How are Hotels Faring in the Book Direct Wars?
This week provided some great insight into how hotels, as of May 2017, are faring in the context of the “direct booking wars.” From online reviews as the key to stealing business from big chains to best practices for those seeking to drive direct bookings, we’ve selected the best recent articles to give insight into the state of direct bookings are.
Pick out your favorite, and get started!
In the hotel business, brand names mean a lot less than they used to.
That is the conclusion of a recent study by Brett Hollenbeck, an assistant professor at UCLA Anderson School of Management. By looking at hotel revenue and reviews, he found that while chain hotels still have more sales than independent ones, the margin is narrowing considerably. And the change is largely driven by the growth of online reviews and ratings. Independent hotels got more of a revenue bump than branded hotels from factors such as the number and types of reviews they receive.
Most hoteliers will agree that improving direct revenue is important for a hotel’s profitability and to retain control of guest interactions. But direct bookings is a topic that seems to never be complete. There is no one trick action to take that will remedy direct revenue. Instead, it is a series of many actions that will result in improved direct revenue.
A few years ago, together with another hotel marketing consultant, we put together a series of steps that must be checked to optimize a hotel’s chance of increasing direct bookings.
Hoteliers know that, regardless of where we are in the cycle, it pays to know how to manage your spending. U.S. hotels are being much smarter about their finances than ever before.
For the seventh year in a row, the U.S. hotels CBRE surveyed saw an overall increase in profits, even though revenue growth has slowed. However, data seems to suggest that, despite the major direct booking pushes made by the hotels within the last year, that their efforts may not necessarily be curbing the amount of commissions they are paying to third-party distribution channels. Or, perhaps, the intermediaries are charging higher commission rates.
A recent report from CRBE Hotels’ Americas Research contains both good and disturbing news for the hotel industry. The glass-half-full side of the story was that in 2016, despite flat occupancies and an anemic 2.5% rise in average daily rates, gross operating profits for the hotel industry rose a healthy 3.7%. Sounds good, right?
The bad news, from my perspective, is that hotel operators were able to achieve those levels of profitability not by boosting rates and demand but by limiting growth in operating expenses to 1.6%. While that shows discipline and expertise by operators, and would be commended by many people, it’s not a viable long-term path to continued profitability. It’s an old maxim, but a true one: no one in business ever saved his or her way to prosperity.
Large hospitality brands, including Hilton and Marriott, have recently launched new apps that have the right idea and ease several common pain points. Here are three lessons all hospitality brands must know about the travel experience–and how some brands are already addressing them with their loyalty programs.