Get more direct bookings
We have discussed with many hotels. Most of them seem to be struggling with the same issue: Online Travel Agencies are having too big share of the bookings. Several researches show, that about 2/3 of the bookings come from the OTAs. We got the similar results, when we made our own summer study in June.
As we know, the two top issues with the OTA channels are:
- They eat too much profit from the hotel operations
- They keep the guest data themselves and do not share this to the hotel.
Did you know, that an average hotel in Helsinki pays more than half a million euros per year as commission to the OTAs?! It is all away from your bottom line. If an OTA gets the profit of 10 - 25 %, it is not healthy for the hotel in the long run.
The other issue is the contact to the guest. Many online travel agencies are now building their own guest loyalty programs. And why not, they are also competing against each other. The more info you collect from your customer, the easier it gets to serve them in the better way. The problem is, that OTAs do not generally share that info for the hotels.
Our studies show, that part of the guests prefer to travel incognito, meaning, that they do not want to be recognized. There may be many reasons for that. But a big portion of the travellers want to be served personally and according to their individual needs. How can you do that, if you do not even know who they are? One of the reasons Air BnB is so successful, is that they truly know their customers and they can offer that tailored, personal service. Limber Way's view is, that the hotels must re-gain the true ownership of their guests and serve them in a better way.
Of course, getting rid of the OTAs entirely is not an ideal situation either, but there is a way for good middle ground. If you could get 25 % of those OTA bookings converted into direct bookings, you can improve your entire profit margin with 2,5 % per year. 25% sounds like a lot, but is not impossible. Think this way. Imagine that you too pay 500k€ per year as commission. Quarter of that is 125.000€. Invest that much to improve your direct bookings ratio and you will have ROI within one year, next year is pure profit. In addition, you will improve your Customer Experience.
How is that possible? It is not easy of course; otherwise all the hotels would have done that already. There are few companies in the USA (some have small presence also in Europe), who market their services to increase direct bookings, i.e. D2D (drive to direct). They are the companies who have dedicated themselves only for this. According to their promises, the improvement ratio they are offering, is between 15 and 35 %. That is quite a result! But most of these companies only concentrate on online presence and activities. And they seem to be very good at that too.
However, the best results can be achieved, when the whole process is managed holistically. First you need to analyse your current status and activities. When Limber Way is on the case, we study 12 different elements. Sales channels (including Webpages) is one of them, visibility in different searches is another. But there are also 10 other elements than needs reviewing, staff's daily operations and models is an example of those. Trimming your PMS is another.
Once we have identified the status of these, we do the gap analysis. We (usually) pick half a dozen most critical elements, that need to be improved. Some of your processes may already be good enough (for now) so they are not the ones you should touch first. But the ones that are below industry standards or otherwise less optimal, require attention.
Next you need the development plan. You should use external consultants for many of the topics. We use our partners to get the best possible results. It is not bad idea to involve your customers either. Plan the timetable, design the changes and improvements and calculate the ROI carefully. Make sure you have set your targets so, that you can - not only reach - but also measure them. If you really want to change things, you must be prepared to change yourself, not just the surface.
At this point you will have a clear picture of the entire project. Will you get everything you want with 125k€? How is the ROI looking? You may need some adjustments or prioritisation, but this is the stage, where you take the Go/No Go -decision. 'No Go' means, that you will continue to pay to the Online Travel Agencies the commission and do not get the guest info. 'Go' means, that you are getting ahead in the race.
Then it is time to go full speed ahead. Make sure, that all aspects are aligned with each other and everything is managed holistically. Things need to click. One of the key elements of the good Customer Experience is the smooth journey between different transitions and touchpoints.
Once all necessary changes are made, the staff is trained and the business continues, you also need close follow-up. You will have to react fast. If you have set the targets right, there should be some indicators which help you to track the flow and detect possible flaws. You should be able to identify which things need further development. And eventually there is a check-point, where you see if that 25% (or whatever target you have set) improvement has been reached.
Like said before, that is not easy, but not impossible either. The best results are reached with wide cooperation and by using specialized consultants. Limber Way is such. We are happy to help you with this battle and not only to survive, but to be on the winning side. Knowing your guests and providing optimised customer service is essential to the business when AirBnB and other new concepts change the market. Our mission is to make the Customer Journey better. Getting more direct bookings is the direct result of this.