Hotels and hotel chains still have a lot of room for improvement when it comes to converting online traffic into direct bookings. That’s why we want you to discover the advantages of increasing direct bookings on your hotel’s website. However, remember that it is very important to have a balance between direct bookings and those coming from intermediaries, both online and offline. Rome was not built in a single day, so start step by step.
But what are the concrete advantages of increasing direct hotel bookings ?
There are three main reasons: to save on commissions, to improve the profitability of the online marketing strategy and to have total control over the communication with the customer.
At the beginning of the online hotel business any booking was celebrated as a victory, but as the digital marketing channel evolves, so does the efficiency of the channel by valuing profitability. Commissions from online travel agencies, better known as OTAs, can reach 20% or more. In this sense, OTAs have a very succulent business in which they invest a great deal of money in capturing more and more customers every day.
“In Europe approximately 90% of online bookings are made through the major online travel agencies (Booking, Expedia…).”
Many hoteliers still sell rooms through OTAs at more advantageous prices than on their own website, so customers are likely to contract with them. However, when the hotel matches the sales conditions of its direct channel with those offered by the OTA, the establishment experiences an increase in the number of rooms sold directly from its website – this effect is known as the billboard effect. So we can deduce that the customer wants to book directly with the hotel when it offers the same prices and conditions as the OTA.
However, you must also be efficient in your online marketing strategy to increase direct bookings. In other words, if bringing direct bookings to your website exceeds the intermediation cost of an OTA (let’s say 20% on average) it’s time to rethink how we do things.
And what does the hotel industry think?
Despite the advantages mentioned above, the debate on direct selling continues to rage in the industry, and every industry professional has his or her opinion. For example, Riu Hotels & Resorts is clear that its main distribution channel is the tour operator and, according to the company:
“Travel agencies continue to be our greatest prescribers and most valuable allies.”
On the other hand, Gabriel Escarrer Juliá, president of Meliá Hotels International, states that:
“The future of the tourism industry will be marked by technology: social networks and online sales channels, which undoubtedly mark a new business imperative that as responsible managers we cannot ignore.”
The case of Meliá Hotels International is a success story, as it sells 37% of its total sales directly through its website, with an annual growth rate of 25% in recent years.
In any case, what is clear is that the online channel is gaining more and more strength. Encouraging an increase in direct online bookings allows the hotel to save costs by eliminating intermediary commissions, as well as the possibility of maintaining direct communication with the client and obtaining information about him/her to carry out loyalty actions.
The advance of the online channel for hotels is perfectly reflected since 2011 in the annual survey of the company WIHP called Direct Booking Source Comparison.
SOURCE: Hotel direct booking source survey 2014 – WIHP Hotels