Hotel direct bookings are the lifeblood of your hotel business, and developing a winning direct booking strategy is essential to increasing your total profits. While it’s obvious that higher profit margins should be the goal here, why do you need such a strategy extended beyond just financial reward – brand loyalty, customer satisfaction and improved service are all part of creating an effective hotel direct booking strategy. It would serve any strategic hotelier well to pay attention to this important process as it truly is at the core of successful hospitality businesses around the globe. So let's explore how you can develop an effective and efficient promotional plan for your business!
Hotel Direct Booking Strategy
RoomStay
Direct Bookings
January 10, 2023
8 mins read
Hotels looking to maximize revenue and ensure customer satisfaction should prioritize direct bookings, a corner-stone of successful hospitality operations. A well thought out strategy will foster brand loyalty among guests, rewarding them for returning time after time. Direct booking strategies can be the key that unlocks success in any hotel!
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Why you should focus on direct bookings?
There are a variety of good reasons why all hotels, including yours, should be creating a direct booking strategy. The most obvious one is better profit margins.
But there are a variety of others including
- Trip anticipation - keep your guest's excitement at an all-time high with targeted messages in the lead-up to their stay with you
- Personal relationships - customer service is key here. Make sure they feel welcome before they’ve stepped foot into your hotel
- Guest feedback & loyalty - if someone has booked with you direct it means they are far more invested in your brand than someone who has booked with you via an OTA This will go a long way to securing positive reviews and advocacy for your hotel too
- Less commission - an incredibly important one from a financial perspective. Ditch the OTAs and keep 15-25% more revenue from each booking and reinvested back into your own marketing
- First-person data - if fewer commissions is the most important consideration as to why a hotel direct booking strategy is far more advantageous, then owning your customer’s data would have to be the second most advantageous. You’ll be able to use their data to great effect before, during, and after their stay
Our blog guide will go into further detail about how you can create some ways to win more direct bookings and ensure that you’re aware of what are some of the key decision factors when making up your mind.
Three Pillars of Direct Booking Strategy
With regards to why a hotel direct booking strategy can be successful, it is based on these three pillars:
- Branding
- Marketing
- Distribution
In short, if you want to acquire more direct bookings, there needs to be proper evidence of each of these pillars. By doing so, whether it be automatically or naturally, it is impossible that your overall hotel revenue won’t skyrocket, too.
Essentially, what this means is that the commission costs that you pay to online travel agencies will also naturally decrease.
When your hotel is seen as a commodity i.e. poor branding, you inevitably end up marketing to the wrong target, at the wrong time, with the wrong message. This is also poor marketing. You think you are at a good parity rate, but you aren’t due to poor distribution and, ultimately, you have poor visibility into just how appealing your rooms and rates are and therefore those who are deciding whether to book with your hotel or not end up going elsewhere. This leads to poor revenue.
Brand
Brand is never about price, it’s always about the value that you can deliver to your customers and what value they themselves can derive from your offering.
How your hotel is perceived by your target audience and prospective guest is very much about how strong your hotel brand is in the market.
You need to be seen as the only hotel that they should and want to book with; not one of many. Therefore, you never want your hotel to be viewed as a commodity. And you literally have a few seconds when they arrive on your website to draw them in.
But how can you do this? By tapping into their emotions, of course.
Hoteliers sell rooms, correct? For the most part, this is correct. Without selling rooms, there is no revenue. And without revenue, there is no hotel. Without stating the obvious, that’s why all hotel website pages are littered with images of rooms.
But that’s not all you are selling. Ideally, what you are selling is an experience. And not just the experience of staying as a guest. It’s the complete end-to-end experience that they can expect when they stay with you.
And the beginning of that experience is when they arrive on your website. This is why it is incredibly important to be able to draw them in within a matter of seconds of their arrival. If you can’t do that, then you may lose them to one of your competitors because you have become nothing more than a commodity.
Always remember this - people buy on emotions and then use logic to justify that purchase. If you can evoke a positive emotion through their experience on your website before they have booked, you can guarantee they will be able to use logic to justify their booking afterwards.
It then falls on you to continue that experience when they arrive at your hotel, during their stay, and then afterwards.
Marketing
Did you know that approximately 3% of the users who visit your website are ready to book? That means that 97% of people are still trying to make up their minds.
These are crazy numbers that present an incredible opportunity that can be leveraged through marketing.
That 97% are still in the awareness and consideration phase of the booking funnel and need that little bit of a nudge to get them into the conversion stage.
Whether it be channels such as social ads or Google Ads, the easiest and quickest win you produce is through retargeting campaigns.
This means that campaigns are set up on both platforms to recapture those who have already visited your website but haven’t booked as yet. We want to drive them back to the website to complete the desired action in the conversion phase of the booking funnel.
Once you have achieved this, they’ve booked themselves a room, and you’ve created an exceptional experience for them during their stay, you’re then able to reacquire them at a low cost for future bookings.
This can be achieved through email marketing, organic search, or direct (which means they’ve put your URL into the browser already).
Distribution
This is related to how else you have been offering your rooms and rates via 3rd party channels in comparison to your website and associated booking engine.
This is referred to as the parity rate. Regardless if you regularly check your own rates online, you have a channel manager, or you’ve reduced the variety of OTAs that you work with, there’s a high chance that you have some disparity-rate issues.
The issue is that it can be an absolute minefield out there. The worse it becomes, the more likely it is that hotels will give up on putting any effort into creating and implementing a hotel direct booking strategy thus giving into the OTAs.
But this is why it’s important to take the leap and then stay the course if and when it doesn’t work out. It might seem easier to completely rely on online travel agencies, but believe us when we say you as a hotelier are giving up so much more than you might realise.
