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Articles Guest experience Do OTAs make it impossible for hotels to make direct sales?

The vast majority of hoteliers go through OTAs to market their rooms.

They generate a lot of bookings for hospitality businesses, which makes them seem indispensable.

In fact, online booking agencies have grown so much in recent years that they now have a dominant market share and hoteliers are losing out by paying them huge commissions!

Do you run a B&B? A hotel? An inn? Is occupancy rate your priority?

What if there were strategic solutions to increase your direct bookings and therefore pay less commission to OTAs?

This article aims to provide you with answers to the questions on everyone's mind:

  • Do I have to market my rooms on online booking sites?
  • Or should I concentrate all my efforts on my website so that bookings are made directly on my own platform?
  • How can I get the customer to want to book, while cutting out the middleman?

Let's try to understand how to make the most of OTAs, but more importantly how to make the customer want to book on your site without going through Booking, Expedia, ... and avoid squeezing your margins!

I. OTAs charge between 15 and 22% commission on bookings: what do you get out of it ?

As you probably know, OTAs charge between 15 and 22% commission on reservations.

It may seem high, but this is the price tag for the visibility that these booking platforms provide. 

In fact, it's no doubt thanks to them that a good deal of your customers know you. These agencies help build your hotel's reputation and image. And these are essential to increasing your occupancy rate.

Another plus point with OTAs is that they compete to develop the best technologies, anticipate visitors' wishes and follow the latest tourism trends. These reasons in particular make doing without an online agency seem difficult. They do everything they can to push the user to book without backtracking.

Also, these platforms provide access to different markets and harness advanced targeting technologies based on Big-data, geographic location and demand prediction to deliver the right offers to the people who are most likely to be interested in them.

Bowo • Kalibri ROI on direct loyalty bookings is almost 2 X OTA

However, is investing in OTAs really effective? How much does it actually earn?

According to a study by Kalibri Labs (carried out on 18000 US hospitality businesses between January 2016 and August 2018), a direct sales strategy is more profitable than going through OTAs. Even after factoring in the extra costs of paid searches (SEA, Google Ads) and discounts as part of a direct sales strategy, Kalibri Labs' analysis showed that direct bookings were 12.5% more profitable than bookings through OTAs.

According to the same study, hotel loyalty programs are also much more profitable channels than OTAs, almost twice as profitable in fact. They generate more visits to the hotel website, and bigger bookings (upsell...).

We would also add that it is not easy to have a customer relationship when reservations are made via OTA platforms rather than on your site.

When a customer books via an OTA, the hotel doesn't receive any information on the future customer. He or she is anonymous as far as the hotel is concerned. This is very problematic because not only does it prevent any data analysis, it also makes it difficult to create a special bond with the customer and thereby build loyalty.

Bowo • Loyalty booking vs OTA booking

Reservations via loyalty programs vs. OTAs

II. The "in-stay" loyalty of your guests

Encouraging customers to book directly on your website means reducing the commissions paid to certain intermediary service providers. This budget can then be directed towards simple but effective solutions that help you to increase your direct sales.

Are you used to losing between 15 and 20% through commissions? Let's take 50% of that amount and use it on specialised marketing instead.

As you have no doubt understood, building a solid bond with your client must be your priority.

The idea is to understand how to get a customer to come back, and what means a hotel can use to retain the customer.

Returning customers provide regular operating revenue and boost occupancy rates. However, while it takes effort and resources to recruit new customers, the same is true of maintaining loyalty.

So you need to find and implement a loyalty scheme.

Let's list some ideas for a "customer loyalty scheme":

  • Preferential reception services

Learn to identify a loyal customer without them having to point it out, and give them special treatment.

  • Fast and efficient handling of complaints

In the event of a complaint, provide loyal customers with special attention and immediate responsiveness to address the issue. The client should feel safe and reassured when facing a difficulty.

  • Gratitude

Being rewarded for their loyalty is something that returning customers appreciate very much. Thanking the customer naturally for his loyalty, with little courtesies during his/her stay, will make a positive impression and further improve his/her good opinion.

  • Gestures / gifts / tokens

A loyal customer may like to have an upgraded room, for example, a fruit basket and drinks in the room, easy access to VIP services, free access to the hotel spa, quick check-ins / check-outs, etc ...

In any event, to be truly attractive and appreciated, gifts and/or benefits should be commensurate with the customer's loyalty level. A customer who returns for the tenth time has more 'weight', for example, so you need to be prepared to spend more on him/her.

This is where you can reinvest your lost OTA costs intelligently.

The customer won't want to go through an OTA, he/she will know exactly where to go, and the cost will be much lower than the commission you would otherwise pay to a booking middleman.

  • Anticipate customer needs

Know how to anticipate the needs of your customers. For example, a late or early breakfast, room service, systematically observing the do not disturb sign ...

Everything you put in place to retain your customers will have an immediate knock-on effect on the “other” strategies that we will look at in the second part.

