We recently collaborated with the Independent Hotel Show to carry out research into hoteliers’ relationships with online travel agencies (OTAs) and surveyed 150 hospitality professionals across Europe, producing some interesting results.
The research shows that the vast majority of respondents accepted online bookings from OTAs, but, most encouragingly, 69 per cent also stated they were committed to growing their strategy to drive direct bookings.
The Direct Booking Survey 2019 also highlighted that although nearly all of the hoteliers who responded use OTAs as part of their distribution model, the overarching consensus is that the commission charged has reached unacceptable highs.
When it comes to the contest for driving direct bookings, we think it’s important to consider that the insight offered by the survey into OTA commissions might be slightly obscured.
Before OTAs, travels agents were taking up to – if not over – 30 per cent commission from hotel bookings, so their online counterparts have actually established cheaper distributions costs.
The focus needs to shift from cost to value, and the value brought by OTAs must be recognised. Allowing smaller independent hotel chains to take advantage of huge marketing machines with an otherwise incomprehensible geographical audience, OTAs ensure a high rate of occupancy is achieved and maintained.
Saying this, they are undoubtedly facing the race to zero commission fees which we’ve seen across many industries, with banking and payments being the hardest hit. As a result, we are likely to see the added value brought by using an OTA as part of a hotel’s business model diminishing alongside those fees or becoming an additional cost, as with the new wave of banking services such as Revolut which charges consumers an annual fee.
So, it’s hoteliers themselves that need to be thinking about this added value and how they’re making it worth it for the customer to be booking directly with the hotel. We mustn’t forget that otherwise why would the customer care about direct bookings? What is in it for them?
As we’ve seen with the growth of services like Netflix and Amazon, this is where personalisation plays a fundamental role and the travel industry should be no exception.
With their reliance on OTAs, many hotels still have very basic and out-of-date websites that inevitably lead all visitors to a ‘book now’ button and a third-party booking engine without any consideration for who the visitor might be.
What about when customers who have already booked to stay at a hotel are browsing the website to see the additional services on offer? This is the opportunity for hoteliers to upsell and create a unique customer experience. The technology that’s available today means there’s no need to be showing irrelevant ‘book now’ messages to the wrong audience.
This drive for providing guests with incredible personalised experiences of staying at your hotel and owning the customer, from booking to departure, is something else that OTAs can’t offer and something that hoteliers need to capitalise on.
This truly is the digital era – we’re seeing social media becoming an irrepressibly powerful marketing tool with 64 per cent of the survey respondents stating that it is an effective means of driving direct bookings at their properties. Consumers are broadening their experiences and looking to try as many products as possible, whether it’s hotels, restaurants, beauty products, clothes, etc.
This has inevitably led to less personal hotel or brand loyalty, but it has established a platform for invaluable advocates and ambassadors. This new form of loyalty revolves around reviews and personal recommendations; it’s about constantly extending the fan base by providing your guests with an experience that they want to share.
The travel industry landscape is changing dramatically and the Direct Booking Survey we carried out alongside the Independent Hotel Show demonstrates just how much of a ‘hot topic’ distributions strategies currently are.
Cost doesn’t necessarily have to be the be-all and end-all for the customer, so as OTAs continue to be challenged over their commission fees, hoteliers need to focus on how personalising their offering can provide added value and drive a new form of loyalty.