Hoteliers Big Challenge begets a No-Brainer Solution

Last year, on separate calls, a number of hoteliers, who happen to also be clients, shared with us a concern they all had in common, and taking their word for it, many more hoteliers share:

The persistent decrease in margins on their online channel.

One thing led to another as it often does, and before we knew it,  a Challenge followed:

- Develop a solution that can help

ONE: Increase Direct Bookings on our hotel’s website,

TWO: Reduce commission payouts to OTAs in the process.

This challenge put us on fact-finding journey I thought was worth sharing, because my team and I learned some interesting facts about the hotel online booking business, facts many hoteliers I spoke with, have not known prior to our conversation. So here we go,

We learned the cup is half Empty:

A. OTA Commissions keep Rising

The hospitality industry is experiencing shrinking margins on the online channel, due to the persisting increase in OTA commissions.

B. OTAs are the 800Lbs Gorillas in the hospitality online booking space

Increasing dominance of the OTA’s in the online booking space, as a result of mergers, consolidations and steady increase in advertising spend:

Expedia 2014 marketing  spend was $2.8 Billion [Tnooz], up from $2.2 Billion in 2013 [Statista]. Booking.com’s parent company Priceline spent nearly $2.6 Billion in 2014 [Skift] up $1.8 Billion in 2013 [Bloomberg].

We learned it is half Full too:

A. OTAs are introducing your hotel to online shoppers:

Many online shoppers learn about your hotel for the 1st time on an OTA like Expedia, Booking.com etc.

B. Most will visit your website:

52% of online shoppers introduced to your hotel on an OTA, will visit a hotel website [Google research]

C. Vast majority of online shoppers rely on Price as main decision factor 

85% of online shoppers admit price is the main factor influencing their decision on which hotel to pick.[Google research]

Armed with the knowledge that at 85%, Price is the most important decision factor in online hotel bookings we proceeded to check what the leading OTAs have to say about this topic:

Booking.com: “Hotels: Booking.com – Lowest Price Guarantee‎” - WELL THAT’S A BLUFF!

Expedia:“Secure incredible value with Expedia’s Best Price Guarantee” - THAT’S ANOTHER BLUFF!

With Rate Parity contingencies enforced by OTAs, prices on OTAs and Hotel websites should be identical. If that is the case, as demanded by OTAs, why do OTAs claim to offer “Lowest Price Guarantee‎”? and  “Best Price Guarantee”? Because they feel they need to Bluff to convince online shoppers to choose them, a resellers, over buying from the source = the hotel website.

Next step was a No-Brainer:

We designed our solution, BookingDirection, providing online shoppers the price transparency they need to support their buying process, right on the hotel website, where buying decisions are being made, showing online shoppers the Hotel’s price, side-by-side with the OTAs prices.

We launched Q1 2015 and are busy helping hoteliers increase Direct Bookings on their websites. Due to the overwhelming demand and positive response, we have a small backlog.  >>> Add your hotel to the implementation queue and we’ll get back to when your turn is up.

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Images by: Stròlic Furlàn – Davide Gabino    Loren Kerns 

2 Top Reasons Shoppers Prefer Booking with OTAs over Hotels Websites

Following hundreds of conversations with hoteliers in the past months, one pain was almost a constant: shrinking revenue margins due to OTAs.

Add to that, the following facts, OTAs are controlling hotel bookings online with their, huge marketing budgets and options & variety to shoppers, and that so many hotels rely on OTAs for an important, sometimes significant, portion of bookings.

The result:

Hoteliers and OTAs end up with a dysfunctional relationship that can be best described as one matching the ‘hate and can’t live without’ type.

Unfortunately for hoteliers in this fast paced online economy, at least for the foreseen future, OTAs are here to stay and Hoteliers need to learn how to better compete, to have a winning chance in direct-bookings.

Some more interesting facts:

76% of online bookings happen on OTA websites [according to a wihp research], however, the good news is 52% of shoppers will visit your hotel’s website after seeing you on an OTA [according to a Google research], you know, to get a better look at your location and facilities. Another industry fact, you guessed right, 85% of travelers surveyed said that PRICE is the most important factor when determining where to book. [according to a Google research]

Questions is: Why shoppers prefer booking with OTAs over hotels websites?

1. Shoppers believe that OTAs automatically have lower prices when it comes to hotel rooms as opposed to actual hotel websites.

2. Being the sophisticated, optimized and specialized multibillion [and million] online businesses they are, OTAs have created a shopping experience that leverages a smooth, responsive and multilingual user experience that is second to none.

So after bringing up boring facts that are, at least to some extent, known to most hoteliers, I would like to share with you a solution we have been working on,

BookingDirection’s technology works on your Hotel’s website to increase direct bookings by providing online shoppers the OTA web experience and price transparency they have grown to like — e.g. showing them “all” the prices in the marketplace, and proving that the hotel has the lowest price. In so doing, the need to comparison shop is eliminated.

Bottom line, EARN MORE by, increasing the percentage of website shoppers booking directly with you and reduce commission payout to OTA’s.

We’re in closed beta, helping hoteliers to get more direct bookings. Join the waiting list and we’ll contact you once additional hoteliers are added.

Image by: Dennis Skley