Stop Worrying About Direct Bookings: Here’s How to Win the War with the OTAs
By Babs Harrison, Managing director of Phoenix based Babs Harrison and Partners
Read on because what you will discover here is why it's a fool's errand to obsessively seek to stop OTA bookings because there is an easy way to win that OTA customer as your own. For life.
Of course we all understand the grumbles about OTAs. The commissions are steep, as much as 30% at some independents, more typically 15 to 20% for high visibility properties. That's still at least $15 out of every $100, a $400 room actually brings in only $340 at many properties.
$280 at some unfortunate independents.
That's a painful slice of revenues and thus the "get them to book direct" anxiety.
Just one problem: most of us are unlikely to win this battle. The OTAs - led by Expedia and the Priceline companies - are massive ad spenders. Priceline spent $2.8 billion on advertising in 2015. Expedia spent $3.3 billion.
Both also are huge spenders on Google and Facebook, usually ranked among the biggest.
Maybe the biggest hotel brands - such as Marriott and Hilton - can fight it out with the OTAs in the advertising arena, but not so small groups and independents.
The other line of attack for some hotel operators is to aim to net direct bookings by winning the SEO war.
Does that ever work? Expedia and Priceline can and will outbid most hotels for any important keywords. That's the painful reality of jousting with giants.
Meantime, some hotels continue to drown their website with keyword-soaked copy in the belief - however erroneous - that this will up search engine visibility and therefore bookings.
Word of advice: stop that. Now. Bad writing repels readers.
Nobody is saying don't seek to win direct traffic. By all means, too, make rational bids for select keywords but don't go obsessive in a misguided effort to win more direct traffic.
My advice is this: let the OTAs do the heavy lifting. They are good at putting themselves top of mind with consumers. Let them get the initial bookings.
I have known DoSMs who have declared war on the OTAs and, honestly, I have never understood their logic. It's rather like Luxembourg declaring war on Germany. There are no odds in favor of a victory.
But out of this defeat there is a way to grab success, just by doing two critical things when the guest arrives on property.
Seek to upsell them - gently - with a range of unique experiences, upgraded rooms, spa, and restaurant. Add a single spa treatment and a meal for two and that will bring in enough profit to let you forget the OTA's commission.
Take every opportunity to upsell because this is where your real profits on OTA-generated guests will come.
Step two: enroll the guest in a loyalty club. That means even at an independent.
Assure the guest that the best rates for future stays will be gotten by calling a private number or responding to an email that goes out only to club members.
Use this loyalty club email list for select marketing but always offer only genuinely tasty deals.
I ask you this: if you are offering better rates to loyalty club members than they can find on OTAs, why wouldn't they book direct with you? Of course they will. That means you will get them to book direct with you in the future and tell them that if they have friends and relatives who want the same treatment, it's available to them if they come to you directly.
Does this mean you'll cut the OTAs out of your bookings?
Let's hope not. Personally I want to see the OTAs do the heavy lifting in selling many of our first- time guests.
But I want to win those guests' future bookings directly and, really, it is easy if you wow them with service (thus making them want to return) then promise them a deal that will be the best they can hope to find.
That's how simple it is to tame the OTAs and transform them into your best supporters.
Babs Harrison + Partners