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Why Direct and Third-Party Bookings Both Matter

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Posted by Alex Gaggioli
October 4, 2016

Introduction

We often talk about direct bookings and their importance to your property. But really the conversation should revolve around creating a well-rounded distribution strategy. The battle between properties and OTAs for bookings will never end, but it’s not impossible to imagine a world where properties can use both to their advantage.

All Bookings Matter

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 somewhere else.

Part of creating a winning distribution strategy is meeting your customers where they are. OTAs, both big and small, present your property to markets that may not have been previously available. We’ve seen the presence of the niche OTA grow, in that more people are turning to specific websites to get certain types of experiences. From cannabis loving travelers to those seeking the unique experience of a French bed and breakfast, there are marketplaces made just for them.

What OTAs really excel at is reaching different types of customers, which booking.com‘s CEO Gillian Tans highlighted in a recent talk. Different types of customers book in different ways. OTAs help discover a property in any given location and gives the property a better chance of getting discovered. Other customers, who are either brand loyal to a specific property or a chain, will book direct as they have found what works for them. OTAs help with discovery and direct bookings are great for returning loyal customers.

But, that’s not to say that you cannot capture direct bookings from new guests. Because direct bookings bring you more revenue, it’s in your best interest to have a powerful web presence including a useful website, strong search rankings, and decent social media presence.

We are strong advocates for being anywhere your customer might show up. From Google to Instagram, there are hundreds of different pathways to bookings and you want to put yourself in the best position possible.

Creating a Healthy Mixture with Technology

direct-bookings-working-with-third-party-bookings

Balance is the key to distribution. You know your property best, and everyone has a unique approach to bookings. Your web presence might be incredibly strong and direct bookings are no problem for you. Or, alternatively, you may receive the majority of your bookings from third-party booking engines. We’ve heard stories of properties finding a third-party platform that works really well for them. It’s all about finding what works best for you.

Technology, in large part, has changed the game for many. Managing OTA connections and direct bookings is cumbersome and overwhelming when not using the right technology.

A channel manager, like myallocator, allows you to connect to many different online marketplaces and manage your direct bookings in one place. Previously, many OTA connections put your property at risk for overbookings. But now, that risk is greatly reduced. While it’s impossible to prevent 100% of overbookings, a channel manager helps mitigate that risk. With a channel manager, the risk of overbookings is outweighed by the new incoming reservations.

Channel managers, property management systems, and booking engines help make your distribution status effective. A booking engine allows you to accept reservations directly on your website without a guest having to call or email you, while a channel manager then organizes all incoming reservations.

How You Win

Winning means something different for every property. Generally, you need to create a distribution strategy where direct and third-party bookings are given an equal chance to succeed.

Depending on your current software, we suggest taking a look at all available OTA connections and choosing partners that will help you gain more visibility. Also, if you don’t already have a booking engine on your website, we strongly encourage you to add one. Replace inquiry fields with a booking engine so your guests can instantly confirm their reservation. Your website should have as few friction points as possible.

As is the case with any good strategy, you should test new channels and strategies to find what works best. The beauty of new technology is that you can add and subtract booking channels with much greater ease than before. Of course, it takes time to set up new accounts and negotiate commission rates, but it is advantageous to those serious about optimizing their web presence.

Conclusion

Direct bookings and third-party sites may always battle against one another for attention, but many see this as a healthy feud. Competition generally helps push progress forward and creates a better experience for your future guests. Approach your distribution strategy with an open mind and willingness to test things out, and you’ll find what works best for your property.