Improve Your Bottom Line by Increasing Direct Bookings and Decreasing OTA Investment
The birth of online travel aggregators (OTA) changed the hospitality industry. Price shopping online for the best hotel, short- or long-term rental, and airfare opened up a new world for consumers who had previously been relegated to working with expensive, inflexible, and slow-paced travel agencies.
No hospitality business should be ashamed of having followed an aggressive OTA strategy in the past - but times have changed. OTAs will likely always be a part of your distribution strategy, but the economics had changed even before the COVID-19 pandemic - which can’t be overlooked. Many small hospitality businesses have taken a significant hit since March, struggling to refund would-be travelers after OTAs used the pandemic as a way to breach contracts with hosts and brands.
Now is the perfect time to re-think your booking strategy. OTAs will always be a part of the mix because hosts and businesses should always be leveraging all the touchpoints they have with travelers, but it’s time for businesses to re-evaluate direct bookings and keep that commission money for themselves.
To build a successful direct booking business, there are valuable lessons to learn from e-commerce and retail, where direct-to-consumer brands have changed selling models - and not just for upstarts. Large consumer product goods (CPG) brands are also developing direct sales channels to customers. In this instance, these CPG brands are not foregoing traditional sales channels, but rather adding additional revenue streams.
And this is the opportunity that exists for hospitality brands. Like D2C, it all starts with knowing your customers. A lot of short stay businesses make the mistake of thinking that the direct booking revolution is only about increasing the margins and cutting out the intermediary. However, the most important takeaway is knowing and owning their guests before, during and after a stay. By providing an outstanding all-around guest experience, you can win the loyalty of their guests and ensure that guests who stay once become their lifelong customers rather than them pledging their allegiance to an OTA.
Here’s how you can do that.
Build Your Brand
Part of the allure with OTAs is everyone knows them. But users of those sites aren’t loyal to you and you don’t have a direct relationship with them. More often than not, visitors on OTA sites are there for one reason: the best deal.
So, if OTAs are a necessary evil, hijack them. By that I mean your marketing needs to be crisp. Have a logo that stands out and features additional branding on your listing so that savvy shoppers know that they can look you up and find you directly.
Once you convert a guest, you need to impress and build immediate trust. Make sure your site is high functioning - information can be found quickly and easily - and that guests don’t need to click too many times to book. It’s amazing how many brands fail because they overcomplicate navigation and guiding guests through the booking process.
Repeatable business equals a decrease in the cost of acquisition
Once you’ve captured mindshare you need to keep it. In the early days, your job is still more challenging than that of the OTAs. But, once the bookings start rolling in, you’ve got a couple things working for you and you’re in a better position than OTAs to reduce the cost of acquisition by increasing the number of time a guest books following their initial booking.
That 15 percent commission is no longer going to the OTAs. Use that found money effectively by offering perks and savings that guests can’t find on the OTA sites. Special rates during the week, romantic packages for weekends, the addition of meals or an extra night for free: whatever you choose, make sure it stands out from something that is exclusive to your site.
It’s also important that your communication be consistent - not overwhelming, but enough so you stay top of mind the next time your guest is ready to take a trip. Every email must include details on the advantages of direct booking, ongoing promotions, a link to the website, phone number - your customer experience - which is an advantage you have over the OTAs - must shine and leave customers feeling delighted. And remember, if a guest books with you through an OTA the first time around, ensure that it’s the last by collecting their email address for future campaigns.
Monetize the Checking-In and Checking-Out Process
It’s important you have a schedule for check ins and checkouts. You need time to clean the unit and prepare it for the next guest, especially in these times of heightened fear over viruses. Don’t expect that those concerns will go away once people have been vaccinated: our industry - and the world around it - has been permanently altered by the events of 2020.
While having an orderly, consistent check-in/check-out process is important to you, it can be frustrating for guests who aren’t on the same rigid schedule. So, make it work for both of you: allow for early check-ins and late check-outs but monetise it. Your guests will pay for the comfort of having additional time and, provided you’re not on a tight schedule to prep the unit for the next guest, you’ll get additional money that goes right to your bottom line.
Now is your time before the travel industry explodes. Go and take a hard look at your direct bookings strategy and determine ways you can create stickiness with customers. Sure, OTAs are still going to contribute to your bottom line, but wouldn’t you rather build and cultivate relationships directly with your customers? For all the darkness over the year, this is your opportunity to learn and build a strategy that’s lucrative for your future.