Is Direct Booking Really Best? Right Channeling May Be Better for Your Hotel

There’s no doubt that there are clear benefits to increasing your direct bookings, for both your hotel and your customers. Hotels save on distribution costs and enjoy higher profit margins, while guests enjoy exclusive loyalty-member rates, along with the ability to earn and use rewards points, and reserve upgrades. And the ability to capture guest data is a key advantage of direct bookings, as the hotel can leverage data in the future for both optimization and personalization. 

Changing Channels

But recent studies show that despite big brand’s efforts to offer the best rates on their proprietary websites, pricing often remains inconsistent across channels, with online travel agency (OTA) and metasearch websites periodically offering lower prices. As a result, shoppers aren’t yet convinced that booking direct is always their best option. So, to focus all your efforts on growing direct bookings, and ignoring third-party channels, could end up hurting your bottom line in the long run. Here we examine key benefits that come from “right channeling,” including third-party channels as part of your optimal channel mix.

Guests Love the Convenience

Research from Phocuswright shows that OTAs currently hold 39 percent of the U.S. booking market. The reality is, many of your guests are accustomed to using OTAs like Expedia and Booking.com to book their hotel rooms. OTAs and metasearch sites make it easy to shop and compare multiple accommodation options in one browser window. And many rely on the one-stop shopping convenience of being able to secure their flights, hotel nights and rental cars all in one place.

Hotels Gain Visibility

Whether or not direct bookings increase due to the Billboard Effect from being listed on an OTA site, OTAs ability to attract new customers is well established. And OTA listings are particularly beneficial for smaller operators, because no matter how beautiful, efficient and SEO-optimized your hotel website may be, you’d be hard pressed to achieve the global reach of an OTA all on your own. In addition, a broad distribution strategy improves chances that your inventory will appear higher on popular metasearch sites such as Kayak and Trivago, which are also effective new-customer acquisition channels.

Perishing the Perishable

For those price-sensitive, flexible travelers looking to score last-minute deals, opaque channels like Priceline and Hotwire help hotels sell rooms that might otherwise remain empty. And because travelers don’t see a hotel’s name until after booking, it’s easier to offer lower prices without compromising your brand integrity and price positioning.

The Influence of Reviews

Hotels with a presence and reviews on third-party sites enable guests to book a room with confidence. According to a study by TrustYou, 95 percent of travelers read reviews before booking a hotel. And while positive reviews influence a customer’s hotel choice, 87 percent of potential consumers believe that an appropriate response to a negative review improves their impression of a hotel as well.

Ancillary Spend & More Direct Bookings

While third-party channels are great at getting more heads into your hotel beds, once your guests are on-site, you can increase their profitability by encouraging ancillary spend, such as food and beverage purchases. Further, before they leave your property, capture guests email addresses. Then use follow-up email campaigns to transform them into direct bookers on subsequent trips.

Based upon today's current purchase climate, it’s clear that OTAs and other third-party channels are important when it comes to customer acquisition and revenue growth. And when managed effectively, hotels gain a number of advantages from incorporating those channels into their distribution mix.

Originally posted on the Rainmaker Blog by Ellis Connolly