And even today, after the internet has seeped in our lives, we don’t book directly. The only thing that has changed is instead of travel agents, we buy packages right from the online travel agents (OTAs).

Personally, OTAs have made things really simple.

Why would I book individually when I am getting everything in one place? 

On top of that, they get me deals that I mostly don’t find on my own or they are not available on hotel websites.

But lately, I came to know that OTAs and hotels are not getting along well. And as a blogger from the hospitality domain, I know why that is the case.

To be honest, OTAs are not the ones to be blamed for this shaky situation. It’s the balance that hotels fail to strike, the dependency that hotels have on OTAs, and the negligence that hotels have towards other sources.

No, I am not blaming hotels either. But this is something very common in hotels and needs to be addressed.

But before that, let me ask hotels a few questions:

• How many OTAs are you listed on?
• How much commission do you payout for each booking?
• What’s your ratio of OTA bookings to direct hotel bookings?
• Does your hotel website provide a seamless experience to guests just like OTAs?
• How much profit will you make if your OTA bookings are always higher than other sources?

If you can answer these, then I am sure you already get the point. Relying only on OTAs will cost you business.

Even though your occupancy will be high, your profit margin will be low. 

In this blog, I would like to help you understand that OTAs are not the only avenues to generate hotel bookings. There are other available ways that will help you reduce OTA dependency and contribute to your overall revenue.

How Did OTAs Come into the Picture?

Before I jump right into all the burning questions, let’s  look at the onset of online travel agencies.

It all dates back to October 1996, when tech giant Microsoft launched a product called Expedia. And it completely changed how people plan and book travel, including hotel stays.

More and more OTAs came in and started invading the online booking space. They were providing a readily searchable inventory and smooth booking experience to travellers.

For hotels, it was more of a mixed blessing. Though there was a commission involved, OTAs were bringing in more reservations for hotels.

According to a report, even during the 2008-09 recession, OTAs were all out and working. Many hotels lacked the capabilities to conduct business the right way, but OTAs kept on delivering what they promised — business.

The ball was completely in OTAs’ courts.

Then, Why is There a Clash?

OTAs started and still are spending aggressively on advertising and technology. More than half of all travellers use an OTA to plan their travel and stay. Not to mention, more than 80% of online bookings are made by under-30s, with OTAs being their preferred booking platform. 

They are the face of the hotel industry; one so powerful that hotels have no option but to join hands with them. 

And why not? Even during the COVID pandemic, they are helping hotels generate reservations.

But, there still remain a few concerns for hotels that push them to reduce OTA dependency.

To make their grip stronger on the industry, OTAs increased their commissions. Hotels today payout hefty commissions — as much as 20–30% on each booking (which is huge). 

This undoubtedly impairs profitability and can deny properties the growth they need to stand strong in this competitive market. 

This has shaken the relationship between both the parties. 

Not only that, there are other pain points which I will share in the next point.

Why Hotels Should Not Rely on OTAs for Scoring Reservations?

Before I start listing the concerns and tell you why hotels should decrease OTA dependency, let’s understand that OTAs are NOT the evil ones here. They were, are and will be one of the major sources of revenues for hotels. 

Along with the commissions, here are some more reasons for exploring other channels of gaining bookings and reduce OTA dependency:

• Hotel’s relationship with guests is a concern. OTAs remain the primary point of contact for guests, even though they provide hotels with guest details. 
• OTAs always run discounts to bring in more guests. But little do you know that they mostly ask for additional commission from hotels. This results in low profits and even loss.
• It is not an easy task to maintain your inventory on multiple OTAs (until and unless you have a channel manager in place). A single error may lead to double booking, which poorly impacts your brand image.
• Relying solely on OTAs increases your workload. You need more manpower to keep an eye on your OTA listings, optimize them, and do a lot to rank higher.

So, what can be done to make things simpler for hotels? 

Well, if you ask me, I would definitely recommend you to invest your time and resources on other channels as well. 

OTAs are here to stay and they will do everything to mark their territory in the industry. 

BUT, hotels can incorporate strategies to reduce OTA dependency.

