Full speed ahead!

Driving direct bookings in the era of integrated systems

by ADAM and LARRY MOGELONSKY

In an ideal world, your hotel would turn off distribution to online travel agencies, sourcing all guests from direct channels and maximizing net revenues. But, in reality, OTAs today are likened to a necessary evil to both raise awareness with new customers and generate bookings from guests who have no previous experience with your brand.

Now, however, new advances in property-level systems are enabling hotels to rethink how they incentivize direct bookings, learn more about guests from owned channels, and, ultimately, drive traffic away from the commission-heavy OTAs. Importantly, any resultant increase in net revenues from this concerted effort will be needed as financial wiggle room for future capital expenditures in the face of a rapidly changing hospitality landscape.

And, the term “concerted” is applicable because this is more than just technology; it also involves marketing strategy, on-site team training, and other operations. While there’s lots you can do – and indeed, guest intelligence and agile hotel marketing are subjects for an entire masterclass – here are three main “rules” centered around data integrations to consider prioritizing to realize significant gains in direct bookings for the rest of 2023 and into 2024.

RIGHT NOW?
It’s a given your hotel is making far less off from an OTA booking than from a reservation made through an owned channel, with commissions varying depending on what you negotiated. What you have to remember is an OTA customer isn’t your customer – yet!

When an OTA guest checks in, their email is opaque – aliased – which makes it difficult to enroll them in your loyalty program or communicate with them for upselling additional services like room upgrade or F&B. While you’ve undoubtedly workshopped several different “mousetraps” to get these guests to hand over some more personal information, the risk right now is the OTAs are doing a really good job keeping their customers loyal to them. Once habits are instilled, they’re very difficult to change.

Namely, Booking.com and Expedia both have their own rewards programs prioritizing destination over property or brand, meaning even a specific hotel search may yield competitive offers that behaviorally deter even the thought of hotel brand loyalty. More recently, the OTAs have become trendsetters with deploying new technologies like GPT-based travel-planning plugins to imbue additional layers of convenience into their platforms.

In other words, it’s almost getting to be too late; the user interface on the OTAs is too robust, too flexible, and too valuable for guests to bother looking elsewhere except maybe Airbnb. Some hotels may end up doomed to rely on hefty commissions eroding gross margins, a disloyal customer base they know little about and constant problems with cancellations, no-shows, chargebacks, and reconciliation issues.

IT TAKES A VILLAGE
As trite as it may be to say, hotels are all in this fight together. It’s often far too easy to fall into a prisoner’s dilemma type of attitude whereby, in anticipation of your competitors undercutting your rates, you preemptively lower your rates, then your competitors do the same, and the entire market spirals down into commoditization.

Instead, understand there are passive cooperative benefits to enhance your efforts to drive direct bookings. These efforts undoubtedly will help other hotels – in your comp set and in other markets – but their efforts also will boost your own direct reservations ratio in the long run as the average consumer slowly but surely becomes more aware of why booking direct is always the best way to go. It’s a bit like karma, and you have to trust if everyone works together on this problem, it will course-correct, and every hotel will realize healthier net revenues.

3 RULES to level the playing field against OTAs

RULE #1:
NEVER GIVE GUESTS AN EXCUSE TO BOOK ANYWHERE ELSE

Rate parity means you can’t undercut the OTAs on price, but there are ways to get creative and still abide by the terms of these agreements. It’s never a one-size-fits-all approach, so here are some ideas to ensure your hotel can compete on price with the OTAs while still adding value to the direct booking as well as the direct booking experience.

