By Jean Francois Mourier, CEO of REVPAR GURU
Hopefully you have been reading my articles over the past few years and you’re familiar with my (very accurate and intelligent) point-of-view: hotels that are not using the online channel to sell their rooms are losing out on bookings and revenue.
Here’s why: when planning a trip, consumers use the OTAs (not Google!) to discover what hotels are available within their destination. So if your property isn’t listed on the OTAs, your customers won’t be able to find you. And if they can’t find you, they can’t book with you. So if you’re not online already, then stop reading immediately and get your property listed on at least one OTA. I said “Stop reading!”
Now, we can move on to today’s topic. Like with any other distribution channel, there are very specific ways to increase your bookings and revenue through the online channel. This article will show you how you can become an online superstar, meaning that you can earn the most revenue possible, without relying 100% on the OTAs.
Don’t forget about your own property’s website
It is important to make sure that you are directing potential guests to your own property’s site instead of the OTAs in order to avoid the excessive commissions. Just like with pricing on the OTAs, hotels need to ensure that their pricing on the direct channel is optimized using the best revenue management system available. In fact, it can be even more important to have a sophisticated RMS managing your website rates because a property’s direct rates must be highly competitive to ensure that consumers are incentivized to book directly instead of through an OTA.
Inventory must be managed on the direct channel, just like it is on the OTAs. As rooms fill up, new allotments need to be distributed across all online channels. While this can be done manually, it is always more effective to use an automatic revenue management system that will update your inventory in real-time.
A word of caution though… one of the biggest mistakes made by revenue managers is to remove inventory from the OTAs when the hotel is approaching maximum occupancy. Many revenue managers theorize that if the property is already almost full, then they shouldn’t have to pay the high commission rates charged by the OTAs to sell the last few. So, they move all of the remaining inventory to the direct channel and hope that travelers will find the website on their own.
Instead, revenue managers should maintain the property’s presence on OTAs, even as the property is approaching maximum occupancy. In a consumer’s mind, if your hotel is showing as sold out online then your hotel must actually be sold out. Instead of going to visit your property’s website to see if there are rooms available, consumers will just book their stay somewhere else.
I’m sure that you’re all familiar with the idea of sales incentives: giving away a free toaster for getting a bank account, a free TV for renting an apartment, a free room upgrade for booking direct instead of through the OTAs… Oh wait, you’re not familiar with that last one?
Well, you should be. Just like in any other form of sales, consumers must be incentivized to act in a certain way. Hotels should be offering incentives for consumers to book directly, especially since booking directly can often be more complicated and time-consuming than booking through an OTA.
Consider offering room upgrades, free food & beverage, cash-back rewards, free airport transportation, etc. for any guests who book through the direct channel. Promote the rewards on your homepage and on your booking page so consumers will be encouraged to take the time (and get the savings) of booking direct. While you may need to spend $5, $10 or even $20 to get that sale, isn’t it better than losing 30% of the total on OTA commissions?
So what are you waiting for? Optimize your online bookings with these three tips and become an online superstar today!