Here Are 10 Ways to Reduce OTA Reliance

OTAs have their own set of benefits without a doubt, but one cannot overlook the challenges they present. And hotels must look for ways to avoid putting all their eggs in one basket.

#1 Analyse channel distribution

When strategizing your distribution, you must start with analysis. And it begins with acquiring the right set of data from the right sources. Be it booking patterns, age group, or determining which channels are prime sources of your reservations.

That’s not all. Identify the market (by which I mean, your competitors as well) and try to determine what strategies they are deploying.

You’ll be able to gather accurate data for in-depth analysis and get an idea about your target demographic and demand for your hotel. Hence, you’ll be able to make much more informed decisions and develop a successful channel distribution strategy.

For example: Post-analysis results show that people are booking from OTAs because of the experience they provide. You can take that into consideration and work on your website booking experience. Make it as user-friendly as possible.

#2 Incorporate a strong pricing strategy

I cannot emphasise enough on the importance of having a strong pricing strategy!!

Let me ask you a question. Why would someone book with you directly, if they are getting the same room at a lower price on an OTA?

There are MANY hotels around the world that keep complaining about low conversion rates on their website. But they always fail to notice or maybe they overlook the fact that their rates are lower on OTAs.

DO NOT put up lower rates on OTAs than on your hotel website. If you do this, then you’re going to miss out on a lot of direct bookings.

#3 Work on your website experience

I would never book with a hotel that doesn’t have a website.

The experience that a guest/potential guest gets on your website is pivotal for conversion. The more user-friendly your website is, the more likely you are to drive bookings from it.

The website should:

• load as fast as possible
• be SEO optimized
• have an intriguing interface
• have all the details — high-resolution photos, amenities, and so on.
• be easy-to-use and navigate
• include right Call-to-Action (CTA) buttons at the right places
• have a booking engine in place (more details in next point)

#4 Invest in a booking engine

Someone comes to your website and notices that you have everything — the details, photos, room rates, offers, etc. Now they want to book with you directly but the options they have is a phone number and an email address or maybe a form.

Do you think they will book? I really don’t think so!

I don’t see a point why a hotel SHOULD NOT invest in a booking engine. It has so much to offer.

A booking engine lets you capture and process direct online reservations in a smooth manner. Not to mention, you can also run loyalty programs and rewards.

Word to the wise: When you decide on a booking engine, determine whether the provider is an authorised partner for Google’s Free Hotel Booking Links program. Why? Because this program lets you display your direct booking rates for free on Google hotel search. And hotels can only enrol through authorised partners. 

It is really important that you stay abreast with all the new happenings in the industry. And this program by the search giant is definitely one of the best.

#5 Let your guests book through Facebook

Facebook has become much more business-centric in the past few years.

If you aren’t making the best out of this platform, you are missing out. Big time!

Integrate your booking engine with your hotel’s Facebook page. When you have that in place along with a ‘Book Now’ button, you will be able to secure commission-free bookings from there too.

#6 Retain your direct guests

Before you go about your guest retention strategies, you must have strong reasons for why they should book directly with you.

One of the best ways to do that is by offering incentives and rewards.

Let me give you an example: You have a guest who is checking out. What you can do is, send a ‘Thank you’ note to them. Plus, mention that you are offering them a free night on their next stay. To avail this offer, they just have to go to your website and book their stay.

In the same manner, you can offer them free meal or access to the exclusive areas of your hotel or just a bottle of wine.

Let me help you with some more tips:

• Your guest database is your goldmine. Use that to categorize and prioritize past guests to target the right ones.
• Now gather their past interests/activities. Did they order red wine while they were there at your property? Yes? Great! Drop them a mail, offering free red wine on their next stay.
• Know their purpose of staying at your hotel. Create experiences based on that.
• Train your staff!!!!!! Imagine a past guest calls up and says s/he is getting a cheaper deal on an OTA. And what if your frontdesk staff asks them to go ahead and book from the OTA? That’s a red flag!
• Look at your previous feedbacks. Did you fail to provide a ride to your guest to the airport? Well, let them know you are offering them a free pick up and drop this time.  

