Finding the happy balance: direct bookings vs. OTAs

Balancing DirectBookings OTAs

Online travel agencies (OTAs) like Expedia and Booking.com are responsible for a large chunk of online room reservations (more than 20%), but they also demand 10 – 25% commission fees. Do you love ‘em or hate ‘em? While hoteliers understandably tend to resent the sizeable commissions they have to pay for OTA bookings, many are also reliant on OTA’s to increase online visibility and fill rooms last minute that would otherwise go empty.
The consumer reach of an OTA is far and wide thanks to substantial marketing budgets an independent hotelier can only dream of. Websites like Expedia.com, Booking.com, and Hotwire.com have developed powerful brand recognition and appear at the top of Google search results — it’s hard for an independent hotel’s website to compete with that.
Relationships with OTAs can be beneficial and worthwhile; it’s the dependency on OTAs that is detrimental to independent hotels when commission payments are eating into your bottom line.
Finding the happy balance between OTA spend and the rest of your marketing strategy is the key.  The goal is to maximize bookings across all your online channels in order to increase RevPAR.
Due to rate parity agreements, you can’t publicly offer lower room rates than are advertised with your OTA, but you can offer prospective guests other effective incentives to book direct:

  • Free Upgrades and Add-ons: You can offer prospective guests special bonuses for booking directly through your own website, such as a free room upgrade (a better view, a larger room, a balcony…) or free add-ons like a room service order, movies on demand, breakfast, or a drink at the bar.
  • Value-added Packages: Think about packaging rooms with discounted on-site amenities – such as spa services, parking or transport – or tickets to local events and attractions. While the room-only rate is the same as that advertised on your OTA, the value of the package advertised on your own website is much greater.
  • Discounts for Limited Audiences: You can offer lower rates to limited audiences, such as your Facebook fans and repeat guests, in the form of exclusive discounts. Discount codes sent to repeat guests by email  or advertised on your Facebook fan page allow these limited audiences to access special rates through your online booking engine. WebRezPro Property Management System’s flexible rate management features allow hoteliers to easily create packages, add-ons and discounts that can be sold through WebRezPro’s mobile-friendly online booking engine for direct bookings.
  • Recruit at Check-in: When guests check in, offer them a 10% discount if they book direct next time. You can even place a sign at the front desk advertising this offer.
  • Appealing Website & Easy Online Bookings: Ensure your website looks great and makes booking easy. State “Best rate guaranteed.” Your online booking engine (as well as your website) must be easy to use and mobile friendly. Take a look at our web design services.
  • Collect Reviews: Travelers researching hotels on OTAs will see your hotel pop up among other similar properties, motivating them to research their options further by looking for property reviews and the hotels’ own websites. Include a link to Yelp or TripAdvisor in post-stay email communication with guests and ask guests to review their stay.

If you are not maintaining a healthy balance between your OTA bookings and direct bookings, those hefty OTA commissions can hurt… but here’s what you are getting for your buck:

  • >> Increased exposure (on a global scale) – Due to the popularity and brand recognition of OTAs, if your property is listed with an OTA, it will get found.
  • >> Last-minute sales – OTAs are very useful for filling rooms last minute that would otherwise remain unsold.
  • >> The “Billboard Effect” – A study by Google shows that 52% of travelers visit your hotel’s website after seeing you on an OTA… That’s right; OTAs  can actually drive direct bookings.

Here are some tips for optimizing your OTA listings:

  • >> Nice Photos: Are you showing your property in its best light? Include images of the hotel’s exterior, lobby, guest rooms (including bathrooms), and best amenities (like a nice pool shot) to give viewers a visual experience of your hotel. Pick the best photo (exterior or guest room or sparkling pool) for your listing’s profile picture/thumbnail.
  • >> Full Descriptions & Amenity Lists: Make sure the description of your property and list of amenities are complete and highlight all the main assets of your hotel. You can check guest reviews for ideas on what to emphasize, for example, are guests always raving about your pool, the speed of your Wi-Fi, the comfortable beds? Do ensure information is accurate; false promises result in disappointed guests and bad reviews.
  • >> Great Rates: Stay on top of your room rates and packages – rates and packages offered through your OTA must be competitive and current.
  • >> Talk to your OTA Market/Account Manager: They can provide valuable insight and strategies to maximize profitability. From performance reports for listings to information about destination air traffic and airfare, OTA account managers have the knowledge to help smart hoteliers develop successful packages.
  • >> Manage Your Budget: Cap your property’s daily/weekly/monthly OTA spend so you don’t blow your budget in the blink of an eye.

Using an OTA to get a guest the first time is well worth the cost of the commission on the booking; getting that guest to book direct next time is the key to achieving a happy balance.