What’s the Buzz Behind Hotel Direct Bookings?

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Direct bookings are taking the world by storm. Whether you see it trending in hotel news, strategized in social media campaigns, or even on television, there’s something in the water with this new wave pushing potential guest to hotel main sites.

hotel_direct_bookings

But why?

In an age of sites like Booking.com, Hotels.com, and even TripAdvisor, the online world has bred a generation of those who want everything in one place. Why book a hotel at one place and then a flight at another? Finding everything in one place (and at potentially lower prices) is alluring. Even I do this, and I’m all about helping the hotel industry out.

So what’s the big deal? Don’t these third-party sites lead to more bookings? Doesn’t hospitality property management software or even booking engine software help you navigate the bookings that your guests reserve on other sites?

Sure, but it’s what comes at the cost of those third-party listings and more bookings that’s driving multiple hotel campaigns to advocate for direct bookings.

Let’s take a look at why.

Avoiding OTA Commissions

I won’t name names here, but online travel agency (OTA) sites can charge you for every booking delivered to you through their site.

That’s right. While I do love these sites as a great way to get all of my travel plans in order from flight to hotel to dinner reservations, I can actually be costing you money. (And as the hotel management specialist here, I’ll of course be changing my behavior now.)

“OTA commission costs of between 15% and 30% are a good reason for savvy hotels to invest in technologies that drive guests to book direct,” says Mike Ford, co-founder and managing director at SiteMinder.

Okay. But that’s not too bad, right? You still get the majority of the revenue generated by the booking. The cost can’t be that bad… or can it?

Let’s check it out.

Say your hotel averages 200 bookings in a month and the average hotel stay gets you about $250. Monthly revenue (without the OTA commission) is $50,000. Pretty good stuff.

But let’s factor in the commission in there. (For the sake of argument, let’s say that all of these bookings also came in through an OTA and the OTA’s commision is 15% of every booking.)

($50,000) x (0.85) = $42,500

$7,500 less than your original revenue.

Not quite convinced? Let’s look at a 30% fee:

($50,000) x (0.70) = $35,000

$15,000 off your original revenue.

In some ways, third-party sites can get your hotel’s name out, especially if you’re new to the industry or a small, independent, or boutique hotel that doesn’t have the brand power a place like Hyatt does.

However, for smaller hotels with small budgets, these commissions could deprive them of the extra cash needed to improve their properties, hire new employees, or improve marketing campaigns.

Maybe these numbers don’t mean much for luxury or resort properties that can spare commissions as a way to edge the competition, but the little guys may face an uphill battle.  

Build Loyalty Programs

Hotels love loyal customers. Not only do these customers return whenever they return to the area, but with hotel management software (or even hotel management apps), you can save data on a guest’s profile, meaning if you know a guest prefers extra towels in their room, you can have that prepared on their arrival.

Loyal customers can help build longstanding relationships, important for any business and especially for hospitality. Word-of-mouth still has power in the world of marketing.

Not to mention, this can do wonders for your brand recognition. Similar to how you think of Capterra when you think of business software, your hotel can be the first thought a business traveler has when they return to a city and are unsure of where to stay. It fosters the idea that you’re reliable, that you’ll always be somewhere where they can stay.

But what does this have to do with direct bookings?

Aside from the fact that a loyal guest will usually return to your property, you can attract new guests who can become loyal customers through monetary incentives as a way to beat out the OTAs.

Think about it: while there are some OTA sites that I love, some fees can be greatly reduced by visiting a company’s home site. For instance, I often use TripAdvisor to book my flights, but Delta Airlines isn’t included in the search results. Instead, I have to navigate to their site, go through the search process, and see if they offer lower prices. Sometimes they do and I can save some serious dough.

It’s something that even major hotels are already doing.

“Hilton Worldwide, Marriott International, Hyatt Hotels Corp., InterContinental Hotels Group and Choice Hotels International, have begun offering discounted rates for loyalty members who book directly on the brands’ websites or mobile apps,” says Julie Sickel of Business Travel News.

If possible, you can note somewhere on your main site that you offer discounts to those who book direct, or even launch marketing campaigns with coupon codes or deep discounts during certain seasons to encourage bookings. (If you’re nervous about ensuring a profit, hotel management software can usually help you calculate discounts while keeping you in the black.)

If possible, you could even encourage those interested in your property to navigate to your main site, despite searching through an OTA, but again, this might depend on what platform you use.

*Be sure to have a user-friendly website. Nothing will deter guests more than a  homepage that’s confusing and unnavigable.

Makes Marketing Worth It

According to its latest stats, TripAdvisor manages to capture 340 million unique monthly visitors. To put that in perspective, Instagram has about 400 million users.

Now, I can’t promise you that kind of traffic, but pushing potential customers to your pages through efforts like Instagram or other social media, or even a Google My Business Page, can make your marketing efforts worth it while saving on the commission fees that come with OTAs.

Just imagine what $15,000 extra dollars can do.

Furthermore, you can now use the extra money you were paying to the OTAs to push paid advertising campaigns on popular sites like Facebook or even Google AdWords. Just be sure you have a target audience in mind. For example, with a Google campaign, you might want to invest in “orlando family bed and breakfast” rather than just “orlando bed and breakfast,” if you’re more of a family-friendly property.

More?

Are there other reasons you think hotels are suddenly emphasizing direct bookings? Let me know in the comments below.

Looking for Hospitality Property Management software? Check out Capterra's list of the best Hospitality Property Management software solutions.

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Capterra

At Capterra, we believe that software makes the world a better place. Why? Because software can help every organization become a more efficient, effective version of itself.

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