Only with profit can you pay your wages and overheads and invest in your hotel business for the future to keep expanding and growing. An important indicator to monitor is your CPA, cost per acquisition. The cost of obtaining a booking is ever increasing with the rise of OTA’s and the monetisation of social media, meta search and paid Google listings (adwords). It is no wonder the OTA’s so favour their advertising spend on CPC when they get a 52% return on their investment. Unfortunately hotels only get on average 8% return.
Every hotel should be performing a regular analysis of their distribution channels, especially the online channels, including their own website, GDS, corporate and online travel agencies. Comparing the yield generated after commissions or marketing expenses to see where the most profit is coming from. It logically makes sense to then amplify the most profitable channels and not be complacent with the most costly.
Lead times for each channel are also vitally important as to setting rates into the future. If you can get 30+ or 60+ days advanced bookings, you are in a much stronger position for higher dynamic pricing (our Price Check tool helps clients achieve this). Cancellations can play a huge impact on your overall strategy with the OTA’s providing ‘free cancellations’ this cost is added to the 15-23% commission they already charge.
When looking at your ‘Direct’ business, even after you add the cost of your marketing strategy to the commission paid on your website, these costs should still be lower than your OTA commissions.
We want you to win the customer direct the first time. Empowering you to establish loyalty through personalised follow up emails and let you dazzle them with amazing personalised service. Simple really, no quantum physics required…