DISTRIBUTION STRATEGY

7 ways to attract more direct bookings for your hotel

Cloudbeds

By Cloudbeds

What is a direct booking?

Direct bookings are reservations that guests confirm directly with a hotel (or other property types) without using an OTA or 3rd party intermediary. They’re typically made on the hotel’s website or another direct booking channel, like over the phone/email with the sales team or by walk-in guests. Direct bookings are beneficial because they connect hotels directly with potential customers and increase hotel revenue through money saved from OTA commissions.

As you probably know, direct bookings have become an essential part of any hotel’s distribution mix. A direct booking strategy can be a powerful force in reducing your customer acquisition costs, increasing occupancy, and improving your profitability by building greater brand loyalty and giving you direct access to your guests.

Still, it’s important to note that all bookings are innately good. Often when we discuss the importance of direct bookings, it sounds as if we’re arguing that somehow third-party bookings are bad when they’re not. It’s true that different types of bookings will bring you varying amounts of revenue and profit. While OTAs take a percentage of your nightly rate, it’s still revenue you may not have obtained elsewhere.

Before we jump into some concrete tactics for capturing more direct sales, let’s quickly review the differences between metasearch, online travel agencies, and direct bookings. This brief review will give you the foundation to understand the place of direct sales within the context of your hotel’s distribution strategy. Then, we can optimize, optimize, optimize!

Metasearch vs. OTAs. vs. Direct Bookings

Part of creating a winning distribution strategy is meeting your customers in real-time. Three of the largest sources of bookings for hotels and other properties are online travel agencies, metasearch engines, and your hotel’s website. Each booking source has its advantages and challenges, so it’s helpful to know the differences when developing your property’s distribution strategy. Developing a dynamic channel mix that you adjust to your hotel business’s needs is a crucial part of building a successful “book direct” initiative.

OTAs

Online travel agencies (OTAs), such as Expedia, Airbnb, and Booking.com, are widely used by travelers worldwide. The majority of OTA bookings come with a commission fee. This means that guests create their reservations and process their payments via the OTA website, and the OTAs keep a negotiated commission per booking before distributing the remaining payment amount to hotels. Commission fees for some channels can sometimes be as high as 15% per booking! Most properties use a channel manager to share their inventory to keep all their channels, rates, and rooms in one place.

Benefits: 

  • Easy access to travelers worldwide
  • Access to niche markets via region-specific OTAs, like Ctrip, or property-specific ones, like Mr and Mrs Smith, for boutique hotels
  • Visibility to travelers that may not have been aware of your hotel before searching (also known as the billboard effect, where consumers visit an OTA for research and eventually book direct)
  • Marketing incentives or special offers and inventory allotments give you control over the share of OTA sales in your distribution mix

Challenges: 

  • High commission rates for the more popular OTAs and rising commissions over the years
  • Access to very little information about the guests who book your hotel on an OTA
  • Less control over the guest experience as their first point of contact is with the OTA
  • Need to track and maintain rate parity between OTAs and direct channels

 

Metasearch

Metasearch sites like Kayak, TripAdvisor, and Trivago allow consumers to compare prices across multiple websites. Hotels then bid on advertising placement and only pay when consumers click on the ad. Metasearch differs from OTAs in that it works on a non-commission model; instead, you pay a cost per click (CPC). You can set a budget for how much you want to bid for each click and adjust bids to optimize your overall strategy.

Benefits: 

  • Visibility of your hotel during traveler research
  • The CPC model levels the playing field by leading travelers to reserve directly on your website, giving you ownership of the relationship
  • The CPC model also makes it easy to scale demand as needed
  • You only pay for performance

Challenges: 

  • You’re competing in an open auction, which often rewards bigger budgets
  • Fluctuating CPC bids based on market demand means that you must keep a close eye on your performance to avoid overspending

Direct Bookings

Direct hotel bookings allow the hotel to transact directly with bookers. The advantages of direct sales are twofold: the hotel doesn’t pay commissions to third parties and maintains a direct relationship with the customer. However, these bookings aren’t entirely free. First, you must have an online booking engine on your website to take your reservations and process payments, even if they are commission-free. Second, you will still have to invest in marketing efforts to attract travelers and remain competitive in your market.

Benefits:

  • Direct bookings give you a one-on-one relationship with guests that improves the user experience
  • More opportunities for upsells before arrival
  • No commissions paid to third-party OTAs or other marketplaces means more revenue and profits for your hotel
  • Loyalty bookings can lower overall costs by increasing the lifetime value of each guest.

Challenges:

  • Direct bookings require strong digital marketing skills or the services of a hotel marketing expert to keep costs low compared to other channels.

