Don’t Be Afraid to Prioritize Direct Bookings Over OTA Bookings
The balancing act between third party channels and your own hotel website is often a difficult one. Once you make the decision to take charge of your online distribution, it can cause some friction with your OTA partners and other third party channels. However, you should not be afraid to prioritize direct bookings over OTA bookings.
For example, hotel technology provider Mirai recently published an article on the difficult coexistence between Booking.com and your hotel website.
They assert that the goal for hotels and Booking.com – and other OTAs – should be a balance, but that the hotel needs to ultimately take control of their inventory.
In recent years, Mirai say, the “marriage” between Booking.com and a hotel has turned into something more one-sided, and hotels are waving the flag for freedom.
As the OTA business grew more powerful in recent years, Booking.com and other online channels often captured large shares and charged commissions that are far too high to be beneficial to independent hotels. These high distribution costs meant that hotels made less profit despite a higher income.
The Book Direct Movement
These high fees and increasing OTA strength sparked the book direct movement. The book direct movement is a determination for hotels to drive direct bookings at a lower cost per acquisition – lower than OTA costs, at the very least.
It’s important to note that no one is suggesting hotels throw the baby out with the bathwater. OTA’s do provide essential exposure (especially for independent hotels), and they help fill low periods.
Mirai describes this struggle to drive direct bookings as the ‘conflict zone’. Since hotels are now competing with OTAs for bookings, they must limit the inventory they give to OTAs, break parity in prices (where possible), and fight for attention on paid search.
This has caused some strife, from Expedia’s ‘dimming’ of hotels to Booking.com’s legal struggles over price parity.
The Productivity Zone for Direct Bookings
From all this evidence, it does seem like ‘conflict zone’ is the appropriate term.
However, although it could be called a conflict zone, this area is in fact when the hotel is at its most productive. So, we’d like to propose calling it the Productivity Zone – conflict is simply one part of the picture.
Although one of the necessary implications of the proactive book direct actions is conflict with OTA’s, conflict is not the core reason for the action the hotel is taking.
They are actively managing each distribution channel with KPI’s in place to ensure each channel is performing best for them.
That proactive stance lets hotels take control of their distribution strategy.
Instead of falling back on OTA’s as an easy option, hotels are carving out higher profit margins for themselves by putting in the work to drive direct bookings. That’s fantastic!
Put Your Hotel First
They key here is that hotels need to be wise to the agenda of each agency they use. This sounds obvious, but it’s an easy mistake to make! Yes, everybody wants hotel bookings, but not necessarily for the same reason the hotelier does.
As Mirai notes, “OTA’s and Booking.com, like all businesses, primarily look out for their own profit (and not yours).” There is inevitably a conflict of interest. Profitable partnerships are possible, but you need to have clear limits and a strategy going in.
It’s very common for OTA’s to make comments when a hotel begins to implement a book direct strategy. They might tell you that direct bookings are more expensive, or that you risk your hotel losing a ‘preferred’ status.
They might even tell you that change is difficult, and you’ll ultimately fail. Here’s a well-known, thoroughly debunked piece from Expedia in 2016 arguing that direct bookings are costing hotels big – click here.
Taking advice from an OTA on your distribution and marketing strategy is foolish. They are not giving to give you sound advice to help you grow your business directly. They’ll give you great advice on profiting on their channels, but that’s hardly the same thing.
Hearing that no change is needed can sound great – after all, no one really likes to change.
However, you’re passing up profits, paying too much in commission, and losing on the chance to gain valuable guest loyalty if you don’t!
Mirai is correct in their analysis. It’s vital for hotels to get advice on their strategy from the right people, and create a long term plan. Stick to that plan even if there’s friction at the start. You’ll reap the rewards soon, and you’ll feel more in control of your hotel’s bookings.
If you need advice on implementing a book direct strategy (and who doesn’t!), check out The Revenue Manager’s Guide to Building Direct Bookings as a great starting point.
Our top 100 clients saw 41% growth in their direct booking value on average last year. Since we partner with hotels specifically to drive direct bookings at a low cost, our success is your success. If you’d like to chat, send us a message here.