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5 Ways You Can Reduce Rising OTA Commission and Increase Profitability

Manu Sharma
Manu Sharma

Reduce Rising OTA Commissions and Increase Profitability | Hotelogix

The hospitality industry would be a very different place without OTAs. They provide vital benefits in the digital age and in a world where old ways for consumers to find hotels have shifted online. However, those benefits do not come cheap. In fact, chances are good that you’re struggling with rising OTA commissions eating into your profitability.

1. Drive Direct Bookings from Your Website with Guest Outreach Programs

Want to cut the commission that you pay to OTAs? Find ways to cut them out (without cutting them out completely). OTAs might play a vital role, but you can do better by getting guests to come right to your website and book directly. Of course, that has traditionally been problematic, and OTAs were developed at least in part to make it easier to get bookings without directly attracting traffic on your own.

Thankfully, things have changed. Today, it’s possible to reach potential guests through what are called guest outreach programs, and then get them to head straight for your website, where they can book and you’re not on the hook for a commission. You’ll find a wide range of guest outreach programs out there. One of the most advantageous is TripAdvisor’s Instant Booking platform. However, you can also go old-school here.

Email marketing offers plenty of benefits, including encouraging direct bookings. Plus, it also helps you build a real relationship with guests and potential guests. Not into email marketing? No worries. There are tons of other guest outreach programs available that let you cut out the middleman, engage potential guests directly, and benefit from direct bookings.

2. Make Social Media Booking Possible

Social media is a must-have for hotels of all sizes. However, chances are good that you’ve barely scratched the surface of what’s possible with your accounts. For instance, did you know that you can make it possible for your guests to book at your hotel right through your social media accounts?

Not only is it simple to do, but it removes one of the barriers to direct hotel booking in the first place. It removes the need for consumers to search Google for hotels and the possibility that they will go through an OTA or book with another property. It also ensures that you can reach consumers right where they spend most of their online time (Facebook is the current king, but Twitter, and other social networks also have a respectable share of the pie).

So, how do you do that? It’s not all that difficult, particularly with Facebook. You just need to create a call to action button that links directly to your booking engine. That way, visitors to your social media profile page will see the button and click through, booking directly with your engine and cutting out the OTAs.

3. Give Membership Discounts without Any Fees for Members

Want to encourage direct booking online? Give your guests something they value – access to membership discounts without charging them a membership fee. What value do memberships offer to your guests, though?

The primary benefit of a membership club is access to the discounted room rate. However, you can also sprinkle in other extras, like discounts at the spa or restaurant, unique stay packages only available to members, and anything else that helps make it appealing.

The thing to remember is this: you need to ensure that the discount you offer on the rooms/services does not approach what you would pay in commission for the OTAs. Otherwise, you’re still losing money even when you’re able to increase direct bookings. ​

4. Get an Advance Web Booking Engine That Enables Higher Conversion Rates

One hurdle to avoiding that hotel booking commission with OTAs is dealing with a basic web booking engine that delivers a low conversion rate. Thankfully, it’s possible to get an advanced web booking engine that enables higher conversion rates. What should you look for, though? Here are some key features to consider when comparing hotel booking engine options:

  • Multi-language support – Make sure the engine you choose offers multi-language support. You’ll find that a lot of potential guests bounce out simply because of the language barrier.
  • Payment gateway integration – Make sure that your guests can pay for the room right through the booking engine via secure payment gateway integration.
  • Booking management – Give your guests the ability to change their booking if necessary, including adding extra products.
  • Dynamic pricing – Ensure that your guests get the most up-to-date pricing based on hotel occupancy.

5. Tie Up with Offline Operators at Volume-Based Commission and a Lower Rate

Finally, you should consider working with offline operators and arranging for a volume-based commission at a lower rate. This can save you a great deal of money over paying the commission to OTAs. Do offline travel agents/agencies still operate? They do, but online travel agents (OTAs) have proliferated and are more visible.

The good news is that trends are shifting. While offline might never become the norm again, you’ll find that some of your audience segments prefer to work with offline agents/agencies. Affluent travelers fall into this camp, but so do Millennials. With a low, volume-based commission, you can cut your costs while still building a thriving business.

Have the Right Tools

Of course, you need to ensure that your hotel management software can support these features. At Hotelogix, we offer the capabilities to cut commission costs and drive increased direct hotel booking through a wide range of methods, including all five we’ve discussed in this post. With our help, it’s never been simpler to get more direct bookings, cut costs, and increase profitability. ​

Want to try Hotelogix for yourself and see how well it can fit your needs? We offer a no-strings-attached free trial that allows you to put our software to the test right in your hotel. You can also explore our full range of features to find out why this is such a ground-breaking hotel property management system.