Sometimes, we all need to be reminded of just how much we’re throwing away by leaning too heavily on OTAs as a primary source of online bookings. Everyone knows that OTA bookings cost more, but very little is ever made of the amazing fact that OTA bookings are usually much lower in total value than direct bookings.
Siteminder, which is in a position to see booking flow from both OTAs and direct websites, recently stated: “The average booking value hotels are realising on their direct website is nearly double the value they are receiving from third-party booking channels. (The finding is based on 43.5 million reservations).”
And Kalibri Labs, a company that helps hotels evaluate revenue performance, analysed the daily stay and cost history from 25,000 US hotels from 2011 through present. They found that bookings made directly on your hotel brand’s site were nine percent higher than OTA bookings. Plus, when you factor in ancillary on-property spending, direct bookings brought in up to 18 percent more revenue than OTA reservations.
HERE ARE THE REASONS BEHIND THIS SURPRISING STAT:
OTAs are for brand atheists and price-conscious shoppers
The picture of an OTA customer is clear. They don’t care about your hotel brand (or any other property’s brand for that matter), what makes your experience unique, or any of your updates and renovations.
You are a commodity to them. They’re looking solely at price and where they feel they’ll receive more bang for their buck.
OTAs are not only your least valuable booking sources, they are also your costliest. To make matters worse, many hotels attempt to out-do their competition on OTA channels by offering even lower rates than what is listed on their own hotel website (via opaque offers). It’s the hotel industry’s version of self-sabotage. Not only is this short-sighted, it unnecessarily undercuts and cheapens any other efforts you make to drive profitability at your property. Lowering already-discounted room rates will ultimately leave potential guests no reason to book direct.
Direct bookers are loyal guests who tend to stay longer
Guests who book direct care about so much more than price. They want something unique that only your hotel can offer. They’ve done the research, looked at your comp set, read your reviews and have deemed your hotel worth their time and money.
These invested guests tend to book longer stays and spend more money on ancillary products during their visit. Plus, the value of these directly booked guests only multiply because there is a large possibility that they’ll come back for a return stay, meaning more room nights and even more ancillary spend.
THE BIG TAKEAWAY:
The major lesson behind this incredible stat is this: third-party bookings not only cost more, they also bring less total revenue.
Instead of lowering your rates and paying hefty commissions for low-value OTA bookings, get smart about investing in marketing tools. Some examples might include retargeting tools, personalised and targeted email marketing, live chatting to engage visitors, a booking engine with automatic best rate guarantees, reservation recovery, and a responsive website and mobile site.
This will ensure a more balanced approach to your distribution and give your hotel the full benefit of higher value bookings.