Retaining guests is important, and if you do it the right way, they will contribute significantly to your revenue.

You can also read our blog on “How to Create the Best Hotel Loyalty Program for Maximum Customer Retention?”

#7 Communicate with your guests

Communication is one of the keys to establish a strong relationship with your guests. And the stronger the relationship, the higher the chances of landing direct bookings.

When I am saying communicate, I mean keep in touch with them. Email them about exclusive offers, rewards, feedback or just an email wishing them on their birthday or a festival (you already have their data).

Personalised emails are a gem. They can do wonders!

#ProTip: Invest in an automation tool to drop timely emails. The conversation and knowledge sharing needs to be consistent.

#8 Leverage paid advertisements to bring in more direct bookings

Hotels must invest in effective marketing campaigns. It is one of the most important aspects that contribute to your revenue.

But again, you need to take strategic approaches to make the most out of them.

Like I said in the first point, you need data. So, gather and segment your data and look for the guests who are more likely to book directly with you. Once done, target them with your campaigns.

You can use Facebook ads or Google ads to go about it.

We have blogs on both of them. Give them a read to understand the nuts and bolts.

• How to Set Up Facebook Ads for Your Hotel: A Step-by-step Guide
• How to Set Up Google Ads for Your Hotel: A Step-by-step Guide

#ProTip: Try to keep your initial campaigns as a test. It will help you learn what works for what kind of guests.

General social media posting is also a fantastic way to strengthen and promote your brand and build relationships. It might take a bit time to get the traction, but with the right approach, you will be able to gain great benefits and reduce OTA dependency.

To make your job easier, here’s another blog: Excellent Social Media Marketing Strategies For Hotels

Read in and you’ll definitely have a crystal clear idea of social media marketing.

#9 Bet on metasearch engines

I have to say this! If you haven’t bet on metasearch engines yet, then you are definitely letting some of the major opportunities go.

Metasearch engines provide people with multiple results (hotel room rates) from several platforms to compare with. And unlike OTAs, metasearch engines redirect the users to the hotels’ websites.

This presents hotels with an opportunity to generate traffic and increase direct bookings.

#10 Focus on building a strong brand image

While you work on all the above-mentioned strategies, do not overlook this one. Everything else will only work when you have a strong and trusted brand image.

From serving guests at your property to promoting your hotel on the internet, you have to be consistently engaging, authentic, and exciting.

The more you include that empathy quotient, the more you connect with your guests/potential guests.

Brand building is not a cakewalk, but you have to put in your efforts if you want to reap long term benefits.

What’s Next?

So you have finally learned all about how to reduce OTA dependency. But have you thought about the next steps? Where are you going to get reservations from, if not OTAs?

Here are some of the ways you can drive bookings (direct bookings is definitely one of them):

1. Corporate Bookings: Business travel is an important source of revenue for hotels. When you partner with the right companies and provide them with great experiences, you increase your chances of revenue boost. 

2. Meetings, Incentives, Conferences and Exhibitions (MICE): Organising events, conferences, exhibitions etc. is a great way to keep the cash flowing in your hotel business. Renting out rooms is certainly the prime job, but putting efforts in MICE gives you a place ahead of your competitors.

3. Offline agents: Offline agents are still in the game. Despite the internet boom, there are many people who tend to plan their travel and stay through an offline or brick and mortar agent. 
   So, you must consider partnering with some. Not to mention, the commission they charge (10-15%) is much lesser than OTAs.

The post Save Big On Commissions: 10 Ways To Reduce OTA Dependency appeared first on eZee Absolute.

The online travel agents (OTAs) have witnessed a spike as well as loss in OTA market share. And today, there are a huge number of hotels that have stopped putting much weight on OTAs and started promoting direct bookings.

This old “OTA vs hotel direct bookings” battle has put accommodation providers in a dilemma. They are finding it hard to balance between both.

In this blog, we are going to compare the pros and cons of both OTAs and direct bookings to understand which is better.

What is an OTA Booking?

