Many hoteliers continue to struggle in establishing the right mix of online booking channels such as OTAs vs. direct bookings to maximize profits.
On one side, you have OTAs who are vital distribution partners to liquidate unsold inventory and put heads in beds. On the other side, you have the hotel’s direct channel, Brand.com, which is the most profitable for online booking.
Establishing a better mix between OTAs vs. direct bookings from third party distributors and direct bookings or the right balance OTAs vs. Direct can help modern hoteliers maximize revenue and take full advantage of projected market growth.
OTAs Dominate the Booking Landscape
Some large chains have made significant strides in balancing direct versus OTA bookings in recent years. For example, Hilton launched new loyalty programs and book direct campaigns starting with its “Stop clicking around” campaign. However, OTAs continue their dominance in the overall market, with a nearly 2-1 share of bookings versus direct channels (Source: Phocuswright).
There are several reasons why OTAs continue to dominate the online booking landscape and continue to outperform the direct channel year-on-year. They are nimble, well-armed with technology, and highly knowledgeable of online shopping tactics and strategies. They’re also leveraging their own loyalty programs to keep potential guests shopping on their channels. Thus, the 2-1 ratio of OTA vs. direct bookings has remained consistent in recent years — despite the healthy Compound Annual Growth Rate (CAGR) achieved by direct booking channels.
When you consider that hoteliers pay commissions to OTAs with each booking (assuming a standard 15% commission rate), you’d realize that every one of those bookings would amount to profits lost by hotels that OTAs will most assuredly reinvest in new technology, new tactics, and new strategies to maintain their competitive edge.
Balance Begins in Two Areas
To bring greater balance back to the online booking equation, there are two main areas hoteliers should focus to improve the performance of direct channels:
1. Drive more traffic to your booking engine.
While this seems straightforward, remember that OTAs want to maintain the flow of shoppers to their channels as well. Luckily, there are several levers hoteliers can pull to shift shoppers to their direct channel. Combating issues with rate parity, employing a robust metasearch strategy, developing sophisticated paid search campaigns and other hotel SEO strategies, and launching omnichannel campaigns are all great ways to shift more potential guests to Brand.com. Discover more hotel digital marketing strategies and channels to leverage on our dedicated hotel marketing hub!
2. Maximize conversions on your booking engine.
Once you have a greater volume of shoppers in your direct ecosystem, your work isn’t over. Research shows that for every 100 visitors to Brand.com, on average only 2 will complete a booking. Increase this 2% conversion rate by delivering a more seamless user experience, engaging users with special offers or low inventory warnings, and remarketing to potential guests who have abandoned the booking process with personalized follow-up messages and offers.
To maximize your website conversions, it is important that your hotel website functions as your top-performing sales representative. Your website should highlight your hotel’s key features and be user-friendly, especially during the booking process. By offering a direct booking option, you have the opportunity to establish a relationship with potential guests from their very first interaction by presenting your hotel in a personalized and tailored manner.
Create Your Own Strategy
Establish a better market mix by creating a strategy that fits your unique needs and capabilities. To support hoteliers in their efforts to improve the performance of direct channels, we’ve developed a new eBook, “Mastering the Art of Direct Booking”. It offers detailed advice on different ways to drive traffic to your booking engine and increase conversions. Assess the viability of the different tactics contained in the eBook to create a unique book direct strategy that meets your business goals, capabilities, and budget, and you’ll be well on your way to bringing greater channel balance back to your online bookings.
Click here to download your copy of Mastering the Art of Direct Booking.Finally, be sure to visit our:
- ultimate guide to hotel marketing to access an all-encompassing rundown of hotel marketing trends, data points, and insights.
- ultimate guide to guest loyalty for a comprehensive guide on guest loyalty, its evolving nature along with proven strategies to position your brand for successful long term guest relationships.