Online Travel Agents (OTAs) like Booking.com and Expedia.com have been eating up direct hotel bookings, however some trends are suggesting that perhaps the tide may be turning. Phocuswright data reported that in 2018, direct bookings had climbed to around 49% of total online bookings for U.S. hotels and lodging services (Travel Weekly). Phocuswright added that by 2022, it’s expected that direct bookings will climb to an even 50% share with OTAs. Let’s take a deeper dive on the numbers and see what is trending and how this should be shaping your online booking strategy. A key reason for this recent surge for direct bookings has been a renewed investment in attracting guests, such as offering loyalty programs and offering exclusive discounts, or “best price” guarantees. That’s crucial when you consider what OTAs have poured into their resources.
The Power of OTAs
OTAs spend billions advertising in every genre; Online, TV, Print, and even Radio. Expedia alone spent $5.7 billion in 2018, an almost 10% increase over the previous year. Add in Booking.com and just this pair together spent nearly $11 billion! Independent hotels just simply cannot compete with this spend. With the commissions for OTAs as high as 30% in some markets, independent hoteliers often feel as though they are actually paying OTAs to take their business. The numbers so far make it look like a lose-lose for the hotelier. However, it is hard to quantify how many “extra” room nights hoteliers receive from the OTAs, but you can bet the impact is high. The ad spend for sure means that online shoppers discover hotels that they never would have through just the individual hotel’s marketing efforts.
So how then do hoteliers use this to make the partnership a win-win? The first step is to make sure that you have negotiated the best commission with these services. In recent, widely publicized negotiations, the big 3 brands (Marriott, Hilton, IHG) have all fought the good fight to lower their commission structures with Expedia and Priceline Group (which owns Booking.com). Follow in these footsteps and work your best deal too. The next step is to turn the OTAs into an asset and not the enemy.
Use OTAs To Your Advantage
- Utilize OTAs like Expedia as your research tool – Hotel owners can use OTAs to shop other hotels in the area. OTAs are a powerful localized resource to see what your competition is doing in any given area.
- Free advertising – The inherent benefit of OTAs is that you can advertise your hotel for almost zero upfront cost. Hotel owners don’t get charged if customers simply see their hotels on OTAs.
- Win the next booking – Make sure to make contact with all guests that book through an OTA and offer an incentive for them to book direct with you next time. A 10% discount off the same Expedia rate is still better than a 18-20% commission, right?
How Hotels can encourage direct bookings
- Loyalty programs – Loyalty programs are easily implemented and can be used in a variety of ways for guests. Guests are loyal to brands they trust, even if that brand is not a well-known chain. So it’s important for hoteliers of all sized properties to realize this. Guests want consistent value, but they also want to customize their experience while on property and between stays. To implement a loyalty program and tie it to a direct booking engine identify what sets your property apart from the competition and then capitalize on that.
- Rate Parity – OTA contracts force hotels to offer the same rate as the OTA when guests look to book direct. So how do you win the booking? When you are in parity with the OTA, guest have a tendency to book directly with you. So, being in parity as much as possible is critical. Using a solution like Triptease can greatly impact your parity. This solution advertises the OTA rates directly to the guest during the booking phase, showing that you are in parity without the guest leaving your site, just incredibly powerful. Plus, they report to you when you are not in parity so you can respond and correct.
- Travel Agents – Travel Agents may seem like a thing of the past to some, but they are actually making a comeback. In fact, a study by the American Society of Travel Agents (ASTA) shows that travel agents save their clients an average of $452.00 and four hours of planning. A surprising statistic from Travel Daily News is that 39% of millennials, known for their constant use of internet searches are turning toward travel agents in their future travel plans. In fact, 60% of millennials are willing to pay more for a travel agent’s knowledge regarding amenities, price, and location. So make sure you pay your TA commissions on time and interact with the ones to whom you send the biggest checks.
- Online Reviews and User Content – The most intriguing statistic for me, also from the Travel Daily News piece, is that a whopping 63% of online bookers prefer to read reviews, see pictures and book online from the same website! This clearly shows that having professional, stunning “staged” photos of your property on your website is not enough. I would not recommend adding links to review sites. Why? This stat shows you may lose the booking to the review site. However, adding some hand picked reviews to your site is great idea. In addition, sharing organic photos from your guests is an incredible way to turn lookers into bookers on your site. Managing this can be a tedious endeavor, but there are solutions for this. You could partner with a solution like flip.to and add to your hotel website. This solution incentivizes social advocacy from your guests and will provide that organic content that online shoppers are looking for.
Knowing the trends and how to use them to adjust your online strategy can help fight the stigma against OTAs. Hoteliers can in fact, turn these partnerships into a win-win. While it may seem unfair to pay the OTA commissions, this issue is not going away. Therefore, a strategy must be implemented that makes the best of the situation. Taking a proactive approach and utilizing the right tech will certainly help. Having the right hotel channel manager is also a great way to make the best of using OTAs.
Our sales consultants are well versed on this critical process; contact us today to see where we can help.
InnQuest Software is a leading technology provider for the hospitality industry. For over 25 years, innQuest has combined hotelier experience with innovative technology. We deliver an all-in-one solution that empowers hotels to attract guests, drive customer loyalty, and increase profits. Our flagship property management software, roomMaster, helps manage over 5,500 properties across 100 countries. InnQuest develops scalable solutions ranging from a Hotel PMS, Cloud PMS, Channel Manager, Hotel CRM and helps properties enable guests to Book Direct. We believe that everyone deserves a great guest experience, whether they’re staying at a small B&B, a thousand-room resort, or anywhere in between.
Call us today at 1.813.288.4900, or email us at email@example.com. We will be happy to walk you through innQuest’s solutions.