There’s been a huge amount of talk in the industry recently about direct bookings, in an attempt to loosen the hold that OTAs have on the industry. A term we hear a lot is that they are a “necessary evil” for us all. It would be a wonderful world if we could turn off OTAs for all hotels, but then you would miss out on huge amounts of exposure from these sites, as guests use them to research their trips.
However, if that’s the case – why don’t we allow all bookings to come through OTAs and sit back? Would that not be an easier life for the hotelier? There are a number of reasons why…
- Cheaper Acquisition Costs
- OTAs typically charge commissions between 15% and 20%
- Direct commissions are far less than this, and even when combined with paid marketing – AdWords, Facebook etc – the goal is to achieve these bookings at less than what you pay to OTAs
- The difference goes directly to your bottom line as profit
- Controlling the Guest Relationship
- As an example, Booking.com has stopped sending the guest’s email address with the bookings. If you need to contact the guests, you may do so through the Booking.com portal. This prevents you from contacting the guest directly with pre-stay emails, review requests and, most importantly form a revenue perspective, marketing e-zines & newsletters.
- When guests make direct bookings, you have information about the guest. You have their geographic location, age profile, and which device they made the booking on.
- Most importantly, you can give the customer the option to sign up to your newsletter so that you can entice them back to your hotel. You can upsell spa & dining options through add-ons to the bookings, or through pre-stay emails.
- Lower Cancellation Rates
- Cancellation rates for OTAs average about 40%, in our experience
- Direct cancellation rates vary from hotel to hotel, but 10% would be a high cancellation rate, with many hotels seeing a lower stat than this.
- OTAs actively encourage guests to make a booking early in the booking process. They highlight the ‘No Cancellation Fees’ and flexible nature of most rates available. “A change of plans is no problem when you have free cancellation!”, one OTA writes on their homepage.
- They have also begun to emails guests with long lead times. They highlight other hotels in the area who have decreased their price – “why not cancel the booking you have and book this other property instead?”
- Unless the guest has booked a specific, non-refundable rate, there is an increased chance that they will cancel the booking before arrival.
- This often means that hotels are holding inventory for a booking, on high demand dates, for bookings that are liable to cancel.
- Easier Retention Rates for these guests
- A guest who books direct is more likely to come back to your property, especially if the have a good experience through the booking process and all the touchpoints with the hotel.
- Higher ABV and Spend at your property
- According to SiteMinder, the booking value of a direct reservation is twice that of an OTA booking – they are more likely to book a package or an upgraded room type, as well as add-ons.
With all this in mind, today’s goal is to help you increase the number of direct bookings to move them away from OTAs for a more profitable guest and improved bottom line.
1 – Analyse Performance between Channels.
Before you make any decisions on the points I make this morning, you need to see where your property stands at the moment. The best way to do this is an analysis of the stats across your different channels.
For the most correct information, pull the different reports from the different extranets & channels and add it to one spreadsheet. This lets you compare like with like stats. Your booking engine provider account manager should be able to assist you with this, and it often yields useful, actionable information you might not previously have been aware of.
I recommend that you look at:
1. Volume of Booked Revenue
How many booking are made each month to stay any date, and what channels perform best each month?
Key factors to look at:
- What is the total volume of OTA bookings vs direct bookings?
- What the differential?
- Have you seen a growth on both OTA channels and direct?
- Do you see increased OTA production in the summer, but your own site performs more strongly in Spring or Autum?
2. Volume of Stayed Revenue
Look at the actual arrivals per month, excluding all cancelled bookings. Look at people who booked at any point in the past to stay in Nov 16, Dec 16 etc.
Also, look to see what types of bookings are making up those says: for example, are your peak periods (eg. the summer) filling with OTA bookings, leaving no room for direct reservations?
3. Lead Times on Bookings
How far in advance are OTA’s reservations coming in vs through your own website? Are OTA bookings more likely to be bookings with long lead times, or do you rely on them to fill gaps? Is there a difference between midweek & weekend lead times?
4. Cancellation Rates
How many of the bookings made cancel before arrival?
5. Lead Times on Cancellations
How far in advance to those bookings cancel? For example, do bookings that come in on long lead time eventually cancel? Are short lead bookings more likely to actually stay?
How far out to they cancel? Does this channel mean that you repeatedly are left with rooms to sell on short notice? Is there a difference between midweek & weekend cancellation lead times?
6. Room Types booked
Take a look at the volume of each room type on each channel. You may not be selling the upgraded room types on OTAs, so a percentage figure may not show the full story if Booking.com is 80% Standard Double and 20% Standard Twin, for example.