An online travel agency (OTA) also known as a hotel booking site is a marketplace that provides consumers with multiple hotels to book with. Simply put, OTAs are the middleman that connect travellers with hotels and take a small commission in the process.

In recent times, OTAs have gained tremendous traction. Millions of travellers around the world use them to plan their travel and stay.

Furthermore, OTAs are not just driving bookings to hotels, but also delivering a lot of other benefits.

• Giving hotels more visibility on the web
• Providing rich tools, analytics, and insights to target the right travellers
• Managing guest reviews and more…

What is Direct Booking?

Direct bookings are nothing but guests who book directly through a hotel’s website, phone call, email, social media, etc.

How do they get to know about the hotel? 

There are multiple factors that contribute to this. They must have:

• seen your advertisement
• read your blogs
• gone to some OTA but decided to book through your website
• seen your hotel in person and considered making a booking

Also, direct booking has its own set of benefits. Here are some of them:

• A great way to nurture a good relationship with guests
• Gives you the power to personalize the guest experience
• Can gather more data for your future marketing campaigns
• And of course, you can do away with commissions

The OTA vs Direct Booking Conflict

The opportunities OTAs present in terms of revenue are significant and it is crucial for hotels not to deprive themselves of such avenues. But hotels are still sceptical about relying on it. 

Let’s understand why it has become such a huge battle.

The rise of OTA bookings

Early on, hotel reservations were either made directly through a phone call, walk-in, or via a travel agent. But over the years, things have changed. Today, there are several ways to book a hotel room and one of them is through an OTA.

The concept of OTAs dates back to the days when Microsoft launched Expedia Travel Services in 1996 in the USA. Which was then just a tool to book a room quickly evolved and gained a lot of popularity due to the good work and a lot of branding.

But there’s another reason that ushered the popularity of OTAs — lack of transparency in the traditional system.  

When brick and mortar travel agents and tour operators were still in the game, there was a serious lack of transparency. But OTAs stepped in and quickly formed a symbiotic relationship with hotels and travellers. They let everyone have a clear picture of everything.

Since then, OTAs became a go-to medium for travellers to book a stay, resulting in more and more hotel listings.

Also, why not!

Hotels were charged a modest commission, they were getting good advertisements, and they didn’t have to spend much on their online fronts.

According to a report, travel sales generated by OTAs were about 45% of entire European travel sales revenue in 2013.

The rise of direct bookings

However, today, despite all the benefits of OTAs, hotels are getting second thoughts and considering direct bookings.

But why do hotels prefer direct bookings these days?

OTAs have lately increased their commissions, cutting into hotels’ profits. That’s not all. Hotels are becoming more concerned about their relationship with their guests. OTAs are at the front and this might not help hotels build a strong guest relationship.

Considering all of this, hotels are now struggling; they cannot let go of the OTAs as they contribute to their revenue, and also, they cannot solely rely on it too.

This is where direct bookings come into the picture. 

An increase in online bookings is inevitable and hotels are now spending significant resources and efforts in enhancing their direct bookings. Securing a share has become more important than ever now.

Let’s Address the Elephant in the Room: Which is Better?

Saying upfront that OTA is better than direct booking or vice versa wouldn’t be valid. Because, both have their own set of advantages. 

So, let us look at the similarities and the differences between both and see who wins this OTA vs direct booking battle.

Here are the similarities:

Act as an online brochure

Both OTA and your hotel website act as your hotel’s online brochure. They allow your guests to check your property’s photos, description, amenities details, etc. And then decide, whether they would want to book with you.

Contribute to revenue

For many hotels, the number of direct bookings secured might be lower compared to OTAs, but there are no commissions involved.

And when it comes to OTAs, there’s a commission involved, but the booking frequency is higher.  

Both are really critical for the hotel to keep the cash flowing.

Contribute to a hotel’s brand reputation

Both OTA and your website are critical for your hotel business. 

The experience guests get while making a reservation through your hotel website impacts your brand reputation. A seamless booking experience is a brownie point for hotels and OTAs and website booking engines deliver just that.

Allow hotels to accept bookings round the clock

Your OTA listings and your website always provide your existing/potential guests with the ability to book anytime, anywhere. They just need a smart device with an internet connection to book a stay with you.