One aspect to keep in mind about distribution is that it is worth more than your direct booking strategy.
Distribution is absolutely the starting point of any digital marketing strategy of any hotel. This is before the actual marketing and revenue.
To begin with, let's say you’ve just started running Facebook or Google Ads campaigns with the goal of driving more reservations and increasing direct booking revenue.
Your click-through rate is performing well, and you are acquiring even greater traffic and engagement.
However, your campaigns are struggling to drive direct bookings. It’s as if you’re doing everything right throughout the entire campaign right up until the point where it's time to book but they go elsewhere.
Why might this happen?
Distribution is the reason why.
You might be used to thinking that the less healthy your hotel distribution is, the more commissions you’ll end up paying to OTAs.
This is partially true. In fact, not only will you pay more commissions as a consequence of fewer direct bookings, but you’ll end up spending more on marketing budgets, running paid campaigns that acquire customers, and bookings to the OTAs.
Booking direct is a result of a number of variables. Ideally, your hotel website is where you either increase or decrease your chances of acquiring direct bookings by at least 50%. The remaining 50% will be produced elsewhere.
Direct Hotel Reservation Challenges and How to Overcome Them
If you’re a hotelier and you’re reading this then direct bookings are always going to be top of your mind.
The higher the direct share is, the better it is for your hotel’s profit margins.
However, there are still a variety of challenges that need to be overcome for your potential guests to think of your hotel first before an OTA booking site.
Some of the more common problem areas include:
- Relying heavily on online travel agents
- Cost of tech support
- Cost of acquisition
- Lack of hotel resources
All of these reasons and more are why hotels aren’t pursuing direct bookings campaigns.
In saying that, there are a variety of methods that hotels can use to increase their chances of winning the direct bookings game and beating the OTAs.
Direct Booking Strategy Tips
Active Choice is Key
There is research out there that suggests that there is a direct correlation between direct bookings and guest satisfaction.
Direct bookers are often happier because they’ve made an active choice to book through the hotel rather than through an online travel agent. Why? Because the personal customer service they would have received prior to their stay cannot be challenged by OTAs because they simply cannot offer it.
Communication & Holiday Anticipation is Everything
As previously mentioned in the blog, the anticipation of a holiday sometimes outweighs the holiday itself and this is where you as a hotelier can effectively communicate with your guest through targeted messages.
Furthermore, and assuming you’ve provided a good user experience during their stay, you’d be surprised at what this can do for their perception of your hotel post-stay as you build loyalty & advocacy.
Boosting Hotel Brand Loyalty
Speaking of which, the best way to ensure you continually increase direct bookings is to boost brand loyalty with the goal of creating new return customers out of every new traveller who enters your hotel.
Increasing hotel loyalty is a natural and obvious way to boost direct bookings and it comes with a variety of benefits including:
- You know your guest's preferences - excellent when sending curated messages to them during their stay
- Your hotel can deliver a better experience by offering more appropriate services to meet the ever-changing needs of your guests
- A larger database of guests will keep you going through the seasonal lows
Abandoned Carts
Yet another reason why a direct booking strategy should be a part of every hotel is the ability to recover abandoned carts.
The general conversion rate on travel and hospitality websites is approximately 2% which means there’s a large portion of website visitors are dropping off at some point during the booking experience. Despite their excessive budgets, OTAs are working only with a 3% conversion rate.
This indicates to us that travellers are very savvy shoppers and are willing to spend the time to research and compare prices on various devices before they make a decision.
Below are some of the more common reasons why travellers abandon carts:
- The price exceeded their expectations
- Need to do more research
- Payment issue
- Tech issue
- The booking process was too complicated
- They got distracted
Payment Gateway
A secure payment gateway that can integrate with the rest of your hotel systems will ensure for a smoother transaction process.
There’s nothing worse when you’re visiting a hotel website, or any ecommerce website for that matter, and there’s no SSL certificate. This creates a lack of trust with the guest and they may go elsewhere.
Furthermore, integrating a booking engine that accommodates your international visitors by showcasing your prices using their currency will not only increase your customer base globally but help strengthen your share of web direct.
Testing Forms and Overall User Experience
It’s can be hard to find out exactly why people might not be making a booking or an enquiry but there’s plenty you can do by using various tech such as HotJar to test these forms as well as overall user experience.
If you are getting a high volume of traffic but few bookings and enquiries, then tech such as this will provide real time recordings that will show you your guests using your website, but more importantly provide you with further insight into why you aren’t achieving the desired results.
Is the form too high on the landing page? Perhaps its too low? Is there too much text? Are there too many fields? Is booking a room a convoluted process? Are there too many fields? Maybe not enough?
Regardless of what the issue might be, technology such as HotJar will certainly help uncover these issues for you to fix and increase web direct share.
How Digital Tech Fits In
Digital technology has now become the key force in driving more hotel direct bookings, as well as improving the overall guest experience. This is mostly due to the rise of consumers using tech and businesses implementing digital marketing strategies to drive further business.
The technology predominantly being used are social media networks, mobile and cloud-based computing, and analytical tools. These are all now a perfect fit for hotels to leverage more direct bookings as they strive to create a seamless experience.
Despite the rise in digital, there is still a want for that personal customer service where they still want you to feel like you know them whilst also placing an emphasis on the speed and convenience technology gives them.
Conclusion
Beyond driving down the need to pay commission fees, there are a variety of reasons why your hotel needs to start building and executing a direct hotel book strategy.
Despite the many benefits, this strategy does come with its own set of challenges that will need to be addressed on a regular basis. But by staying the course you can increase direct share and drive down your reliance on OTAs
