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It’s Not About OTAs vs. Direct Bookings

shivam.arora@hotelogix.com
shivam.arora@hotelogix.com

Take Advantage of All OTAs

According to PhoCusWright, of all travel bookings in 2015, only 45% of those bookings were done through online channels, with the rest being walk-ins, groups or done over the phone, among others. Of the reservations made online, independent hoteliers reported that 58% of them were done through OTAs, while chains reported that 48% of their bookings came through OTAs, showing that independents have a much higher level of dependency on OTAs.

These statistics show that while OTAs are certainly a valuable booking-generation resource, there’s still a huge amount of business generated by non-OTA channels. In other words, if you aren’t catering to those channels, you are leaving money on the table.

Your Booking Channels Should Not Be Engaging in a Battle

The hospitality industry has been engaging in a long-running debate focused on which is better: OTAs or direct bookings? In reality, this is a debate that shouldn’t even be taking place. The key to success is not choosing one over the other, but taking advantage of all the channels at your disposal to maximize bookings.

The main problem cited with OTAs is the commissions hoteliers are charged, which vary from 10% to 25%. These fees certainly eat into a property’s profits significantly, but that doesn’t mean dropping an OTA channel is a good idea. OTAs generate exposure for your property – exposure which can be difficult to generate on your own as OTAs tend to have massive marketing budgets dedicated to attracting users.

Furthermore, a Google survey shows that 52% of travelers will visit your website after seeing your hotel on an OTA, while WIHP Hotels conducted a survey that found 20% of direct bookings were the result of a traveler seeing your hotel on an OTA.

In other words, while you might generate some direct bookings on your own, it doesn’t hurt to have the support of an OTA. Also, consider that quite a few returning guests will book directly through your website, even if their first reservation was through an OTA.

On the flip side, you don’t want to rely solely on OTAs precisely because of the fees we mentioned. If the majority of your bookings are done via an OTA, the fees and unreliability of OTAs regarding those fees can create high expenses for your property.

So, choosing OTAs over direct bookings or vice versa is a mistake, just as it is a mistake to ignore other marketing channels. Ideally, you need to balance all your reservation-generation channels so you aren’t putting all your eggs in one basket – and yes, this also includes offline channels. Considering that only 45% of all 2015 bookings were done online, you’d be losing a lot of potential business by ignoring offline channels.
At the same time, if your numbers are similar to the stats, in that 58% of your reservations were done via OTA, that still leaves 42% of business being generated from other online sources, meaning you also need to optimize online channels for your hotel.

Capitalize on the Online Channels You Own

One of the areas you need to focus seriously on is optimizing the online channels you own, like your website and social media platforms. Since you own these channels, there’s a smaller risk attached to them.
Consider if you rely solely on a particular OTA and that OTA fails, raises prices, or changes the rules. You’ll be stuck and could end up losing a huge chunk of business. With channels you own, this risk is non-existent. Yes, it takes time to build these channels up, but every penny you invest in channels you own is a penny you are investing in protecting your hotel.

And remember, the better optimized your own channels are, the more money you will save in fees paid to OTAs. So, make sure these channels are as effective as possible by providing information, guest reviews, and more. The key is to engage your audience and offer them a great experience on your own channels so they don’t need to go through other channels to make a reservation.

So, while the debate will likely continue to rage as long as OTAs exist, an independent hotelier shouldn’t be focused on whether to choose OTAs over direct booking or vice versa. An independent hotelier should be focusing on optimizing all their channels to generate as much business as possible. However, remember that the channels you own are vital to protecting your hotel for the future. Thus, you should invest in creating a great website and keeping it relevant to attract and engage prospects so you can increase the chances of converting them into lifelong guests.

For more information on optimizing your marketing channels, read our e-book:

The Art of Selling More Rooms.