First conclusion: learn to do without OTAs and invest your money in customer loyalty marketing!

Provide the customer with a completely unique experience!

III. Strategies to improve direct sales

While online travel agencies have become essential and help independent hotels fill their rooms, their dominance is detrimental to hotels, depriving them of direct bookings and therefore of significant financial gain.

How to avoid this? How to increase the number of reservations directly on your website? Are there any solutions other than customer loyalty as already discussed?

The idea is to find the means to promote your establishment on other communication channels.

With the right digital tools, you will be able to find customers to make your business profitable and fight off the competition.

Let's go into more detail now, and list the key steps to success.

Your website, the essential tool for good communication

Google has found that 52% of Internet users who visit online travel agencies' sites such as Booking, TripAdvisor, Expedia or HRS visit the hotels' sites before booking.

The image of the site is therefore key to retaining your customers on the web. They need to feel confident, and that they have a central role in the process. So, provide them with everything they want to see ... Knowing your target is one of your priorities as a hotelier.

A smooth, user-friendly site.

The customer must be able to access a photo gallery, a list of services. They should be able to picture themselves in your establishment without having to go back to the OTA site.

To be a good conversion tool, your website must meet travellers' four main selection criteria. Within the first 30 seconds! According to some studies, you have less than 30 seconds to 'seduce' the visitor and lead them to the booking system. If you succeed, there is a 75% chance that they will confirm their reservation directly.

The site therefore has a key role and should be treated as a priority.

What are the traveller's four main selection criteria?

  • The most attractive price - he must see the financial benefit of booking direct rather than through an OTA.
  • Location, location, location.
  • Quality photos of the facility.
  • A TripAdvisor rating.

Conclusion: do a stock take of your site!

Bowo • OTA et ventes directes hotel

🎯 Targeting and Re-marketing to generate more conversions

Do you know your customers? Target them! Appear in their searches on keywords that match your offer. Invest in Google Ads campaigns that will make you appear at the top of Google search results for strategic keywords. And spend most of that budget on re-marketing.

Re-marketing is a term used in digital marketing to refer to advertising retargeting.

It is a process that means you can deliver targeted advertisements to Internet users who have visited your site and/or your mobile application.

Re-marketing allows you to better target your audience by addressing internet users who are already interested in your offer.

You can have multiple objectives for setting up re-marketing campaigns: increasing your sales, increasing your visibility and notoriety on the web and therefore the occupancy rate of your establishment.

The idea here is to focus on people who have already visited your site, so the chances of conversion are naturally higher.

Communicate on social networks

Communication on social networks goes hand in hand with the previous point!

A good website is an essential asset for good communication on the networks.

The aim is to communicate the link to your site as much as possible, to encourage the user to take a look! But also, to share any content and media that show the customer experience they can expect, because above all, that's what they are looking for: a travel experience.

To do this, your three best friends are: LinkedIn for the MICE customers, Facebook and Instagram for private individuals.

They mean you can communicate almost daily with the future customer, but also share their positive experiences, photos, testimonials, conference videos or events, services, etc… with a large audience. If you have the resources to produce quality videos, create your own YouTube channel.

The app that we provide at BOWO can be extremely useful to you, because you can use it to collect your customers' opinions on a daily basis.

When they are in your hotel they communicate with you daily, it is a gold mine of testimonials and opinions that you can put to good use on social networks.

Social networks play an essential role in maintaining a strong link between a hotel and its guests. As one of the major means of communication, social media represent a real opportunity to improve the visibility and image of a hotel.

The customer wants to be able to experience your hotel through the networks!! So let them!

To fine-tune the e-marketing ideas that you can put in place for your establishment, why not check out our article on hospitality in the digital communication age.

Play with price and package strategies

A happy customer is a customer who feels pampered, so pamper them!

Show them what they want to experience and tell them what they want to hear.

  • A weekend getaway.
  • Summer holidays.
  • Spa offer.
  • Romantic break.
  • Pre-cruise offer.
  • Cruise & parking offer.

The idea is to use social networks and the website to clearly target different consumer niches by offering tailored packages. Because when you know the customers, you know what they need.

Provide things they won't find on OTA sites.

For example, create a VIP group of subscribers, former customers, and send them special offers regularly via email, a WhatsApp group or even text messages.

When they consider that the service is beyond reproach, and that customer esteem is your priority, then they're bound to recommend your establishment or, better still, book again! And if your marketing tools aren't doing their job, your client may well make a second booking in your establishment…. via OTAs.

You must therefore set up processes to collect your customers' information during check-in...

With a tool like Bowo, advance check-in to your establishment is automated. You will collect all your customers' details, without requiring extra time from your reception staff... not to mention the range of services and the possibilities of additional sales that you can make available thanks to the platform's integrated concierge service. All of which will further boost your margins.

It's all about balance.

In the end, it all comes down to the mix of channels. Hotels that work with OTAs should do so with an honest assessment of the value provided by these channels. But now you know there are alternatives.

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