With Expedia’s acquisition of Travelocity and Orbitz, the OTA landscape is currently dominated by Expedia and Priceline. Much debate surrounds this powerful duopoly and their dominance in the online hotel booking space currently. Independent Hotel owners and chains are expressing the concerns they have about its power. Concerns which have been widely expressed, especially within Europe on issues such as rate parity which remain contentious and ongoing.
In this article we’ll address what Hoteliers can, and must do, to take control of guest direct bookings in the current climate to address hotel direct guest sales revenue growth.
The existence of the well known OTA’s in the Hotel reservation space is something of a double edged sword for the Hotelier.
On the one hand Hoteliers are feeling the squeeze with a growing proportion of all online bookings being taken by the OTA’s and commissions hit Hoteliers hard at a lofty 15-30%.
Statistics on the percentage of online bookings via OTA’s vary regionally however ETOA reference that in Europe, 39% of bookings will be made online by 2017, a rise of 5% from current figures. In the USA, the figure is 44%, a rise of 2% OTA market share – OTAs will enjoy a majority share of the US market by 2017 (52%).
Recently Booking.com opted to withhold customer email data associated with booking from the Hotelier citing security as the reason for the change. However we choose to view this, it sets a clear precedent and tells the Hotelier all they need to know about the value of customer data acquisition for the times ahead. (See Lesson 1 below).
On the other hand Hoteliers must also view OTA’s for the opportunity they present – as a major source of referral traffic and as an informative window on the competitive landscape. Guests will frequently check out a Hotelier offering on the Hotelier’s website prior to booking, as they will with competing hotels in the the area. Hoteliers need to play well here. Indeed, viewed through the lens of the OTA, one could argue that the Hotelier’s biggest competitors are not other OTAs, but the hotels which make up the wider OTA marketplace themselves.
In Lesson 2 below we’ll look at the significance of this and the scope it affords Hoteliers for Direct Guest Bookings and data acquisition.
Hotels are increasingly looking at their cost of distribution and looking for ways to leverage available and developing technologies to maximise direct sales.
OTA commission costs of between 15% and 30% are a good reason for savvy hotels to invest in technologies that drive guests to book direct.
Sell across your full range of hotel services with fully pre-paid vouchers.
The good news is that powerful cloud technologies such as the VoucherCart sales engine are available to to put hoteliers firmly back in the driving seat, drive down the cost of acquisition and drive reliable and consistent revenue growth.
All things considered, what should hoteliers be doing to combat the dominance of the OTA’s in the booking space?
The balance between OTA’s and direct bookings varies both regionally and by hotel type. Key is addressing how to use the OTA’s and create a win-win on both direct and commissioned sales.
I’ve created a shortlist of items which should be actioned below. Moreover, these should be considered best practice for any Hotel irrespective of the OTA threat above, and as routine and embedded business practice they should be considered as a reliable means of new customer acquisition and retention.
Actions Hoteliers should be taking now and on a continued basis
Hoteliers are far from powerless here, and the application of the lessons below will allow Hoteliers to easily establish and grow a significant share of direct bookings in addition to OTA-generated bookings. Better yet, it enables Hoteliers to achieve strong and growing direct guest booking performance on the back of traffic provided by the browsing OTA customer.
Let us consider a situation in which a prospective guest has navigated to the Hotelier website, having viewed the hotel offering via an OTA site and is doing his/her homework on the hotel in question.
The Hoteliers task here is to convert the OTA visitor into a direct sale customer. Specifically the user experience and incentivisation the user encounters on the Hotelier site should be sufficiently compelling so as to draw the user into booking direct and eliminate any inclination the user may have to revert to the OTA to make their booking.
Let’s look at how we can stack the likelihood this will happen in the hotelier’s favour.
Lesson 1: Use smart Guest incentivised email capture on your website.
Use Smart-Modals to request site visitors to enter their email address to get a coupon they can use to receive X% discount on a voucher purchase.
Lesson 2: Ensure the guest has a good reason to book direct with you and make it clear why.
Get loyalty with a voucher sale. (See below). Get something ‘extra’ or some form of discount the user cannot expect to receive if booking via OTA.
Lesson 3: Use fully pre-paid vouchers with loyalty to drive revenue into your hotel across your full range of services.
Here you can take payment in full and in advance for accommodation, spa, food and leisure services your hotel provides as vouchers (Room + Spa Offers, Room + Food Offers, Experience offers, Romantic Breaks and indeed any form of single or packaged of services you choose which cannot be found via OTA sites.)
Better yet, these cannot be considered on par with a booking because they are not bookings at all, they are vouchers which entitle the holder to make a booking at some future date or within a window the Hotel chooses to define clearly in the sale terms. You can add on extras to differentiate the sale further and offer a “stay-experience” the buyer can simply not achieve when booking via an OTA.
Lesson 4: Provide a better class of guest experience on your website.
More information, better images, video and a high quality clean, smart website user experience which is uncluttered, easy to navigate and has purchase triggers in all the right places.
At VoucherCart we deliver the latest and most powerful direct guest revenue growth technology for Independent Hotels and Hotel Chains available today. Through the VoucherCart sales engine, we empower Hoteliers with our fully supported technology to easily and seamlessly drive Guest Revenue through their own digital channels – website, social and email – all deployed for promotion via a single interface.
VoucherCart cloud sales automation technology has enabled Hoteliers to achieve staggering revenue growth at levels of 300% and beyond on like for like sales, through simple “voucherisation” across the hotel services offered and through use of hotel marketing automation technology.
Vouchers are the single most profitable commodity a Hotel can sell, representing payment in full and in advance for services which are only ever delivered upon approx 80% of the time. When you leverage multi-channel automated promotion technology, sales incentivisation for the buyer, embedded loyalty and viral behaviours to the tried and tested pre-paid voucher concept you see immediate and compelling revenue results.
Doug MacLennan – VoucherCart CEO & Co-Founder
In conclusion, and as the landscape continues to evolve, and it is clear that a well-balanced distribution and sales strategy which includes both directly-generated as well as OTA-generated booking and sales across the hotels services is key.
OTAs are a vital part of the online hotel sales ecosystem giving consumers choice and a more convenient booking experience. In addressing the challenges faced, we encourage Hoteliers to play well on the OTA’s versus their competitors there, but more specifically focus on creating best possible guest experience for those elements of the process they can control.