The rapid growth of bookings through on-line travel agents (OTA) in recent years has been hailed as a great opportunity for the hospitality industry. OTA aggregate listings permit the prospective guest to compare the rates of a large number of properties instead of having to check each hotel website separately. This often results in the prospective guest learning of the existence of a particular hotel at that destination and making a booking. While booking through an OTA means that the hotel must pay a commission, if this is a first booking by the guest then the reduction in net yield as compared to a direct booking can be considered a necessary marketing cost.
Not so if the prospective guest has previously stayed at the hotel. Contracts with OTA prohibit a hotel from offering a competitive rate on its own booking engine. A guest familiar with the hotel and the OTA would notice that the hotel rate is higher than that offered on the OTA, and would, of course, book there. Since the guest already knows of the hotel, the difference in yield can hardly be considered a legitimate marketing cost. It is actually a needless payable commission.
To maximize yield, a hotel must encourage guests already familiar with the property to book directly from the official site. However, the hotel must also take care not to compete unfairly with the OTA and risk jeopardizing a valuable source of new customers. To encourage returning guests to book direct while maintaining good business relations with OTA, a hotel must 1) make full and effective use of available technology, 2) take some strategies from the OTA playbook, and 3) employ local knowledge to create and promote value-added products beyond the scope of a travel-agent listing.
Some surveys* of on-line behavior indicate that during the shopping phase, prospective guests tend to jump between hotel sites and OTA listing pages. Therefore, a hotel should be careful to eliminate a large gap between OTA and direct-booking rates. However, simple rate parity may not be sufficient to entice a prospective guest to book direct. The hotel must sweeten the direct-booking option by offering better conditions, such as more flexible policies on changing check-in dates or for late checkout.
(*Based on a study by Cornell University)
Parity of published rates is only the first step in a strategy to attract direct bookings. OTA employ various tools to promote sales, such as offering confidential unpublished rates to frequent customers. Hotels can employ this technique but offering “secret deals” to certain users, such as those with an existing guest profile. When they access the hotel site and identify themselves, they can be sent an email containing a link to a restricted-access booking page offering a deeply discounted rate. As this rate is not displayed to the general public, this strategy does not violate the agreement with the OTA, which only covers published rates on recognized channels. Recent statistics* indicate that secret deals can increase direct bookings by up to 85%.
(*Based on Pelican hotel members performance in 1st quarter 2015.)
While hotels can employ secret deals and other discounting methods to attract direct bookings, the technology and business volume of an OTA site means that the hotel cannot compete successfully only on price. Instead, hotels must use their own advantages of on-the-ground familiarity with facilities and attractions in their vicinity to design appealing packages that an OTA cannot match. These custom packages can include costly items such as sightseeing or adventure tours, restaurant meals, and tickets to nearby entertainment or sports events. The hotel can then use their business relationships with the local vendors to offer the package at a total price lower than what the guest would pay purchasing each item separately.
Small or independent hotels can have a significant competitive advantage over OTA: personal familiarity with their guests. Small hotels offer numerous opportunities for personal interaction between staff and guests. Through these subjective impressions, augmented by guest-profile data obtained through departure surveys and other methods, a hotel can create packages that precisely address the interests and requirements of individual guests. The hotel can send previous guests regular emails suggesting packages or even offering greetings based on information supplied by the profiles. Maintaining communication in this manner will encourage such guests to visit the hotel website before surfing the OTA sites, increasing the chances of a direct booking.
The exponential growth of mobile device usage means that hotels must remain fully up-to-date with this technology. None of the strategies to attract direct bookings will have the desired effect if the prospective guest cannot make a reservation quickly and easily on their smartphone or tablet. OTA direct significant resources toward ensuring that the user experience is seamless, intuitive, and hassle-free. A hotel must match this user experience, or else the prospective guest might wonder why he is compelled to wait or re-enter information and pay a higher room rate than he could get by entering a few simple keystrokes on an OTA site. Based on a recent study, 34% of global ecommerce transactions are executed through mobile devices.
(*Based on a study by Criteo)
Responsive and technically sophisticated websites are especially important with business and young travelers, who tend to make their travel arrangements on a mobile device. Such travelers often will be already at the destination and actively searching for a room to occupy immediately. Hotels are well-advised to offer different rates for this market. A travel-fatigued person peering at the tiny screen of a mobile device while standing in a crowded arrival hall will probably opt for the first reasonable deal presented.
The great power of the Internet is the ability to connect buyers and sellers directly. By eliminating a mediator, both parties enjoy greater benefit from the transaction. In the hospitality industry, especially, minimizing the need to pay high commissions to third parties frees resources that can be devoted to enhancing guest experience. The key to success for most hotels is to build a distinguishing presence in this highly competitive industry.
OTA have an important role to play in the travel industry as they bring in new customers and provide the most efficient means of selling rooms as simple commodities in low-end market segments. However, most hotel rooms are not commodities, they are experiences, for which guests are willing to pay a premium if they perceive sufficient value for money. Direct bookings gives hotels the ability to sell experiences, not just rooms.
To learn more about the effective use of Pelican’s Integrated email marketing, please contact info@pelicansolution.com or visit www.pelicansolution.com
About Pelican Hotel Solutions
Pelican Hotel Solutions is an Internet-focused technology and services company providing reservation systems, distribution connectivity and comprehensive e-commerce solutions for the hospitality industry.
From our establishment in the year 2000 as a hotel-booking engine provider, we have evolved into a complete e-commerce solutions provider focused on meeting the unique and varied requirements of the international hospitality and related industries.
This synergy of information technology and hospitality industry expertise enables us to anticipate and prepare for continually changing market conditions. We are committed to serving the hospitality industry by assisting hotels to maximize revenue, optimize human resources, and improve cost efficiency.
Pelican Hotel Solutions is an American corporation headquartered in USA, with offices in Thailand, Hong Kong, Singapore, Indonesia, and Mexico. The “Pelican” trademark is registered in the United States and the European Community.
pelican-hotel-solutions