The holiday booking wars have long been dominated by large online travel agencies (OTAs) such as Agoda or Expedia. But recently, they seem to be loosening their grip, and as technology evolves, new opportunities to compete are constantly being uncovered for smaller operators.
At the heart of this struggle is, of course, the customers. In the past, many smaller properties were willing to pay OTAs a commission per booking for a wider reach. Today this power dynamic is wavering slightly and in many cases, direct bookings are proving cheaper.
An advice piece in the New York Times recently had this to say:’“Do your research and inquire directly with travel providers in addition to searching the big travel aggregators.’
For further evidence of this trend one need not look far (Forbes, LifeHacker), and it’s worth examining for both business owners and consumers alike.
Why Are Direct Bookings Becoming Cheaper?
The true cause of cheaper direct bookings is a complicated economic interplay that is tough to pin down. A few observations can be safely made though:
- Rate parity clauses are being regulated. Rate parity clauses force hotels to maintain the same rates across the board. The regulation allows individual properties to play with their price points.
- OTAs are lowering their commission rates. This is counterintuitive. OTAs have a high volume and perhaps thought lowering commission rates might appease their properties. This may be true, but it’s also given individual businesses more flexibility as their margins improve.
However you slice it, the opportunity for educating loyal customers about direct bookings and grabbing additional market share is primed now more than ever.
Practical Strategies for Driving Direct Bookings
A quick glance at the data reaffirms the fact that the world has gone mobile. As 2016, Google’s algorithm has started giving preference to mobile. This has a huge number of implications, and from a hospitality perspective, it means there is absolutely no excuse for not having a responsive, mobile-friendly website.
Education is another hurdle to overcome. According to Debbie Miller, the president of the marketing agency Social Hospitality, ‘A lot of people just look for the cheapest deals. They go to the OTAs as a search tool because they don’t realise there might be other opportunities by going through the websites directly.’
There are a number of ways to build awareness and inform customers of lower direct prices. Some commonly cited tactics for smaller players are as follows:
- Incentivise direct bookings with bonuses and promotions
- Add an OTA comparison widget so customers can see the difference
- Focus on authenticity or offer a unique value proposition (larger brands struggle to do both)
- Play the long game and keep efforts consistent
There are also a number of innovative companies appearing in this space. There is Triptease, a direct booking platform that has done over a billion dollars in sales, and Hotel Linkage which offers a handy suite of tools and support. Both are geared specifically to help facilitate direct bookings.
Changing quickly is an advantage small businesses will always have over established brands and corporations. The key to increasing direct bookings (and remaining competitive) is making sure your technology is keeping pace with the ever-changing landscape.
Also, utilising customer relationship management (CRM, such as Guestfolio or Twilio) or revenue management software (RMS, such as IDeaS) allows you to tailor guest experiences and pricing.
This customised experience will likely drive direct bookings and benefit many other facets of your business.