• Promoting your best rate guarantee is a half measure because it requires an extra morsel of time on the part of the guest to bring to your attention. You need a clear and real-time picture of when the OTAs are running promotions – both those your revenue director controls and those the OTA runs themselves – so your direct channel lists the same price as what’s on an OTA and nothing higher. This will require good intelligence from your revenue management system (RMS) and perhaps some AI-based automatic rate adjustments to make happen.
• Another important aspect the leading RMS vendors can now offer is the interpretation of vast sums of forward-looking demand data so your rates can remain nimble with respect to the comp set or any compression events. You must be able to react in an instant to optimize revenues and not drive traffic to the OTAs because they’re displaying a slightly lower price by being just a touch faster.
• Next, consider your channel manager and which room types and room packages you send to the OTAs. Yes, your contract says you must give them the same rates as what you list on direct channels, but there may be some room to breathe (pun intended) around which specific room categories you push out. Notably, you may decide to keep all the premium rooms and suites for direct guests, then combine this with an extra non-price incentive, like offering same-day complimentary upgrade upon availability. Other areas where value can be added, depending on the terms in your OTA contract, include prepaid non-cancellable rates, free breakfasts, all-inclusive rates, or packaged specials that bundle local attractions.

RULE #2:
KNOW YOUR GUESTS AND THEIR LOOKALIKES

It’s not like the problem of opaque information from OTA guests is new, and tech vendors have made incredible strides during the past few years to let you hone the leisure transient funnel and enhance each phase of the customer journey so you can still get a good picture of what motivates your guests. Furthermore, what we learn about our guests is invaluable toward developing lookalike personas and microsegments to guide marketing efforts and future promotions.

• Outside any discussions of programmatic advertising or other top-of-funnel awareness campaigns, the first real touchpoint with your guests is the website. Whether you have control over any modifications to the front-end design, it’s nevertheless important to know about the latest enhancements to the website booking engine (WBE). Not only are user interfaces becoming more adaptable, but you have more user behavior data to tell you where customers are dropping off as well as what additional incentives are working to lock in the bookings when those shoppers return.
• If you have control over your front-end website and can add a prominent Book Now button, then absolutely do that. But, as a bolt-on to the site, adding live chat functionality may be more likely as an approvable project. Guests will have questions, and the more you can answer them and engage them, the more likely they are to prefer the direct channel. And, for efficiency’s sake, you can deploy a chatbot trained to answer most of the repetitive questions before handing over the reins to a live agent to complete the booking or handle complex requests.
• While those familiar with the industry know quite well the benefits of loyalty programs, numerous other “average consumers” have no clue, nor do they see a long-term future with your brand. They’re mercenaries who want immediate gratification. Luckily, there are a handful of rewards platforms that can help entice direct reservations in the moment while remaining compatible with your loyalty program.
• Ultimately, integrating systems is a must. This can improve the performance of the rewards you present, the intelligent guidance your RMS gives you, and the packaging flexibility you are able to present within the WBE. The more you clean and combine the data, the more actionable insights you will have to see what’s working. Even broader, think in terms of revenue per guest, wherein additional integrations from the point of sale (POS) can tell you what’s driving ancillary spend to further refine those guest inferences that will guide the messaging to lookalike audiences.

RULE #3:
INFORMATION CAPTURE FOR THE ON-SITE EXPERIENCE

This is likely to be your best chance to get the guest’s real email, phone number, or social media account for future marketing efforts. It goes without saying this largely depends on how good the on-site experience is, but a great stay is no guarantee the OTA guest converts into one of yours.

• Outside of all things tech, online staff training is your ace in the hole, both by delivering exceptional guest service to build positive rapport as well as treating every customer interaction as a way to remind them to book direct. Are they prompting guests about your loyalty program? Do they know the specific advantages so they can speak about them passionately? Are you incentivizing your front-desk agents to obtain the real email address from OTA guests by offering them, for example, 10% off their next stay? While a lot of this can be done in person, facilitating this education through an online portal is more efficient and scalable.
• Another great point to discuss the loyalty program is through digital signage, be it in the display, a public area display, or a check-in kiosk. All can be configured to raise awareness or even include a specific mousetrap like a QR-codebased promotion for a free drink at the bar that requires a real email address to be activated.
• A third area that may need some retooling is the Wi-Fi login portal. Most already are set up to show a host of available add-ons, but there are now a few upselling platforms that can be bolted on to A/B test different offers and incentives to see what’s working to drive ancillary spend.