OTAs vs Direct Bookings War - in the heat of battle the only thing to fear is fear itself.....

Now I have your attention with my bombastic title, I would like to draw you to an ongoing and tempestuous debate raging around us in the land of the accommodation providers and it goes something like this…

Accommodation providers are deeply unhappy that online travel agencies (OTAs) such as Expedia or Booking.com are taking too large a share of their online bookings and subsequently they are paying large fees in commission. They are desperately trying to figure out how to drive more bookings through their own website and drive down this cost. Many properties feel powerless and lament the good old days.... when people died of smallpox and a shaving cut could kill you.

The simple fact is that is that it is not possible to compete directly with OTAs for a number of reasons.

1)   OTAs offer a huge marketplace that consumers visit to find what they are looking for, however on the other hand a hotel is just one of hundreds of stalls with “similar” products on offer.

2)   OTAs have immense resources at their disposal and can outspend any property on the main search engines. They can’t be outspent or competed with in this respect.

3)   OTAs are out and out specialists in promoting themselves and gaining loyalty from their customers by creating a great user experience, offering choice and great prices.

4)   Some OTAs are possibly the most universally savvy online advertisers in the game, this makes them impossible to “beat” on their own playing field.

5)   Finding the digitals experts to employ and apply strategy just isn’t very easy or affordable, whereas OTAs can afford to buy the best talent.

So is it all DOOM and GLOOM? Are "the die cast" and the figurative Rubicon crossed? Does the hotel industry now face dominance at the hands of ruthless tyranny? Is all lost and only fear remains?

Nah! Of course not - Hotels can do plenty to help themselves?

I am reminded of the Serenity Prayer which is probably familiar to many people for various reasons :-“…grant me the serenity, To accept the things I cannot change; Courage to change the things I can; And wisdom to know the difference”

At a great conference I attended recently the host ask the question, “Are OTA commission fees a marketing cost or a distribution cost? Or a combination of the two?

I'm not sure exactly but let’s not beat around the bush, OTAs spend BILLIONS of Dollars advertising on search engines. BUT many hotels would find it all but impossible to survive without them.

Hotels don't need to fight OTAs, but partner with them effectively and find alternative ways to help themselves.

So what can a hotel do that is cost effective and relatively inexpensive, and easy?

1)   Use online distribution technologies e.g. Pooled inventory channel Managers to improve revenues and drive up revenue production, and maximise all avenues of distribution

2)   Use Revenue management and better pricing strategies which will YEILD HIGHER REVENUE from all of your channels. (a small % increase in monthly ADR could make a hotel alot of revenue)

3)   Integrate hotel technology platforms and automating online distribution systems to drive down cost and boost efficiencies

4)   Diversify the online distribution channel mix – eg. Facebook bookings

5)   Have a clear and easy to navigate website

6)   Have a clear and easy to navigate Booking Engine on your website

7)   Use a commission free Booking Engine on your website

8) Train and empower your staff (front desk especially) to identify and maximise opportunities

9)   Understand how to best encourage repeat direct bookings from customers who first found you on an OTA.

Point 9 is the most difficult to master and you need to learn the strategies that suit your property. So try to get 1-8 nailed as you pull together your direct strategy.

Simply taking an email at reception during the check in process is not good enough these days. For a kick off some customers don’t want to give you an email when they haven’t established a relationship with you.

I have heard of some guests being given a bottle of wine or a cheesecake upon arrival and publicly thanked for booking direct. Although there is great merit in this kind of approach, it is probably unfair to do this, after all guests who booked on an OTA shouldn’t be penalised for this – it’s not their fault

What you need to do is demonstrate that booking direct has its benefits once the customer has been WOW’d by your product and what you offer for the money charged. If the hotel is an overpriced, badly run Fawlty Towers style property there's even more work to be done.

“When guests no longer see added value in the quality of amenities they receive, the only option to truly differentiate a brand is to develop a strong service culture that makes guests feel special and appreciated,” said Rick Garlick, global travel and hospitality practice lead at J.D. Power.

If you deliver great service, great value, pay attention to detail and make your customers feel special, they will WANT TO COME BACK and if they don't hopefully they can’t wait to tell someone else about you.

Finally and importantly:-

A hotel knows more about it’s guest than anyone else - or it should do. If you know the answers to these questions below you can start to evolve a solid direct strategy and use your resources wisely. Without understanding these it's hard to change.

a)   Do you actually get repeat business guests?

b)   Do you actually get repeat tourist guests?

c)    Do you run events such as seminars or weddings?

d)   Do you get much referral business?

e)   Do your guests even understand a how a direct booking may benefit them or others?

The Good Hotel in London has recently stated on its website https://www.goodhotellondon.com/mission :-    

Book direct and help local children in need. For every booking made on our website, we donate 5 GBP per night to our NGO partner, Ni?os de Guatemala. You can also opt for a discount on your stay, which we'll deduct from your room rate, when booking directly with us. The choice is entirely yours.”

This is a genius approach, the hotel is saving commission costs to third parties and offering a great choice to its guests, repeat or otherwise. This kind of offering can be displayed throughout the hotel so all guests and staff can understand who benefits and how.

Perhaps the real trick is getting the guest to really WANT to come back and WANT TO BOOK DIRECT and tell someone else too!

To conclude, one really fantastic hotel I visited a while ago had a quick 5 question multiple choice questionnaire on IPads in the foyer when check out was taking place.

The last question asked was whether I would return or be happy to recommend the property? I ticked “yes” and I was asked for my email which I gladly gave.

Shortly after I was thanked for my stay and reminded how booking direct, either online or by phoning would allow me benefits unavailable anywhere else….

I’ve been returning to this hotel for over six years and spent thousands of my companies dollars there.

Why? Because I get better treatment booking direct…?

No… Because I loved the experience the very first time I stayed at the hotel, and I still do…

Below is a quote I love and think of often.

"Real knowledge is to know the extent of one's ignorance" - Confucius