7. Rateplans Booked
As most hotels only sell RO & BB on OTAs, it’s important to see the volume of each of these coming through. If you have a non-refundable rate for sale on OTAs, how is this doing compared to your own site? could you look at reducing the cut off from 14 days to 7, or vice versa?
8. Geographic Source of Bookings
US & UK business is important for many Irish hotels – but which channels are these coming from?
For instance, you might see a lot of US guests booking through Expedia or one of it’s affiliates, as this brand is strong in the US. On the other hand, Booking.com is stronger in Europe. Knowledge of this will feed into paid marketing later on.
9. Review Freesale v Allocation given to OTAs
Are you providing an OTA with an allocation of rooms every night?Are they selling this full allocation, or do you end up having to release it?
The answers to these questions will help you when deciding to re-contract an allocation next year.
2- Best Rate Direct
Guests should always be able to get the best deal direct. If you are selling rates publicly for cheaper than you would be able to book direct, you are training your guests to look elsewhere for better deals. We recommend setting your OTA prices to be €5-€10 more expensive than brand.com rates – this gives guests a clear reason why direct is best! If this isn’t possible, give guests another reason to book direct.
Regularly, you should check these channels to ensure that your rooms are not being sold more cheaply on other channels. Check on the OTAs as well as through metasearch engines like Trivago and Google Hotel Price ads.
If your cheapest rate is already direct, look at the cancellation policies on OTAs. Consider adding more restrictive policies than your own site – a flexible rate direct for the same price as a non-refundable rate on OTAs is better value.
Look at this particularly for high demand dates to protect your inventory!
3 – Reasons to Book Direct
Ensure your guests know WHY they should book direct. What’s in it for them?
Ensure that your reasons to book direct are very visible on all your touchpoints with your guests and offer a consistent message: Ads, Homepage, Booking Abandonment, Post Stay Emails.
This can be done in keeping with the design of your site while still standing out. Here are a few ideas:
- Free continental breakfast
- Early check-in or late check-out
- Free dessert or a glass of wine with your main course
- Free parking for the night of your stay
Choose one or two little perks that work for your hotel. You’d be surprised at how far those go!
If you are stating that you have a Best Rate Direct, it’s best to be clear and state that if you book direct you can save 5% or €10 if it’s consistently applied and you can stand over it.
4 – Total Stay vs Per Person Rates
We have been doing some in depth analysis at Net Affinity this year into conversion rates during the booking process.
The biggest finding is that rate display has a big impact on conversion rates. Our finding from the data is the opposite of the general feeling among Irish hoteliers: Per Person Sharing is not the best way to display rates.
Instead, we recommend changing rates to preferably Total Stay or Per Night.
There are a couple of reasons behind this: you are removing any mental arithmetic for your guests as well, and not shocking your guest by doubling the rate halfway through the booking process! Many guests skim or read the fine print, and they won’t realize they aren’t seeing the Total Stay rate until it suddenly doubles or triples.
OTAs display Total Stay from the beginning to reduce this confusion.
In addition to this, the fewer types of rate displays, the better! This makes comparing different offers to each other easier, so your guest knows that they are getting the best deal for them.
5 – Protect your High Demand Date
It’s key to ensure that you are driving as many bookings direct as you can for high demand dates.
Firstly, you need to identify your high demand dates. Public holidays and popular wedding dates are usually a good starting point.
Once you have identified your best selling room types, consider closing these out earlier on OTAs so that guests looking to book these have to book direct. This means that when you have the upgraded room types only available on OTAs, you are still available and appearing as open.
Once you are are comfortable with the level of occupancy, close out the OTAs altogether so that bookings can only come in direct. Check different channels to ensure you’re closed out – some OTAs may simply revert to allocation.
If you receive a Low Inventory warning from an OTA, ensure that you or your team aren’t blindly topping this up. Consider each date to see if you are happy with the level of OTA bookings already taken, and should be able to take the remainder of rooms direct instead.
Most importantly, you need to be looking ahead 4-6 months. Add these restrictions ahead of time, before you’ve filled these dates with OTA bookings already.
6 – Ensure Brand.com has the correct level of Inventory
If you have a small number of rooms, it’s tempting to add only 2 rooms to Brand.com and 3 rooms to Booking.com – but if these rooms are selling out too quickly, your guests won’t be able to book direct. Make sure that you are limiting OTA inventory from the outset for high demand dates. You can always top up closer to the time for these dates.
This will help ensure that you don’t fill your hotel with OTA bookings, which are less profitable before your direct bookings come in.
