We did a simple calculation.
In 2022, for a 3-star hotel with 30 rooms in Paris, the amount of commissions paid to OTAs since the beginning of the year amounts to around 45,000 euros…
And yet, OTAs are essential: they offer visibility that hoteliers cannot do without, generate significant traffic, and offer an excellent way to explore new markets. An essential segment of your distribution, it should not however be the only segment.
The following question arises: how to find a good balance between direct sales and OTAs ?
The price of OTAS
Around 75% of online hotel reservations today go through OTAs.
In addition to the commissions you pay them, which vary between 15 and 30% of the room price, you also have to deal with the rewards, packages and loyalty offers (Booking Genius, Hotels.com Reward, etc.) from your partners. and rivals, without forgetting their offers to make you gain visibility, sometimes at your expense…
In 2020, Booking. as we thus announced a novelty that the pandemic brings with it: the program Favorite More
The promise is as follows:
In exchange for maintaining rate parity, and an additional 5% commission (i.e. 22% minimum) Booking.com offers its preferred hotels an increase in bookings of up to 30%. To further entice people to book, Booking.com is offering travel credits to guests at preferred plus hotels.
This makes your property more attractive to potential guests, who can use the earned credits for future bookings on the Booking.com site. Because it would be
shame to make them loyal to your establishment, isn’t it? ?
Work on your direct booking rate
The value of direct booking may seem obvious to some, but for others the time and money spent attracting people to their websites is not worth it… And yet, direct booking is ‘is :
1. A lower cost for a more attractive rate
This seems obvious, but it is nevertheless necessary to remember here that the commissions of OTAs ranging between 12 and 25 %, your own site will cost you much less, allowing you to lower your prices in order to be more attractive.
2. A lower cancellation rate
We know that OTAs actively promote the ease of cancellation if travelers book with them. Some even send emails to customers telling them to cancel a hotel in favor of another establishment with similar services that has just lowered its rates. This cancellation facility promoted by OTAs has a direct impact on your business.
3. A controlled customer experience
As you know, most OTAs do not give you the contact details of your customers, preventing you from communicating with them. They are still your customers. Retrieve their data and collecting information such as their habits, tastes and preferences would allow you to retain them.
Never underestimate the power of an email address !
We are not going to tell you the opposite: recovering customer data is one of the major issues that are pushing hoteliers to adopt a CRM solution such as ours.
4. An increase in turnover ?
Do direct customers tend to spend more ?
Let’s look at the facts:
A direct customer = an email address = a contact with whom you can exchange and therefore offer additional products, services and packs even before their arrival.
And if you do your job really well, and you use a CRM to segment your customer database, sending personalized offers tailored to their needs is automatic.
We had fun doing the math, and the result is clear:
Since the start of 2022, out of all of our hotel customers offering upsell in their pre-stay emailsthe establishments made an average of 16 additional sales of products or services per month, for an additional monthly turnover of 1,327 euros.
Reduce OTA commissions by increasing your direct bookings
By increasing direct bookings, you can reduce the percentage of rooms booked through OTAs, and therefore the commissions you pay them. There are incredibly effective ways to achieve this.
Offer more interesting rates and availability directly !
This may seem obvious, and yet, it still regularly happens to come across establishments offering more advantageous rates on OTAs than on their own sites.
If you don’t, let your customers know. ! Make sure this appears everywhere on your website, and throughout the booking process. Don’t forget that a Booking user interested in your hotel is very likely to visit your website during their purchase journey. It is therefore necessary that your price advantage is obvious to him, in order to encourage him to book directly.
Do you have the best online availability ? The rule of thumb is to never have rooms available from third parties when you are closed on your site.
Diversify your booking channels
There are other booking channels than OTAs !
Your website, metasearch (Google Hotel Ads, Tripadvisor, Trivago…), tour operators, word of mouth, partnerships, corporations, etc.
Calculate the return on investment of your different acquisition channels. Check the number of bookings and revenue generated on each, and compare their respective commission rates. The goal is to find the most interesting channels !
Optimize your website
Your website is normally the first contact new customers have with your establishment. Things like slow loading times, navigation difficulties, and booking issues are all ways to drive customers to other sites.
It is now necessary to optimize your website for mobile browsing.
80 % of consumers use a mobile app during their vacation research phase, and almost half of bookings are made on mobile. OTA sites and apps and almost all travel agencies are optimized for mobile, with customer data pre-recorded: they only need a few clicks to make a reservation. So don’t lose your customer at this level !
Your presence on search engines
Leveraging the power of SEO is currently one of the most important marketing strategies a brand can have. If you don’t have a Google My Business page yet, now is the time to get started.
Also do brand advocacy by buying your name on Google Ads, to appear at the top of Google results. Indeed, it would be a shame if a customer looking for you came across Booking, and ended up booking elsewhere…
Exclusive live offers !
You have to be creative, and offer adapted services to the profiles of your customers. Offering a lower price is not always enough to seduce.
Improve your offers to encourage the traveler to book directly. Simple incentives like a free cocktail, upgrade, or free late checkout won’t weigh on your earnings but could mean a lot to a customer.
Also include what you already offer as not all customers know this. For example, wifi or free parking, your concierge service…
Build customer loyalty
If you manage to retain your customers, chances are they will book directly on your website.
Offer them a Loyalty program (promotional offers, packages, gifts, services offered, etc.). Take advantage of your knowledge of the customer to communicate offers that will please him !
Also play the human card by offering him an impeccable customer journey during his stay, so that he keeps a memorable memory… In short, make him want to come back, and remind him of his good memories quite regularly to that he does not forget you !
Hotel Experience is a hotel CRM solution that allows you to automate exchanges with your customers based on their segmentation, preferences and consumption habits.
Optimize your customer journey in order to improve your customer satisfaction, collect their data, encourage them to leave you positive reviews, build loyalty, and thus increase your share of direct bookings.
Get the best out of every customer in a few pre-configured steps !
We would like to say thanks to the author of this article for this remarkable material
How to control your OTA commissions? – TendanceHospitality