The commissions paid to Online Travel Agencies (OTAs) are often viewed as just “the cost of doing business” in the hospitality industry. According to a recent L2 report, hotels forfeited $2.5 Billion to OTAs in 2010 which begs the question- are there ways to limit this expense? In the Facebook Factor I talked about how fans and advocates are more likely to book directly with hotels. This can reduce the influence of review sites and the commissions paid to OTAs such as Travelocity and Expedia. How can savvy hotels increase this phenomenon? How can hoteliers use social media and enhanced technology to incentivize customers to book directly? In a slowly rebounding economy the cost savings between direct bookings ($2 to $6) and OTA bookings ($40 to $120) can mean the difference between thriving and simply surviving.
Driving Direct Bookings
Consider why OTAs are so popular….they allow unparalleled browsing of properties by price point, location, user reviews, ratings, etc. Customers use OTAs like the yellow pages of hotels- if your property is not listed customers are less likely to know that you exist. An OTA or review site is usually the first stop when a traveler is considering a trip. Travelers often do not book during that first visit to Hotels.com, TripAdvisor, or Travelocity. They browse to learn about pricing and availability before they move forward with booking both a hotel and transportation. During an initial browsing session customers may view a few profiles, read reviews, and click through to a hotel’s website for more information. This is the ideal time to start a social media relationship with that customer and hopefully drive a direct booking. Consider some ways to convert travelers to your direct channel.
Integration with Hotel sites and Social Media
Above all, hotels should have direct access to their website from all review sites (TripAdvisor, Yelp, etc.) and OTAs where possible. Additional investment in services like TripAdvisor’s Business Listings will lead to more direct reservations. This will guide browsing customers not only to your website but also to your social channels where you can communicate with them in unique ways. A website that is highly integrated with social channels can foster the following powerful social engagement….
- a shopper wants to remember your hotel, so they pin an image to their Pinterest trip planning pinboard
- a potential customer “likes” you on Facebook to see if you offer any fan-based special promotions
- a customer views your Twitter feed to learn about the atmosphere and mood at your hotel
When you captivate potential customers with social media you boost their interest in your property. This can prevent them from going back to the “yellow pages” (an OTA) to consider other options before they book. If you have given them a “friends” rate or just made booking easy from social channels, you can avoid OTA fees. Good social media engagement with all fans and followers will increase this effect.
It can also be effective to provide some functionality that the OTAs offer directly on your site. Most travelers would agree that the most persuasive and valuable part of the OTA experience is user reviews. By pulling in real-time user reviews from TripAdvisor or Yelp, you may give that shopper enough assurance that your property is the right choice. This should be done in a transparent way, reporting both the good and the bad to ensure customers view the online reviews on your site as credible. Revinate makes it really easy to share reviews with Social Buzz. Here is a great example from Distrikt Hotel in New York City.
Focus on Mobile
Same day bookings on mobile devices are the new “walk in” business for hotels. In fact, Google reports that hotel bookings on mobile devices have grown by 3,000 percent between 2010 and 2011. Many mobile bookings are made in close proximity to the hotel and often for same day check-in. When mobile customers make a booking for that night, they often book direct due to a fear of reservation system delays. Shoppers via mobile devices are also looking to make reservations more quickly. Affinity to brands plays a large role in mobile booking, because customers want to book quickly and spend less time searching extensively for options. In addition, same day reservations often involve a higher rate category, which makes mobile booking an especially profitable channel for hotels.
Considering Rate Parity
Most hotels match their direct rates with the rates offered through Online Travel Agencies, which pleases customers. However when rates are the same, hotels need to provide additional value to the booking process to incentivize direct booking. This is also important in offline booking. HotelMarketing.com recently reported that mystery shoppers were asked to call reservation agents to check on rates relative to OTAs. Most agents did not motivate those shoppers to buy direct; in fact many of them supported and sometimes suggested OTA booking despite the fact that this is a less profitable channel. It is critical that all staff understand the benefits to having customers book directly. If everyone understands the importance of channel conversion, then they will be motivated to close new bookings over the phone. When customers are intent on booking online agents should drive customers to the hotel’s direct booking engine with information about benefits and ease of booking.
Offer something unique
Hoteliers should remember that when rates are equal, the guest will book in the easiest possible way with the most benefit to them. However, it is possible to offer something that the OTAs cannot. On a recent trip I booked a room direct with a large hotel brand. As I was moving through the reservation process, I was offered a low cost upgrade if a better room type was available on the day I checked in. An upgrade, that might have been given to me anyway, became a chance for a guaranteed upsell. In essence, I was given the room I really wanted with much better views at a lower rate than the OTA offered. In addition the hotel was able to move me out of the lower category room, allowing them to remain competitive on the OTA sites and sell that room to someone else. Hilton also benefits from this because word of this type of direct booking benefit is the kind of thing that gets broadcasted quickly via social media.
Streamline the booking process
It is easy to undo the benefit of these steps if your booking engine is more complicated than booking through an OTA. Consider mimicking the look and feel of the OTA booking process so that customers are more likely to successfully complete a booking. Audit your booking engine on multiple platforms and mobile devices to ensure that there are no barriers to booking. Extra investment and focus here is critical when you want to make reservations more profitable. You have worked hard to get those customers on the hook; don’t lose them while you are reeling them in.
Relationships with Booking Services
OTAs and review sites are excellent marketing alliance partners, but relationships must be managed carefully. The benefits of working with OTAs outweigh the costs for most hotels. However, the risk of losing a potential customer to another listing on an OTA makes the transition to direct booking a great idea when the opportunity exists. Direct bookings also allow hotels to manage the customer relationship end to end. I often read reviews where an unsatisfactory booking experience with an OTA tainted the customer’s view of their entire stay. Funneling bookings to direct channels can make reservations more profitable, but also protect your reputation. Following these steps can turn shoppers into loyal direct customers.
It depends where you are going. I aalyws use Expedia to get a baseline price to beat. Then if it is domestic, I go to the hotel company website and use their page to beat the price. If it is international you can do the same by getting on the net and contacting the hotel and getting their rates without Expedia doing it for you. You can even call ahead. Why not ?Outrider
Posted by: Minii | July 27, 2012 at 08:32 AM
Brilliant article that encapsulates a problem that is bigger than most realise. Staff training seems to be a huge issue in this area. I stayed at a hotel in Kona on and wanted to extend my stay.
Unbelievably, in order to stay on the same 'internet rate' I was sent from reception, across the road to an internet cafe to book via my Expedia.co.uk account if I wanted to stay on the same rate.
The best rate they would offer me to accept my stay extension was $8 a night more unless I booked it 'over the internet'. I was absolutely stunned and even though I tried explaining to the desk staff about commissions all I got was 'that's the internet rate, you have to book on the internet.
I carried out a test on a UK Channel Island a couple of years ago and armed with the latest rates from OTA's tried walking in and offering 5% less than the online rate.
None took the deal and all advised me to, you guessed it, book online. It was obvious that not one of the desk staff that I encountered understood the costs of commissions, nor would they listen when I tried to explain.
Posted by: Russell Pendregaust | June 23, 2012 at 04:20 AM
Please note that this article was originally published with a typo. The correct number that hotels paid to OTAs in 2010 is 2.5B, as published by L2.
Posted by: Michelle Wohl | June 22, 2012 at 04:20 PM