 2016, Skift summarized a report released by the European Union Committee titled Online Platforms and the Digital Single Market which included testimonies from hoteliers and other online and digital players around Europe.
It mentioned that in the past when the commission charged by OTAs used to be around 10 percent, hoteliers and OTAs seemed to be working harmoniously. However, over the years, the commission percentage had dramatically increased, and now OTAs have been charging around 15-30 percent per booking which has become a definite pain to hoteliers’ bottom lines.
Realizing this, more and more hotels started to focus on implementing direct booking strategies in an effort to increase their revenue. Big hotels like Hilton and Marriot went all out on their direct booking campaigns to steer away from over-reliance on OTAs.
The movement has started being picked up by many other smaller hotels. Although hotels realize that it’s hard to put a brake on these OTAs, at least focusing on getting more direct booking will help them make a dent in the high commission cut.
The Billboard Effect
Regardless of how big or small your hotels are, OTAs should not be your only source of revenue. There should be a balance between bookings from OTAs and direct. In this case, hotels should be smart to make use of the “Billboard Effect” (the term describes when guests discover your hotel via an OTA, they will look up to your website online).
In a survey done by Google, it was revealed that 52% of travellers will search for and visit your website after seeing you on OTA. This is also in line with a survey done by Tripadvisor where 57% of people surveyed worldwide acknowledged that they would use OTA to plan their trip but not all booked their hotel through OTAs.
How OTA Can Help Hotels Increase Direct Booking
Based on our explanation about how you should utilize the Billboard Effect, and be a smart hotelier in this relentless war of OTAs versus direct booking, here are our suggestions on what you should do:
1 – OTA is your tool to create brand awareness for your hotel
Don’t shut down OTAs straight away. We know that the typical guest journey on finding accommodation online normally starts with browsing one or several OTAs based on their selected destination. Only from there, they narrow down their options by price range, distance, and so on.
Once they have selected a few, they will then search for the hotel website online and move on to visit the site before deciding whether to book via OTA or direct from the website.
Based on their journey, it is wise for hotels to have their businesses advertised on these OTAs. At least this is the first step for hoteliers to get known by their prospective guests.
2 – Website is your greatest weapon
You’re at war with these OTAs, and by now you should have already known there are high chances that guests will visit your site after finding you on OTA, thus you should be able to win over these customers by making sure they get hooked on your site!
The very basic thing you need to have established is your website should be mobile friendly and have an online reservation system, also known as a booking engine.
By having these two, you’re at least making sure that you won’t easily surrender without throwing a fight.
3 – Provide Incentives for Guests to Book Direct
One of the reasons that hinder hoteliers from ramping up on their direct booking strategy is due to the rate parity agreements they have with OTAs.
While it’s true that hoteliers need to ensure the rates offered outside should not be any lower than what is advertised on OTAs, they can still play smart by providing a promotion code or letting the guests know that there will be incentives like free breakfast or free drinks that will entice them to book directly from your site.
Sunway Hotels makes it clear on their site the benefits their guests will enjoy if they book direct with them.
Make use of your website to advocate direct booking. Make it clear to your guests the extra that they will get to enjoy when booking directly from your site. Your goal is to prevent them from closing your site and going back to the OTA to make a booking.
OTA has been in the industry for decades and will continue to be. In finding the balance between bookings from OTAs and direct, hoteliers need to be smart to know what strategies to implement.
When it comes to hotel direct booking, numerous strategies are being mentioned by many parties online. Our suggestion is don't get lost in the sea of direct booking strategies.
Focus on the basics mentioned above to start benefiting from the Butterfly Effect.