Every modern hotelier faces this difficult question - how to reduce OTA fees. They are a two-sided problem. First, OTAs are relied on because they give you better online exposure and drive bookings up, and second - OTA commissions are high. They can range from 10 per cent up to 30 per cent per room sold. This means an average-sized hotel can pay hundreds of thousands of dollars on OTA fees per year alone, let alone a larger one. These fees lead to reduced revenue and lower net income. Fortunately, there are some smart steps that will make you less dependent on OTA fees and will increase your income:
- Don’t provide your OTAs with all the rooms
- You should not list all hotel rooms with OTAs, especially the expensive ones. The math here is simple - OTA commissions for pricey rooms are higher. Instead, list most of your cheap and average-priced rooms. Leave some of them along with your expensive rooms available for direct online bookings and walk-ins. Thus you will be able to retain your online OTA visibility and make more money at the same time.
- Encourage your guests to come back to you
- Having more guests having not booked through an OTA is great. You won’t pay a penny for their stay and can influence them to book directly with you again. Start by offering excellent services and total guest acceptance. Your efforts will not remain unnoticed. Then you can tell your customers they can book directly with you online or on the phone, or that they can just walk-in. You may emphasize this once on their departure and even offer a discount or some other reward for their next stay if they book directly.
- Enhance your direct booking strategy
- By enticing your guests to book directly with you during their stay you have already reached the stage where you’ve touched upon your direct booking strategy. You can undertake a lot of approaches to make it work. For instance you can:
- Offer your best deals on your website
- To increase your direct bookings you can offer your best deals exclusively on your website. They may include the best rates possible or some other benefits such as free upgrades, free services, discounts, etc. If you make this known to the general public, potential guests will be much less likely to use the services of an OTA.
- Design and use outstanding loyalty programmes
- Another thing you can do is design and use an excellent loyalty programme that is automatically activated for every guest. It can give your clients personalized offers based on their previous stays, discounts, bonuses, etc. but if they use an OTA to book again, they will lose all benefits. Knowing this, they will be more likely to book directly through your website or over the phone.
- Be flexible
- Flexibility is the key to success in the direct booking game. The truth is that people change and so should your direct booking strategy. To meet changing demands you should keep a close eye on the direct reservations, the people making them and the reasons behind. For example, you can track when you get the most direct bookings and then associate them with a certain event or season. Then special deals targeted at this event or season may be offered. Again, flexibility is crucial - only then you will be able to keep an optimal number of online direct bookings.
OTA fees are something painful in the life of every hotelier. They are the necessary evil so that you can be online exposure. But still there are measures you can undertake to curb the influence OTA fees have on your income. By following the methods we just described you will be able to enhance your revenue and become less reliant on OTAs without breaking connections with them. It all starts with a simple step.
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About Clock Software
Clock Software is a global provider of cloud-based property management systems (PMS), integrated online distribution, online & kiosk hotel self check-in solutions and mobile & in-room guest engagement systems with customers in more than 65 countries.