Great article again, republished below, from Des O'Mahony at Bookassist on the need to look at all aspects of distribution for hotels. It's something we have been pushing with all of our clients with our SiteBuilder, ConversionBuilder and RelationshipBuilder Cogs each driving one another.Online Travel Agents (OTAs) do a really good job at shifting hotel rooms, albeit at a high commission. Hotels need OTAs for exposure and additional sales, but a balance must be struck between brand-direct bookings and those on OTAs.
Is it ultimately worth the effort to keep pushing for direct business, once all the real costs associated with direct bookings are taken into account? Our answer is a resounding yes. But you need to spend wisely.
Take for example a hotel group that Bookassist operates with in Europe. When Bookassist partnered with them in 2009, just 4% of their online business was coming directly through their website. Their website was a secondary concern, their booking engine was just a PMS web module, they had no digital marketing presence. Today, at the beginning of 2014, that group does almost 38% of its entire online business direct, a factor of ten improvement, and rising. Direct booking revenue has gone from a few hundred thousand Euro per year to almost €6M.
This is not new business - this is redistributed business moved from OTAs to direct. On that redistributed business, they would have paid well in excess of €1M in OTA commission annually, but they now pocket the majority of that margin and can afford to reinvest significantly to continue direct growth.
Same occupancy, same general ADR, but a whopping margin difference in their favour.
The reason for their success is that they put direct booking strategy at the front and centre of their entire business strategy and stopped treating it as a peripheral issue. It's the focus.
IT’S ABOUT MARGIN, NOT REVENUEBookassist Account Managers are also trained Revenue Managers and they are well versed in issues of ADR and RevPAR that hotels obsess about. However, as they point out, these metrics viewed in isolation tend to focus hotels on the revenue issue alone, while the real issue today is arguably margin. With the capability of OTAs today, achieving high occupancy is no longer so difficult if you’re prepared to pay. Achieving it with a good margin Per Available Room is another matter.
Successful hotels employ a very unified and integrated approach across the spectrum of online visibility, conversion and growth. Let’s look briefly at some key points in these areas. (I’ll discuss this in the context of websites only, but mobile is increasingly relevant to the discussion.)