The Internet has made reservations really simple and both OTA and direct booking win the game here over traditional reservations.

Here are the differences:

OTA delivers more visibility and reach

OTAs provide a lot of advantages to hotels, and the ‘Billboard Effect’ is one of them. People are more likely to search for your hotel and visit your website when they see you on an OTA.

Also, OTAs want to gain higher revenue. So, they provide extensive marketing to hotels, helping them reach a broader audience, and generate more bookings.

Direct bookings help with better guest relationships

I have already mentioned this above. But let me give you a clear picture here.

Every time a guest books through an OTA, his/her data gets captured and that particular OTA can use the data to communicate with them.

But OTAs are not able to build the level of close relationships a hotel builds with its guests. 

This is where direct bookings are an advantage. 

It allows hotels to gather guests’ data to cultivate meaningful relationships. Also, hotels can deliver a personalized guest experience for every individual and in return, cultivates loyalty.

Direct booking saves the revenue shares

OTAs are the most preferred booking channel. However, according to a report, hotels usually pay 15 – 30% of the value of the booked stay which is definitely a huge percentage.

Now just think, if you get most of your reservations from your website or your Facebook page and not from any OTA, how much would you actually save?

Increasing sustainable revenue is the ultimate goal for hotels apart from building a brand. And hotels that focus on driving direct reservations achieves the same.

In this scenario of OTA vs direct booking, direct booking takes the cake.

OTAs deliver an efficient experience

One of the major reasons people turn to OTAs is because they get to see and compare a lot of hotels. Also, the process of booking is really fast and seamless.

And as more people are turning to OTAs, hotels are also flocking there.

Now that we know the similarities and differences between OTA and direct bookings, can we say which one is better?

Well, I don’t think we can!

Both the approaches to drive reservation have their own set of pros and cons, but that doesn’t mean hotels can rely only on one approach.

People might argue that hotels were doing well even before the OTA boom. But that doesn’t justify the current scenario of OTA vs direct booking.

The world has become internet-savvy and everything is happening online. It’s not the hotels who have brought in the OTA trend, it’s the travellers who found it really alluring.

So, the bottom line is both OTA and direct bookings are equally important for hotels. It’s just that they need to strategize their approaches. And this brings me to my next point.

How to Strike the Right Balance Between OTA and Direct Bookings?

Even though there’s an OTA vs direct booking conflict, you can still nurture and grow your hotel business if you rethink your distribution strategy. And the best way to go about it is by leveraging prices, special offers, policies, providing guests with an incentive etc.

Here are some of the tips you can consider:

Offer loyalty program

In OTAs, travellers cannot access loyalty programs and rewards. And this is what hotels can use to their advantage and secure direct bookings.

For example: You can roll out a campaign where guests would get access to the pool and gym, free breakfast, and other amenities if they book directly with you.

Furthermore, you can also take your loyalty program and reward approach to the next level by targeting former guests. You already know their preferences and behaviour, and based on that, you can curate personalized packages.

Here’s another example: Your hotel is near the airport and there are chances that most of your guests would be the ones on layovers or someone on a business trip. You can always create packages for these groups of travellers. Provide them with exclusive amenities to relax if they book directly with you.

Implement smart pricing strategies

The price you charge for your hotel rooms is crucial for your business. And while you want to strike a balance between your OTA bookings and direct booking, concrete pricing strategies are a must.

Right price, right time, and the right avenue is the key to boost occupancy and profitability.

You can read our blog on "Powerful Hotel Pricing Strategies” to know more.

Further, you can also invest in revenue and marketing management services. Revenue managers will help you make informed, data-driven choices, rather than relying on instincts or guesswork.

Here’s another blog that will help hire the right revenue management service provider for your hotel business.

Have an effective cancellation & refund policy

A flexible and seamless cancellation policy is another great way to secure more and more direct bookings. When someone cancels a booking on an OTA, they mostly end up waiting for the refund. The process of cancellation and refund on most OTAs doesn’t entice a lot of people.

