Written by: Antonio Andújar
Hotels and hotel chains still have many opportunities to improve during 2016 when it comes to converting online traffic into direct booking. So we want to discover the advantages of increasing direct booking at hotels. Although remember that is very important to have a balance between direct booking and those coming from intermediaries, both online and offline. Rome was not built in one day, so start step by step.
There are mainly three: save on commissions, improve the online marketing strategy profitability and have full control over communication with your customer.
At first, any booking victory was an online hotel business celebration, but as the digital marketing channel evolves, its efficiency also gets better valuating profitability. Online travel agencies commissions, also known as OTAs, can reach 20% or more. In this sense, OTAs have a very juicy business in which invest a lot of money to capture more and more customers.
"In Europe about 90% of online booking is made through the major online travel agencies (Booking, Expedia...)."
Still many hotels sell their rooms through OTAs at lower prices instead of through their website, so most likely, customer won’t book directly. However, when a hotel matches the selling conditions of its direct site with the OTA offers, that hotel experiences an increase in the number of rooms booked directly through its web - this is known as billboard effect-. So we can deduce the customer wants to book directly at the hotel when offering the same prices and conditions as the OTA.
Nevertheless, the online marketing strategy also has to be efficient in order to increase direct booking. So, if by having direct booking to your web you exceed the cost of OTA’s intermediation (let’s say 20% on average) it is time to rethink how you are doing things.
Despite the advantages we mentioned, the industry debate on direct sales is still alive and every industry professional has their opinion. For example, Riu Hotels & Resorts is well aware that its main distribution channel is the tour operator and, as indicated from the company:
“Travel agencies remain our greatest prescribing and valuable allies".
On the other hand, Gabriel Escarrer Juliá, president of Meliá Hotels International, said:
“The tourism industry future will be marked by technology: social networks and online sales channels, which certainly mark a new business imperative that we can not ignore as responsible managers”.
Meliá Hotels International is a great case study because it sells directly through its website 37% ot the total with a growth of 25% annualy in recent years.
Anyway, what is clear is that online channel is increasingly taking power. Boosting the increase of direct online bookings, enables the hotel’s cost savings by eliminating intermediaries’ commissions and makes possible to keep a direct communication with the customer in order to get information to help the loyalty strategy actions.
The progress of online channels for hotels is perfectly reflected since 2011 in the annual WIHP company survey named Direct Booking Source Comparison.
SOURCE: Hotel direct booking source survey 2014 – WIHP Hotels