We often focus so much on the direct booking phase that we lose sight of other stages within the sales process that begin with generating awareness in the market, or being present in the places on the Internet where potential customers look for us.
Selling through our direct channels requires an investment of time , knowledge, personnel and money.
It is often easier to assign the responsibility of sales to a platform external to the hotel, such as an OTA (online travel agency), but by doing so we are also giving up control of our sales .
Tips to rebalance our direct bookings.
Sales through indirect channels such as OTAs have gained strength over the last 10 years and have continued to grow as the strongest sales channel for many hotels.
This sales power has been the result of the huge marketing investment of technological giants such as Booking.com and the Expedia group and their penetration in many countries.
For many hotels , OTAs account for over 50% of their sales and many hotels can claim to have seen sales growth thanks to them year after year.
OTAs represent an important channel not only for sales but also for marketing, so your hotel’s name can appear in the first results on Google thanks to the advertising investment of many OTAs, so what’s the problem?
As the popular saying goes: “ Don’t put all your eggs in one basket .”
By relying solely or mostly on indirect channels we are assuming the risk of these channels.
If sales drop due to OTA problems with Google , your hotel’s sales also drop. If a technological problem occurs that temporarily disables these platforms or if the governments of countries restrict their sales or reach, your sales are affected .
Plus, if you don’t have booking technology on your website , many people who would like to book directly with you will end up booking with an OTA.
For you, that means not only paying a higher sales cost (the sales commission) but you will also be promoting customer loyalty with other brands and not your hotel’s brand , so you will have to pay more and with customers who are not loyal to you .
If you want to better balance your online sales channel distribution , here are some tips:
1. Prepare your website to generate direct bookings.
Your website should be the most important sales tool you have on the Internet, for this you must have hotel software that allows you to not only have a PMS but also a booking engine where customers can choose travel dates , number of guests and see the list of available rooms .
But it is not just about having a website with a booking engine installed, direct sales and bookings require strategy and marketing actions to attract future customers, so you should include actions such as web optimization , advertising and a loyalty program in your planning.
Every great goal requires effort and time dedication , including your website.
The advantage is that you will have control of the sales and more loyal customers to your hotel brand .
Maybe it’s been many years and you haven’t updated your website?
Just like a house, the website needs maintenance and renovation .
The technology of 10 years ago is no longer the technology of today, so you will want to not only improve the aesthetics of the website and give it a new face, but also improve it internally and make it fresher and add the technology it needs.
2. Convert indirect OTA sales into future direct sales and bookings on your website.
If you want your hotel to reach new customers , then you need marketing actions, but you will be limited to the investment of money and knowledge you currently have.
Another way to reach new customers is through OTAs , as each one invests millions of dollars to promote the hotels in its portfolio.
Bringing in new customers can be up to 5 times more expensive than generating new sales from our current customers, so we need to identify the potential of current guests to return to our hotel who came through an OTA and invite them to book your hotel again but directly on your website .
This is known as moving from indirect to direct sales , and it is something we recommend.
Keep in mind that many people are already loyal to OTA membership programs so you will need to convince customers why they should book with you again using your website and booking engine .
One way to do this is to offer additional benefits for booking directly with you or a fare discount , although the latter will cost you more.
3. Calculate the net cost of online sales for your direct hotel reservations
Learning how to calculate the cost of sales for each sales channel will help you decide which channels are better than others and give you a clearer idea of your website’s potential .
When working with OTAs there are often two payment models:
- The customer makes a reservation with an OTA , but pays only when they arrive at the hotel. The hotel then has to send the commission money to the OTA: this is the case with Booking and Expedia’s hotel-collect model.
- The customer books and pays on an OTA, then the OTA sends the money to the hotel after deducting its commission: this is the case of Expedia in its merchant model and of most indirect online sales channels.
Accounting-wise, hotels usually record OTA revenues based on the amount they receive in their bank account from reservations.
This is where confusion often arises when calculating cost of sales .
In case 1 above, the income is reported in full and then an outflow of money is recorded for the payment of the commission . The problem is that this income reported in the accounts is not ideal for calculating the real income or average rate of the sales channel for your hotel .
What we recommend is that you subtract the commission amount before recording the average income or rate from channel sales like case 1 in a separate spreadsheet.
This way you will have the real data and you will be able to compare the channels more accurately and make essential decisions for the hotel business.
4. Create a night sale campaign on your website.
We already know that sales on our website require greater marketing actions , one of them is to determine special dates and times to sell, as is the case with night sales .
It could be a time of year when you know the customer will have more money available to spend on a hotel stay or special dates created by the company to seek to attract more direct reservations.
The latter is the case of night sales.
The night sale, like any sales event, must have a limited duration that allows the customer to understand that if they do not reserve it now, they will not be able to reserve it under those conditions later. This is known as generating urgency in the purchase .
If you allocate night sales to be exclusive on your direct channel (website) you will also help improve sales results and at a lower cost.
For this reason, you will need to use those customers who have bought from you in the past and no longer do so, who have the potential to become frequent customers , and thus capture their attention and help them trust your brand again through this temporary offer .
You will need the right technology like a booking engine and PMS to help you automate these types of campaigns.
5. Invest in advertising to create demand for your direct channel
Once we have a powerful website with all the online sales and trust-building tools, we can now move on to advertising as a tactic for generating new customers.
The first thing we need to consider is our advertising objectives, what we want to achieve with it, in this case new customers who book on our website.
Based on where your potential customers are, the next step now is to find the ideal channels to invest in and place our advertising campaign . If we talk about digital channels, then two media sound obvious: Facebook and Google .
Facebook has the advantage of being present in people’s daily lives during leisure and even work moments, so it is an ideal channel along with Instagram to capture the attention of new potential clients and seek to direct them to our website.
Google is closer to the purchase intention ; when someone uses Google it is because they have the intention of finding something, in this case finding a hotel to book , which is why search advertising is something that generates better sales results than Facebook, but at a higher price.
The recommendation is to have a combination of ads on Facebook and Google that allow you to attract attention and then work on an offer that generates value for the potential guest .
With these tips, your hotel will have more opportunities to better balance sales through direct channels and OTAs, both of which are important for your booking generation strategy.