7 – Booking Abandonment
Booking Abandonment tools are a very important touch point for guests – especially those who are still in the research stage. You want them to remember you when they’re ready to book!
If you’re a Net Affinity client, you can avail of our Booking Abandonment Tools:
- Leave a message when closing a reservation form
- One email after 30 mins
- Second email after 2 days, if the booking has not been made and the room is still available
- Voucher abandonment email after 30 mins – very important in voucher season!
Add an extra incentive to the second day email that will convince guests to both chose your hotel and chose to book on your site if they are still undecided.
This can be something simple:
- Add 5%-10% discount
- Give a value add, like a drink on arrival
- Free breakfast – the best seller of them all!
8 – Mobile
Mobile is becoming a more and more important aspect of the booking process. For a lot of hotels, mobile is the most important touch point with the guest because it’s often the first.
Some hotels are seeing upwards of 50% of all traffic coming through mobile. But while conversion rates are improving, the majority of revenue still comes from desktop. Guests do research on mobile & make the booking on desktop. I do it myself – I research when I’m travelling or sitting on the couch, and then process the booking the next morning at my desk.
It’s vital that your mobile presence represents your brand as well as your desktop site and has easy access to the most important content: Hotel info, Dining, Spa, and Wedding, as well as galleries of images.
Net Affinity clients can avail of our mobile app in place of a responsive site and our booking engine, which is optimised for mobile to make the process easy to manage on a touch screen. It’s also optimised to reduce load speed, especially on the homepage.
Consider your website design. Is it functional for mobile? should you look at a responsive design to be the front window of your hotel on mobile?
9 – Paid Marketing
The traffic landscape for hotels online has changed massively in the past couple of years. Organic traffic is dropping and paid is becoming more and more vital. Google have changed their search results, and several other major changes are also having an effect.
You need to ensure that you are investing in the correct level of Paid Advertising for your property on the correct channels. A hotel not on many OTAs should consider brand awareness through Social Media advertising, maybe, instead of Google AdWords. If you have a big level of OTA bookings, maybe you should be increasing the spending in your brand search terms, especially for the summer period.
For most hotels, 2017 will require an increased budget for Paid Marketing and possibly to look at other channels.
From the analysis of your bookings and geographical markets, this may reveal that you need to invest more in Paid Marketing in your major foreign markets. Conversely, it might show that you should be concentrating on the domestic market.
10 – Website Content
Content is king. Your website is your “front window” to your hotel. It’s the impression that you give before the client gets to the front door.
Ensure that your website content (the text and images throughout your site) is regularly updated. Not only is it vital make sure the information is correct (you may no longer offer water in the room or the golf club you recommend has closed down), but Google also rewards relevant, regularly updated content. Try to take a section of your site, e.g. Dining or Rooms, and give it a monthly review and update. This is what helps Search Engine Optimisation.
Take a look at your Google Analytics data to see what pages are the most popular, and make these a priority. Review Bounce Rates – the number of people who leave this page without going to another page or engaging with the site. Ensure that these pages do what they are intended to do and that they contain the correct information. Do they allow the guest to continue browsing the site or convert through a search box or offer button?
Even more important than content, one could argue, is your imagery. It’s a powerful tool. Imagery can lead to you dreaming of being there instead of here, reading this article.
This is the impact you want to make on your site – and this can only be done with high quality imagery that sells your property and location.
An important caveat: speak with your website provider on how to display these images without hampering site speed!
Finally, rate plan descriptions. These are what clinch the sale, and they need to be clear, concise and the correct tone that’s consistent with your brand.
Ensure that your rate plan descriptions aren’t filled with irrelevant info about the hotel in general. The rest of the site will do this for you! Ensure that the title has the main information included, so that it’s clearly visible on mobile when the rate plan description might be behind a button.
To Wrap Up
Today’s landscape is certainly an ever changing one, and keeping up with it is even more challenging than ever!
We appreciate that it’s difficult to always have the time and resources to work on driving direct bookings. However, that said, it will make such a difference to your bottom line if you can address your OTA bookings and work on getting your customers to book direct.
If we were to give you the key takeaways today to make your job easier, they would be:
- Analyse performance by channel
- Ensure they best rate is direct
- Highlight to customers why they should book direct
- Have your prices as TOTAL STAY
- Protect your high demand dates
- Ensure you are giving your site the best of inventory levels
- Talk to your Booking Engine Provider about booking abandonment.
- Always consider the mobile booker
- Look at your paid advertising
- Update content regularly
The above are our most important actions, and what we recommend to Net Affinity clients when discussing book direct strategies, regardless of the hotel’s size. It’s never too late to start on this. Start tomorrow and you will see the benefits!