In the hotel room booking wars, online travel agencies (OTAs) seem to be giving up a little ground, and it’s a great opportunity for small, boutique and independent hotels.
Hotels that sell rooms through OTAs must pay a commission, so direct bookings mean higher profit margins. For many years, hotels gave up that extra profit in order to reach a wider audience.
However, new data shows that many rates are now cheaper when booking directly through the hotel website.
We’ll take a look at some possible causes for this shift. We also spoke to hospitality experts to get some tips for driving direct bookings.
Here’s what we’ll cover:
What Is Causing Cheaper Direct Bookings?
The true cause of this shift is hard to nail down, though some experts think a combination of a couple key factors may be leading to cheaper direct bookings:
- Effective regulation against rate parity clauses. Regulations against rate parity clauses—contract language that force hotels to maintain the same rates on all distribution channels—may be having an effect. This means some hotels could offer lower rates on their own website.
- OTAs are willingly easing up on commissions. OTAs often charge hotels an average of 15 to 25 percent per booking, so it’s easy to see why hotels would want travelers to book direct—it means they make a higher profit. It’s possible the OTAs believe reducing commission rates won’t matter, since their volume of business is so high.
This shift is an opportunity for small and independent hotels to educate potential guests and market these cheaper direct booking rates to them.
Many major hotel brands expect the majority of their guests to be millennials in the near future. Why is this important?
Millennials seek the authentic feel boutique hotels can uniquely provide, and they check an average of 10 websites before making a purchase. Hotels need to make sure their site is compelling enough to encourage a direct booking.
To help achieve this, we spoke with two hospitality experts to learn how to encourage guests to book direct by taking advantage of the unique features smaller hotels can offer.
Video Interview With Kristofer Carlson, GM of Westin Austin Downtown
To learn how the big brands are driving direct bookings, watch our interview with Kristofer Carlson, general manager of Westin Austin Downtown. He tells us how his hotel facilitates personalization for guests who book direct, and why the focus on delighting guests increases brand loyalty.
“There are a lot of reasons why we really want to drive people to booking direct, but it all boils down to the most important, which is really to offer personalized service.”
Kristofer Carlson, General Manager at Westin Austin Downtown
Five Tips to Drive Direct Bookings for Small Hotels
We also spoke with Debbie Miller, president of Social Hospitality, a digital marketing agency focused on driving customers to your website and boosting brand loyalty.
Miller believes this shift marks a good time for small hotels to begin educating travelers that booking directly can be cheaper and more valuable, but changing consumer behavior will be an ongoing challenge.
“I think a lot of people who just look for the cheapest deals, who aren’t partial to a specific hotel brand, go to the OTAs as a search tool because they don’t realize there might be other opportunities by going through the websites directly.”
Debbie Miller, President of Social Hospitality
Both Carlson and Miller offer practical tips for small hotels to attract more guests directly to your website; the more time they spend on your site, the more likely they’ll be to book.
1. Compel website visitors to book direct with pop-ups or calls-to-action (CTAs). As travelers research places to stay, they’ll likely visit the hotel website to view photos and other amenities. Miller says it’s important to grab their attention fast using CTAs or pop-ups to alert guests to cheaper rates on the hotel website.
“Have a homepage pop-up and make it really bold, right in the visitor’s face when they land on your site, offering some incentive to book online,” Miller says. “The ‘book direct and save’ phrase is something we use a lot and tends to get a lot of click-thrus on pop-ups.”
Traveler behavior will be tough to alter, but a simple message to website visitors could be enough to keep them returning to your hotel because they feel they’re getting extra value.
This added value can be achieved if hotels…
2. Offer incentives on the website. Alongside the message about cheaper direct bookings, hotels can also place a cherry on top of the deal with some type of incentive for booking direct.
In past research, we surveyed about 2,500 travelers to reveal which incentives are most likely to drive direct bookings.
Just about half of travelers (48 percent) would be most likely to book direct if a hotel offered a room upgrade as incentive to book direct. Second in line is free room service, at 23 percent.
“Many times, we’ll see that if properties offer a value add instead of dropping the rate, they can keep the rate competitive, but offer free breakfast, free Wi-Fi, free parking; whatever they can offer depending on the hotel,” Miller says. “By offering those add-ons, [the hotel doesn’t] have to sacrifice rate and still offer incentives for people to book direct.”
This messaging should also be promoted throughout every social channel, including Twitter, Facebook and Instagram, Miller says. Create a simple contest to win a larger prize if they book direct, and include imagery of the property or incentives to further compel potential guests to visit your site.
“Whatever those little things are that drive them to your website, even if they intend to book through the OTA, they may be inclined to change their course there,” she says.
3. Arrange OTA widgets so that your rates capture visitor attention. Hotels rely on OTAs for a lot of traffic, but you also want guests to stay after they land on your site. One way OTAs and hotels connect online is through OTA widgets on the hotel website that list rates, awards they’ve won or user reviews.
Miller definitely recommends keeping those widgets, as they still boost indirect sales, but she says hotels can be strategic about where they’re placed.
“I think putting it in the footer is wise, so that it’s not the first thing the guest will see on the website and jump off,” she says. “Hopefully, they’ll scroll through the website, look at other things and maybe book direct before seeing the widget.”
Instead, make sure the benefits for booking direct are front, center and at the top of the page when travelers arrive on your landing page. Be proud to display your awards from OTAs, but convey that without sending visitors to another site.
4. Focus on what you can offer over big brands. Again, one major advantage small hotels have over big brands is authenticity. While most small hospitality companies don’t offer loyalty points programs, they often have features and services unique to their location.
Focus on whatever makes your hotel special to convince travelers that they will get a unique, authentic experience by staying at your property.
Exceptional service and an extraordinary location are the recipe for turning guests into brand advocates who will help market your hotel organically—they’ll want everyone to know how memorable their stay was.
As Kristofer Carlson, the Westin Downtown Austin’s general manager, mentions in the video, the opportunity to personalize a guest’s experience is a big reason his hotel benefits from direct bookings:
“When somebody books directly, it gives us an opportunity to connect with that guest on an absolute personalized scale and really give them the experience they’re looking for here at the Westin and here in Austin in general,” he says.
Many big brands, including Westin, employ staff members who actively gather information and preferences about guests before their stay. Sometimes they have preference information about a guest from a previous stay or by viewing guests’ social media accounts. They can even gather this information by speaking to the guest directly.
They could then find out, for example, that the guest loves the University of Texas Longhorns football team and is in town for a game; Carlson says he can leave a UT koozie or other related gifts in the guest room to pump them up for the game.
This is a simple way to delight guests and boost loyalty for a very low cost to the company.
Because they have fewer guests, Carlson says, smaller properties can get even closer to travelers, learn their preferences and personalize their stay in a memorable way.
5. Prepare for the long game. Educating travelers about cheaper direct bookings and influencing the way they search online for hotels won’t be easy or quick, but it’s an opportunity to attract new guests and make them lifelong customers.
Both Carlson and Miller are doubtful that traveler reliance on OTAs will ever change significantly, but think that if smaller properties can stick to aggressive messaging campaigns, they’re likely to gain valuable loyal guests over time.
Hopefully this report and video have given you practical takeaways to help draw in guests with cheaper direct bookings and increase personalization. Here are some next steps:
- Check out our other hotel management content on new hospitality technology or using popular trends to market your hotel.
- Review our list of hotel management systems, including reviews and images, which can help you create and manage marketing campaigns to increase direct bookings.
- Need guided assistance finding software? Call out analysts for a free consultation at (844) 687-6771.