Every hotel property suffers from the peaks and troughs of customer demand. Smart hoteliers manage the swings in demands, are prepared for it in advance and have worked with the data to understand how their competitive set are managing the changes in the seasons.
But not all hotel operators have either the in-depth knowledge of revenue management, are not particularly internet or application savvy and are a “Jack of all trades” where they are at the same time registering new guests at reception, setting the rates for the week ahead and are making sure that rooms are clean – a continuous stretch on limited resources, physical and mental.
At a time of economic uncertainty as a hotel operator one thing that you should allocate time to is implementing a plan to increase your hotel profitability by effectively managing your cost of sales and channels of distribution.
As consumers, it is rare that we are not always nowadays looking for the best deal. With the power of the internet at our finger tips there is an inherent feeling that if I search long enough I should be able to find an even better price.
This “deal mentality” is an opportunity for hoteliers to develop a direct relationship to customers, to cut out “the middle man” which in this case tends for most operators to be the OTA’s (Online Travel Agents).
The idea is to optimize the distribution channels that costs you the least amount and provides the highest revenue and profit margins.
Your hotel website is the ideal tool to enable you to do this. It should yield the lowest cost of customer acquisition because you are having a direct interaction with the customer, which provides an opportunity to nurture a long-term relationship and reduce your cost of sales with less OTA commission to pay.
The volume of online business today driven into hotels via OTAs is significant in its size and value to hotel operators, a strategy to be managed carefully so that you do not end up over relying on OTAs as your main source of business.
As an independent hotel operator, there is no way to match the OTAs for their scale of distribution or brand awareness amongst your prospective customers. So, most hotels accept that paying commission is a necessary evil to feed business to their property.
Nonetheless, intermediaries such as OTAs act as a link in the chain of distribution between hotels and their guests, providing exposure to those that use OTA sites for research, providing access to an audience they would not normally get and turning the tap on for business during periods of low occupancy.
Effective online presence
In today’s travel marketplace, it makes sense to seek a balance between growing your own direct business along with managing your OTA channels. With such a large proportion of travel researched and booked online, your property needs to have an effective online presence so that you can be found and have an integrated online booking engine for site visitors to be able to book direct.
Now is a good time for hotel operators to get their own channels working harder, to employ a more proactive direct booking strategy, to start chipping away at the business that takes the OTA route, and develop a direct relationship with your customers.
The classic booking path for a guest tends to be a mix between an OTA website and a hotel corporate website.
Prospective bookers often use the OTA site to start their research, in order to generate a shortlist of potential properties to stay at.
Where the customer experience tends to go wrong is when the user gets frustrated when they use a hotel website and feel underwhelmed by the whole user experience, not able to compare “apples to apples”, a booking process which is not user-friendly, confused by different listings, room types, features and cancellation policies, etc.
An unsatisfactory user experience leads to frustration and often the visitor heads back to the OTA site to complete the booking.
An integrated online hotel booking engine enables guests to book directly through the hotel website, a financial benefit from spending less on commission plus providing the operator with all the guests details.
Independent hotel operators are becoming far more proactive in developing their own direct booking strategy, using a combination of marketing activity and online booking software.
Any reduction in the OTA commission costs will go directly to the bottom line as profit. Plus, often the booking value of a direct reservation can be higher than that of an OTA booking as the profile of the guest may be somebody who is less price orientated and you have the opportunity to build a longer-term relationship that just one booking.
Advantages on having a direct online booking strategy
Below we have listed what we at Happybooking think are the advantages on having a direct online booking strategy:
- You receive direct bookings that are commission free, a boost for revenue and profit margins and you rely less on OTAs.
- By integrating your product pages with your own online booking engine it means that customers are less likely to jump off your website, better conversion rates
- A direct booking provides a far cheaper customer acquisition cost with typical OTAs commission around 15% and 20%
- As an operator by controlling the booking system you also have the ability to offer upgrades and upselling to guests to drive incremental revenue
- Online booking systems save you and your staff time when they replace manual procedures.
- You manage your own cancellation policies and occupancy levels at your property
- As an operator, you are far more in control of the guest relationship without having to go through a third party to make contact
- An operator can save time by automating admin tasks associated with a direct booking that can be used to then focus on improving the guest experience
- Integrated online booking systems allow you to check your reservations and availability
- Direct bookings help you to build and control your hotel’s brand as you interact and engage with your guests before, during and after their stay with you.
- It helps build customer loyalty towards your property as you get to you know your guests
- You always know the status of your business, billings and rooms management by viewing the system
- An online booking engine linked to your website provides data for you to analyse and build insights on your guest
- You can offer a consistent guest experience by providing an own branded booking engine to match your hotel’s website look and feel.
- With a system like Happybooking you can also manage bookings, revenue, and front desk functionality all within the same system
- A responsive booking engine will deliver a great booking experience to your guest across all the different devices
- Provides multilingual content and currencies across the booking engine experience
- Reporting that helps you to analyse your property data with multiple report modules
- A Happybooking system can integrate with multiple third-party systems and channel managers
- You can also create and manage promotional packages and deals in your property calendar
- The Happybooking system can also integrate an automatic payment system to reduce manual workload and provides an easy and safe way to both book and pay for a reservation
When Happybooking was developed a lot of effort was made to make it secure, so the system is backed-up every day on Happybooking servers and IT security continues to be a top priority.
Happybooking have always focused on creating a user-friendly property management system based in the cloud that can help property owners improve their revenue performance with a direct booking engine, generate more profit by lowering commission costs and reducing admin time. So, take a quick tour to see how it works - click here.
Happybooking is first and foremost a property management system. That means they help you automate time consuming tasks giving you more time to focus on your guests. On average Happybooking customers can get back up to 10 hours per week – think what you could do with that extra time!
Our guest blogger is John Kennedy. John is a hospitality consultant, dedicated to helping increase profits through marketing, revenue management and efficient operations. www.kennedyandersson.com
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