Finding The Balance Between "OTAs" (Online Travel Agents) & Direct Bookings
Focused on the hotel and tourism industry, we are constantly looking for ways to improve your sales and grow your business. We’ve found a great article that can do just this and we’ve taken some key points and laid them out below.
History of OTAs
76% of online bookings happen via OTAs
OTAs became powerful and efficient due to good work (and a little brand-jacking). Before, hotels sold to wholesalers, who sold to tour operators, who sold to travel agents and finally to guests. Transparency in this markup system was non-existent. Neither the hotel nor the guest knew how much was being paid. When OTAs entered this space, they gave control back to the hotels and guests received a clear picture of how much they were going to pay.
OTAs were able to become big and powerful because there was nothing else there. They filled a void, that could have been filled over by GDS, Tour Operators or Wholesalers. OTAs just happened to be faster.
Most hotels would love to have 100% of their bookings be direct without having to pay commission to anyone. We have achieved this with some clients but it’s not necessarily the best solution and certainly isn’t the fastest.
We find the best balance comes from direct bookings being on par with OTA bookings. However, exact percentages can vary from city to city. For example, the best balance for a hotel in Paris is around 30% direct and 30% OTA. The remaining 40% come from corporate and phone bookings, return guests and some tour operators. Those figures are different in Rome where it’s closer to 40% direct and 40% OTA.
These are not absolutes, but they are a good benchmark for a healthy split.
20% of your direct bookings come from people who discovered your hotel on an OTA.
Per a recent Google survey, 52% of travelers will visit your hotel’s website after seeing you on an OTA. WIHP also conducted a three-year survey on the billboard effect. We found that over 20% of direct bookings occurred after the guest found the hotel on an OTA. Which shows us, being on an OTA can also increase your direct bookings.
Optimising for Direct Bookings
In most cases, the problem hotels have isn’t how to increase OTA bookings, but rather how to increase direct bookings.
The classic booking path for a guest starts with a search on an OTA. Then they make a shortlist of interesting hotels and check each hotel website for more information. The user gets frustrated if they don’t find the same room types, names, pictures and cancellation policies. This frustration causes the user to leave your site and head back to the OTA.
Users on OTA sites, will visit an average of 5.6 pages per visit and remain on the site for an average of 6 minutes. We hear of hotels being happy that the time on site increased and the page views doubled. This is not something to be happy about. Guests need their questions answered as fast a possible with as little friction as possible.
Optimising on OTA
There are a few things you can do to optimize your OTA presence. The first is to hire a professional photographer to take photos of your hotel and upload these high quality photos. We often see hotels using low quality images with wrinkled sheets, crooked pillows and burned-out lights. Invest in good photos and lots of them because emotion is what drives the sale.
Clearly explain the location of your hotel, the inspiration for your decor, and how you manage the price point of the hotel. Remember your USP is a combination of location, comfort and price, so be honest and helpful when talking about them.
And of course if you want to give it a boost, you can always bump up the commission or make a special offer, but those are measures of last resort.
Connecting it up – Connecting your PMS to your Channel Manager and supplying your rates and inventory to the OTAs and Booking engine with a two-way connection has been found by our consulting teams to increase availability by 30% on your hotel website, sounds incredible? Well consider that major OTAs like Booking have a cancellation rate of 30%, if you don’t get that inventory back into your PMS and channel manager, and in turn to your booking engine, it will be sold on OTAs.
Simplicity in Rooms – Keep room names simple that are easy to recognize like Single, Double, and Superior. The Orange, Eiffel, and Empire rooms have little meaning. They may sound fancy, but to busy travelers searching for a double room, it’s just too much to process.
Protect your Brand – The first thing to do is trademark the name of your hotel. But here is the trick, register and trademark it as the hotel name plus the city. Adding the city name is so important that we even recommend legally changing the name of your hotel. You can either hire an agency or do it yourself. Once it’s done file the registration with Google (trademark it without any logos etc, just the text) that will help you get started. The other way to protect your brand is to outbid OTAs on paid advertising channels.
The balance between OTAs and direct bookings is different by city and sometimes by hotel. The important thing is figuring out how to use the OTAs and make it a win-win for both direct and commissioned sales. We often see that we double or triple direct bookings for a hotel without reducing OTAs, because the OTA sales remain or increase. Is that a bad thing? Not really. It means that we have managed to increase the occupancy or the ADR and everyone wins when that’s the case.
1. Use the OTAs to create a billboard effect – Over half of OTA customers will check your site for more info.
2. Keep descriptions in parity with OTAs – Simplicity is part of the OTA success, duplicate it on your site.
3. OTAs should drive 30% of your revenue – If OTAs are doing too much, find out where your site isn’t optimized, don’t complain about their success.
4. Protect your brand to limit OTAs eating it all – Legal protection is the first thing to do, the rest is paid traffic.