Direct bookings will come to an end in 2018?
Recent years have seen a dramatic increase in the number of the online booking platforms. They’ve become increasingly popular, and as the intermediaries between hotels and their guests, seem to be taking over a significant chunk of reservations made via Internet. Their growth seems inevitable – and so does the loss of control by the hoteliers. But does it mean the end of the direct bookings?
Online Travel Agencies, or OTAs, gained an immense amount of power over the last decade. Most of them came to the scene even before the Internet grew into what it is now, and quickly established their position.
Quick, easy to use, accessible tools to book rooms whenever and wherever they want. All hotels in one, easy-to-navigate place. An opportunity to compare and choose from millions of options. Essentially, they provide what the good 21st-century online products boil down to -easy designs, comfort and accessibility.
Customers don’t like over complications. They want to make a reservation with one click of a button, without the hassle of making phone calls and sending emails. The creators of online booking platforms noticed this and used it to their advantage. Most importantly, that is what differs them from many hoteliers. They understand, that the world is moving forward and that their target groups need the products to be up-to-date with their expectations.
Many hotel owners don’t feel as comfortable on the internet and social media. They know their business, they do it well, but marketing-wise, they often cannot keep up with the OTAs, who have crews of hundreds working on their advertising and online communication strategies.
It seems as if the era of the direct bookings is lost, and soon the OTAs will take over the entire process.
The rate parity is a key issue?
One tool the OTAs use to control the hotels is rate parity. It is a legal agreement between those two parties, ensuring, that the hoteliers use the same rates for their room prices on all the distribution channels. Having such an agreement signifies that the hotel can’t give discounts on its prices, not even on its own website. Because of that, guests often don’t even bother going to the hotels’ own site, believing that it won’t lower the costs. If the price for the room is the same via a direct channel and the OTAs, it means, that the 30% commission lowers the income of the hotel by 30%.
The whole agreement doesn’t seem fair and makes one party feel frustrated and cheated. Hoteliers feel as if they lost all the control over what used to be theirs. No wonder petitions circle the web, asking for the rate parity to be made illegal.
The key factor of direct bookings
It is obvious – hotel owners would prefer to acquire as many direct bookings as possible. The main reason? Costs. While attracting more bookings, the OTAs charge the hotels commission of up to 30% of the overall price of the room. That means, that while getting more reservations, the hoteliers earn much less than they could if they were made through their website or other direct channels. Every CEO wants to maximize the revenue of their business. No wonder, that so many hotel owners are frustrated with the OTAs, because their help seems necessary, yet it comes with a steep price.
But direct bookings are much more than just a source of income for the hoteliers. Most importantly, it is a tool to better control their property and revenue. They can supervise reservations with more efficiency, without intervention from third parties, as well as gather data about their customers for both analytic and advertising purposes.
Direct bookings also establish loyalty. If guests book through the hotel and connect with its staff, they are more likely to remember it next time they choose the same destination.
Are there solutions?
If you are a hotelier, it may feel, as if there is no point in fighting the system. Many assume, that there are no ways out. This is far from true. Hoteliers can still use some solutions to fight back and regain booking control.
Firstly, remember the design. We live in an Internet era, and each one of us is bombarded daily with hundreds of websites of different colours and schemes. That’s why your hotel’s site should stand out. An easy to navigate, clear and interesting design can be a true game-changer.
Secondly, go mobile. The studies suggest that each year more bookings are made via mobile devices, not just computers and mobile share has increasingly made a large percentage due to partly convenience. Make sure, that your website works on both and doesn’t lose its integrity when opened on a smartphone.
It is important to focus on the booking process. It should be as easy to make as possible, with clear step by step instructions and clear, understandable buttons. SiteMinder has a new widget – The Booking Button, that makes the process incredibly easy and fast, with various additional options, such as currency conversion and many language choices.
Another crucial tool is social media. Use Facebook and Instagram to interact with guests and show them the benefits of staying at your hotel. It is a great way to establish a good reputation among travellers and therefore get more direct bookings. Engaging with them is another way to establish loyalty, which so crucial in the today’s environment. Don’t be afraid to use online positioning to ensure that your hotel is visible.
It is also worth noticing that not all OTAs are ‘bad guys’. One company, that wants to bring the fairness back to the industry is Bidroom.com. This online booking platform, which is essentially a community of travellers and hoteliers, doesn’t charge hoteliers commission, and in fact, ensures the direct bookings for them. In exchange, it only asks for a discount or extra benefits for the guests, so that both sides of the reservation feel content with it.
The fight for the direct bookings is certainly not over. The hotels should use all of the resources available to them to fight back and regain authority in this matter. It is crucial for them, but also for their guests, who seem to be on the losing side of this equation, often paying more than they should. While the choice given by the OTAs is an advantage, the new era should, above all, bring transparency back to the industry and control back to hoteliers.