It has become obvious that 2016 will be remembered as the year of the direct booking battle between hotels and online travel agents (OTAs). Hotels have left to OTAs the job of capturing consumers on the web for too long. In the beginning, it all seemed natural - hotels didn't have the technology and the commissions were reasonable. But now, when commissions and contract clauses have become unbearable and with the arrival of modern advanced hotel and marketing technology, an opportunity for change arose and finally a few big brands took the brave first step. Other big brands followed and now we are talking about a direct booking war. But since the big players have the budget and the power, the question remains: what is in there for independent hotels and groups and smaller properties?
What we know so far?
There sure have been previous attempts to break the firm grasp of OTAs, but the first remarkable step has been taken by Marriott with their 'It pays to book directly' video campaign. OTAs tried to stop it before its official launch but it went live and Pandora's box has been opened. Hilton didn't waste time to follow with their own 'Stop clicking around' campaign. For a while, hotels were sitting and watching while Priceline and Expedia published statements of disappointment and warnings of long-term disasters. Finally, Hilton's CEO proudly announced 'promising results' of the campaign for Q1 of 2016 and off it went - in only a few days their own campaigns announced IHG and Choice Hotels and it's very likely that others will join soon. So, generally speaking, the biggest hotel brands are breaking new ground for what could be the end of the dominance of OTAs in hotel online distribution.
What it all means for independent brands?
Until now, we have only seen big hotel chains initiate direct booking campaigns while independent properties still hesitate to join or at least do not dare to announce their efforts publicly. Admittedly, the big chains have some unbeatable advantages over them. They all use a similar model - the so called club rates that are available to loyalty program participants, i.e. a huge number of guests. They also have large budgets and room capacity that OTAs won't let go that easily. I mean, they can't afford to cut-off Hilton, and Marriott, and Hyatt, and all the big brands from their listings just like that, can they?
Now, what if hundreds, or thousands, or hundreds of thousands of hotels, small or big, jump in - will OTAs be able to 'dim' or penalise all of them? Or will they rather start negotiating? For independent hotels and groups, the current situation is like manna from heaven. Since the big players have set a precedent, there has never been a better time for every hotel to request, yes request, new rules and the right to make direct business the way they want to.
And last but not least, the campaigns and the media coverage they got have raised global awareness among travellers that OTAs don't necessarily offer the best possible price. There's a real chance to change travellers' behaviour if the majority of hotels consistently keep the promise to offer a better deal directly.
How should independents approach the direct booking war?
Break OTAs' bad habits. Initiate negotiations for new, more equitable contract terms.
Here are the worst practices that need to be stopped:
- OTAs are allowed to bid for your branded keywords but you're not allowed to promote better deals on your own website. How fair is that?
- Some OTAs sell your inventory further to other intermediaries what results in uncontrolled rates and unfair competition.
- Many will hide the guest's email address thus preventing you to provide personalised service and establish a relationship before arrival.
These are only a few but the point is, it's time to return the right balance. The more hotels request the change, the more receptive will OTAs become.
Improve your own direct booking channels
Still too often, when travellers visit hotel's Brand.com they land on a poorly designed website, not mobile-responsive and with a cumbersome booking process. " … too often, hoteliers handle marketing as an after-thought, pouring investments on infrastructure improvement or human resources training while neglecting to respond to online reviews or having a mobile-optimized website that answers 80% of most commonly asked questions less than a click away from the home page." - says marketing expert and consultant Frederic Gonzalo of Gonzo Marketing in his recent post Hotels Promoting Direct Bookings: It’s About Time!
Investing in modern technology that lets you provide excellent online experience for your potential and returning guests is worth every dollar in the era of online and mobile bookings. One of the reasons your guests go to OTA websites is that they expect and are used to the modern digital services available there. So make sure that when customers come to your website, they will feel the same level of comfort and readiness to complete a deal.
Educate the customer (away from OTAs)
'If nobody is aware that best deals can be found by booking direct, or through a rewards program, then how can we expect customers to flock to our websites?' says Frederic Gonzalo in his posts. Can not agree more. As you probably know, we offer a comprehensive web booking engine that offers everything to optimise a hotel's website for conversion - easy booking process, upsell opportunities, personal codes for special rates, gift certificate shop. But what's the use of it if customers don't know that they can find a better deal on your website? That you are able and ready to add value to their booking if they deal directly with you? The more hotels make and keep the promise for better deals offered directly, the more likely it is for travellers to change their booking habits. They are looking for a better deal and still believe that OTAs will provide them. It is the job of hotel marketers to teach them otherwise.
Know your distribution and marketing channels and explore new alternatives
In a recent article on EyeforTravel editor Pamela Whitby talks about Hotels and the dirty battle of distribution - a thorough research on the current hotel distribution landscape. This is what she said about the maturity of the market for mass involvement of independent hotels in the direct booking push: 'The falling away of rate parity restrictions as well as innovative technology is certainly helping hotels to take a harder line in driving direct bookings. Hilton's Stop Clicking Around campaign which it launched in February 2016 has seen bookings from the mobile app rise by 150% year on year and app downloads are exceeding 70,000 a week. That's a 200% increase from 2015!'. And about the possible traps hotels should avoid, she adds: '[You must] really understand your channels and make sure your rates are accurate. The last thing a hotel needs is for its 'best-available rate' to be undercut by a competitor.'
Vikram Singh, Global hospitality and travel business strategist, author of Words of Vikram blog also shared his thoughts on the best approach independents can take to direct booking campaigns: 'Consolidation in the hospitality sector presents an opportunity for independent hotels to take charge of their own distribution and profits. One-to-one matchup in marketing dollars with an OTA is not possible. What independent hotels can do is use their marketing budget to make sure they get their fair share of revenue and bookings. Their strategy should include giving a real incentive for guests to book direct, keeping their website and content fresh and relevant, and making sure they secure traffic for their brand name online through adequate investment in paid search. They also need to be smart about their OTA participation: by taking advantage of OTA exposure without completely giving up control of their distribution. Nothing should stop you from asking for direct repeat business from anyone checking into to your hotel."
So, independent hotels should take every opportunity and use every available channel to push and promote direct business and reach the right balance of booking sources - metasearch engines, own website, mobile, e-mail, PPC.
In conclusion, I would gladly state 'No OTA, no cry!' and finish the discussion. But in order to remain reasonable we have to admit that OTA listings are still an indispensable part of the online distribution mix. But they are only reasonable with limited inventory that will let you milk the so-called billboard effect. What you should focus on, and spend on, is direct marketing, website improvement, a good booking engine, guest relations, excellent service. And last but not least, hotels have to teach customers that best prices are to be found on your direct booking channels, and keep that promise.