 

How to increase direct hotel bookings

Now that we’ve discussed their value let’s look at some key tactics to increase those direct sales at your hotel. As you look to increase your direct bookings, remember that small improvements amplify over time, so don’t get discouraged if you don’t see results overnight. Each 1% increase in direct sales is a win worth celebrating! Eventually, you can rely less and less on OTAs, metasearch, and other third-party, commission-charging sources for your bookings.

Here are a few ways to increase your hotel’s direct bookings:

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1. Use a commission-free booking engine

Look for a commission-free booking engine that’s also mobile-friendly: mobile devices account for a significant share of travel research and booking, with Euromonitor estimating that 1 in 4 travel bookings will be on mobile by 2024. Mobile usability will maintain the competitiveness of your own channel.   

Also, ensure the booking process is limited to two or three steps and includes a rate checker so consumers can compare prices from your website to increase conversion rates. That way, you keep them from leaving your site to rate shop on OTAs, and you also give them a reason to book by showing that you have the best rate.

2. Build an eye-catching, user-friendly hotel website

Your website is often the first impression potential guests will have of your property. Go the extra mile to keep your site updated and use high-quality images of all your rooms and property area. Simplify the booking flow by providing a modern and seamless experience to encourage travelers to book. Also, make sure you have a bold, colorful call-to-action (CTA), like “Book Now,” on every website page.

3. Leverage digital marketing 

This is where boosting direct sales can get a bit tricky. Instead of relying on OTAs for their marketing muscle, you’ll have to run hotel marketing campaigns yourself. Begin by looking at your property management system data to identify guest segments most likely to book direct. Then, develop targeted offers and messaging for each segment as a test to learn what works. It’s all about continuous improvement!  

4. Lean into loyalty

Your past guests are a gold mine when it comes to rebooking. Re-engage past customers using an email marketing campaign with compelling discounts and offers. Also, if you don’t have one, consider launching a loyalty program. Travelers respond well to these programs, and you’ll learn much more about your best guest profiles. Your loyalty programs don’t have to be complicated, with points and redemptions — it could be as simple as promising “Members Only” rates.

5. Get active on social media

Social media is a fantastic way to strengthen and promote your brand and build relationships with past and potential guests. Encourage social content sharing around your property by creating your own hashtag and building “Instagrammable” corners to encourage guests to post and share photos. You can then reshare content posted by guests. Nurture and engage with your community online, and then make occasional offers or exclusive packages for your followers.

6. Personalize the guest experience 

Guest profiles within your PMS can contain detailed information, such as birthdays, anniversaries, and special requests. You can use this information with guest messaging software to build guest relationships and offer personalized services, special discounts, and deals during their stay.

For instance, say one of your guests recently visited your property for an anniversary trip, and they noted that they have a gluten allergy. Imagine the guest’s reaction if you send them a text informing them that your restaurant has recently expanded its gluten-free options and are offering their room at a discounted rate for their upcoming anniversary. Personalized service creates lasting customer loyalty and encourages repeat visits and direct bookings.

7. Be responsive online

From OTAs to online directories and community forums like Yelp, travelers worldwide have open platforms to rate and review your hotel. When researching your property, your future guests will likely visit some of these sites. Inspect your property listings on OTAs and directories and respond to reviews when you can. A personal, well-tempered comment from the owner or manager looks good to guests and improves your brand’s perception. Those same guests are more likely to visit your website and book there.

Expand your distribution mix & earn more revenue

Reducing the amount of dependency on OTAs and increasing direct booking revenue can create a higher bottom line for your property. Still, keep in mind that the best reservation is the one that pays the property the most in value (Total RevPAR) and was acquired through the least amount of expense and means (Cost of Acquisition or CAC). Sometimes the commission costs paid to OTAs are less than those incurred on an individual marketing campaign. Remember to track these costs as you test different ways to drive direct bookings. Increasing hotel direct bookings requires cleverness and creativity, but it will be well worth it when you start driving more direct bookings and keeping more revenue than ever!

 

Interested to see how Cloudbeds can supercharge your property?
Published on 18 November, 2022
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About Cloudbeds

Cloudbeds

Founded in 2012, Cloudbeds is the hospitality industry’s fastest-growing technology partner, serving a global customer base of thousands of properties across 157 countries. Its award-winning Cloudbeds Hospitality Platform seamlessly combines operations, revenue, distribution, and growth marketing tools with a marketplace of third-party integrations to help hoteliers and hosts grow revenue, streamline operations, and deliver memorable guest experiences. Cloudbeds was named No. 1 PMS and No. 1 Hotel Management System by Hotel Tech Report in 2022, Best PMS and Best Channel Manager by the World Travel Tech Awards in 2021, and has been recognized by Deloitte’s Technology Fast 500 in 2021. For more information, visit www.cloudbeds.com.

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