So, why not use this to your advantage again? Offer a quick refund and flexible cancellation policy on direct bookings.

Optimize your website and OTA

An optimized hotel website that is easy to use and navigate, has a proper booking engine in place, has rewards and offers, is more likely to drive direct bookings.

Similarly, it is also important for hotels to optimize their OTA listing. The OTA profile must have all the relevant updated information in place — description, high-quality picture, a proper cancellation policy and so on. 

Be it on a website or an OTA, engaging content is a hook. Period.

Also, hotels must maintain rate parity; not only to avoid cutting into your hotel’s profits but also to avoid confusing customers.

Convert OTA booking to direct bookings

Whenever a guest books a stay at your hotel through an OTA, try convincing them to book with you directly on their next visit.

Offer them discounts or something complimentary on their next stay. This is one of the overlooked strategies; but if done right, it can be really effective.

FAQs

The post Who’s Really Winning The Battle Between OTA and Direct Booking? appeared first on eZee Absolute.

Hotels that reflect and feature on the websites of ‘Online Travel Agents (OTA)’ clinch an additional benefit of getting more reservations over and above direct sales. This advantage, in the hospitality industry, is often referred to as ‘Billboard Effect ’ through which hotels observe an upswing in the number of direct reservations through various connected distribution channels and hotel’s website. This effect not only quantifies the number of direct bookings but also enriches hotel’s online search. Numerous hoteliers over the globe have adopted this marketing technique to wangle an astonishingly great number of reservations through the middlemen.

Let’s see step by step what magic can the billboard effect do for your hotel business

Be as visible online as any other bigger brand

Modern travelers tend to surf dominant OTA websites before finalizing their travel plan for the sake of comparison between different hotels, locations, visitor reviews as well as best deals.Ultimately, this increases the chances of traveler visiting the hotel’s own website to seek more information once he finds it acceptable on the travel site. Essentially, Billboard effect is all about being present everywhere, as these travel giants splurge a huge amount of money in marketing and advertisements which eventually help you building your brand stature vis-à-vis the bigger established brands.

Save yourself from extravagant marketing costs

Prominent OTAs spend a herculean amount on online advertising; this has significantly affected the increase in sales trend of the hotels. The precipitous rise of hotel OTAs is also because of the fact that these travel sites offer a wide range of hotels to bookers in a single place to select from instead of conducting a long and exhausting individual hotel search. Even though the booker found your reference on the OTA, many of them will still visit your website before finalizing the booking. You can easily take advantage of this opportunity to attract the guests directly while saving a lot on marketing expenditures.

Access reliance on the Billboard Effect can get a little sour

We all are aware that every action has an equal and opposite reaction. Thus, use of the Billboard effect is a little bitter-sweet as trying to be present and managing a huge number of distribution sites can go little awry as well. Quite often, things go out of control when hotels receive a massive number of booking but are unable to update their inventory on all the associated site. It can lead to over-bookings which…. let’s face it, is a sticky and very unpleasant situation. Additionally, with an upsurge in the bookings through the OTA, the commission the hotel has to pay increases as well.

What should a hotelier to do? How can you take advantage of the billboard effect without facing the negative impact of the approach?

What you need to do is a complete analysis of the current situation and apply a few well-tested approaches that attracts more direct bookings compared to the OTA.

Offer the most competitive rate

When the bookers visit your website, make sure they are aware that they will get the best price while booking directly with you instead with third-party agents.

Take advantage of guest reviews

Make sure to have a lot of positive reviews on OTA portals as well as your hotel website, this will definitely impact your sales positively and attract new guests to experience your hospitality.

Responsive website and content marketing

One of most obvious methods of converting lookers into bookers is offering a smooth and user-friendly booking experience with your website. At the same time, don’t forget the importance of content marketing either through promotions, a fresh and new travel blog series or newsletter.

To conclude

Thus, it is beyond doubts that the ‘Billboard Effect’ can work in your favor enchantingly well to enhance your brand reach and online visibility. Part of the magic formula is to be unswervingly represented across all influential OTAs, succouring to strengthen your brand reputation while not losing control of the situation to maintain a win-win situation.

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