Strategies for Winning the Direct Booking Wars
It’s been a busy year on the “book direct” front. Hotels of all sizes are facing off against established and emerging online travel agencies (OTAs) and meta sites. At the same time, lines are blurring, with OTAs continuing to expand their business services for hotels and the industry moving towards ‘meta metasearch’ (for another post). But generally, hotels are testing a wide range of strategies to win back share from OTAs, which take costly commission rates ranging from 10 to 30 percent.
The direct booking wars
With much press, earlier this year, many brands launched massive ad campaigns in conjunction with “book direct” discounts to loyalty members. Hilton was the first to launch such a campaign back in mid-February (“Stop Clicking Around”), with many other brands following suit. And internationally, the European umbrella organization for hotels, restaurants and cafes called Hotrec began a similar campaign.
Initial indicators are positive, as new soon-to-be-published research from Kalibri Labs shows that brands have in fact successfully shifted share. From January to July of 2016, for the first time in five years, the hotel website, or Brand.com, grew faster than the OTA channel, and this is particularly true among higher rated upscale hotels. This emerging data suggests that these direct booking campaigns are having positive impact.
In addition to these campaigns, other more cost-effective book direct strategies are also starting to show significant value. In this post, we will examine three such strategies.
Strategy 1: Focus on website optimization and conversion
Ideally, the travel decision journey would start and end on your own hotel website.
The good news is that hotel websites increasingly have an e-commerce advantage over OTAs. According to Cindy Estis Green, CEO and Co-founder of Kalibri Labs, “Booking engines are getting much more sophisticated, which is good for the consumer and good for the hotel.” In other words, the “range of possibility” is much higher on the hotel website, with additional room types, incentives, and other tools available. And these add-ons are driving results; for example, recent research from hotel software reviews company Software Advice found that 48% of people would most likely book directly if they received a free room upgrade.
Hotels can look to the airlines for inspiration when it comes to website optimization. Airline apps provide many more options than OTAs, from check-in to flight status updates and baggage tracking, allowing guests to access information that is important to them on-the-go. Hotels should similarly focus on enhancing the guest and merchandising experience on their own websites and apps to drive ‘stickiness’ versus OTAs.
Many hotels are also adding validation content (e.g., online reviews, widgets) to their websites to encourage consumers to book direct. One emerging technology startup is The Hotels Network. The Hotels Networks adds a layer of tools to the hotel website and booking engine to drive validation and urgency, including a Price Comparison Widget and Smart Notes (e.g., “12 people are looking at this hotel right now”). As a result, hotels have seen direct bookings increase by up to 40%. According to Juanjo Rodriguez, Founder of The Hotels Network, “A better conversion also means a lower cost of acquisition per user and increases the ROI of marketing efforts.”
Another key lever for driving profitable conversion is revenue management, which we have covered in detail in other posts. Forward-thinking revenue management practices can help optimize (and automate) pricing decisions to maximize conversion on a daily basis.
Strategy 2: Focus on search placement
Despite these website optimization techniques, the reality is that the travel decision journey does not always start on your own website.
Beyond your website, Google and TripAdvisor are two of the most influential channels when it comes to booking decisions. Google is increasingly where the travel research process begins, while TripAdvisor is still the world’s most important reference point for prospective guests.
However, not everyone who stays at your property is compelled to login to Google or TripAdvisor to write a review, so you need to activate your ‘silent majority’ (i.e., satisfied guests who will not typically write a review). Some hotels do this by working with guest survey providers that have review collection partnerships with Google and TripAdvisor, such as Revinate. More specifically, hotels can solicit private feedback and also include a TripAdvisor or Google review form in the body of the survey, which encourages guest engagement with these channels. For example, Revinate clients using these techniques with TripAdvisor see an average 4x increase in review volume and 15% improvement in market ranking.
Another effective tactic is optimizing your survey design for completion rates. One way to do this is to glean distinct insights from private and public feedback. For example, sentiment analysis reporting on online reviews will provide certain insights, like department-level performance, or insights about the WiFi, etc. Therefore, you may consider asking different or fewer questions on your survey to drive higher completion and search placement.
Strategy 3: Start macro targeting
Further down the funnel, guest engagement is all about maximizing the value of the hotel-guest relationship after the initial booking has been made. It’s where a lot of the emerging action is in hospitality technology, given the changing nature of guest expectations, including areas like email marketing and customer relationship management.
Unfortunately, many hotels still take a one-size-fits-all approach (i.e., sending emails to the entire database), which can damage both brand reputation and guest database health. Research from Janrain shows that nearly 75% of consumers are frustrated when content is not personalized. Non-targeted emails can also drive unsubscribes. For example, before targeting, one of Revinate’s new customers had a 15% unsubscribe rate every time they sent a monthly email blast to their entire database (industry average unsubscribe rate is under 1%).
The good news is that a move from unsegmented blast emails to simple macro targeting based on even just one filter (e.g., gender, rate code) can be incredibly valuable. For example, the same customer recently sent out two versions of their summer newsletter, one to families and one to couples, generating much higher open rates and a 2x lift in revenue. According to Revinate CEO Marc Heyneker, “Simple targeting, even with your monthly newsletter, can drive high engagement and a great rate of return on your email marketing investment. Hoteliers who aren’t using even basic targeting are putting their brand and guest database at risk.”
Hotels can win the direct booking wars
In summary, Revinate and our partners see that positive momentum is building on the side of hotels in the so-called direct booking wars. And even for hotels with smaller marketing budgets than the large brands, focusing on website optimization, search placement, and macro email targeting can start to drive meaningful share shift away from the OTAs.