This article was originally published in the September 2019 edition of Luxury Hospitality Magazine.
A common theme we see, particularly with independent hotels, is a heavy reliance on Online Travel Agents (OTAs) to maintain a steady stream of incoming bookings. While these OTA sites, such as Booking.com, Tripadvisor, Expedia, Secret Escapes and countless others, do provide hotels with some surety and additional presence, they do come at a high cost, typically taking a commission of 15% to 30% of the booking cost.
Despite taking such a large bite out revenue, OTAs continue to grow exponentially and it looks like they’re here to stay - Booking.com alone has grown from an annual revenue of £1.5 billion to £11.6 billion over the past decade.
In reality, hotels have a number of approaches they can take;
Firstly, if you’re solely reliant on OTAs to keep your business afloat, you have to accept the stark reality of high commission rates. You’ll need to review your marketing budget to ensure you can sustain these levels of spend on every booking, and be aware that there’s no reason that commission rates won’t increase over time too.
With a cutback in marketing budgets, it follows that your marketing efforts would need to recede too. The real danger here is that you become so reliant on limited capabilities of OTA profiles, that you become silent on all other marketing channels and don’t have the ability to build awareness or develop and share the character of your beautifully unique establishment and its offering.
An additional danger of OTA-reliance is that you being to attract customers who are shopping largely on price or are motivated by special discount or offer promotions. Not only do you end up sacrificing even more potential revenue, but you sacrifice some the ability to target and attract the type of customers you want to.
Finally, by investing more heavily into OTAs you not only fuel competition in the industry, making it harder for everyone, but you fuel the OTA’s growth too. Ultimately, you’re building their audience, when you could be building yours.
While going cold turkey and dropping OTAs entirely is a move that some take, that’s not an approach everyone can afford to take. In reality, while overreliance clearly has major pitfalls, OTAs can become a valuable part of a more comprehensive marketing mix.
The real reason so many become reliant on OTAs is that they need to ensure a steady stream of bookings. But perhaps there’s a better approach that can fill that gap? One that avoids the aforementioned pitfalls and provides additional benefits.
The answer is to put in place a more rounded digital marketing programme that ultimately focuses on gaining direct bookings from the right customers. To work, this approach needs to encompass the following areas...
Ensuring all of these areas are working optimally can be a challenge, make take some time and upfront investment, but once all these areas are working at full tilt, they provide tangible results.
If you’ve never taken time out to think about your target audience, you need to do this as soon as you can - it can be transformative to your business and critical to marketing success. Use tools such as pen profiles and empathy maps to sum up your target customers. The results of this process will shape everything that follows.
While usually set in stone and beyond the purview of digital marketers, if the hotel’s branding (its logo, colour scheme, fonts used) don’t fit with your target audience, then it’s an important point to raise and review.
You’ll need recent professional photography of your hotel - it’s interior, exterior, rooms and any particular USPs such as your restaurant offering, location or spa facilities.
The requirements for a good website are actually relatively simple - it should answer customer’s questions, look good, work on mobile and be easy to book through (especially with our keen focus on direct bookings).
Again, with our focus on direct bookings, your booking engine needs to be up to the task. If it doesn’t work well on mobile devices or makes it hard for people to book, this will need addressing urgently.
A positive presence across all relevant social media platforms gives you the opportunity to build your character, tell your story, personalise messages to your target audience, and provides you with plenty of opportunities to promote offers.
While all the above alone should begin to pay off for you, if you want to take things further you can build awareness further through search engine marketing. Focussing on building both organic Google rankings and through paid ads.
Build an email list of engaged customers that will become advocates for your hotel and build repeat business. Send regular campaigns that add value and a sense of exclusivity to mailing list members. Always keep things GDPR compliant.
OTAs do have their place in this broader strategy and you should have a presence on the ones which are most relevant to your hotel. When used correctly OTAs can provide a new audience, helping fresh customers discover you. Used in conjunction with the other marketing channels you can help turn OTA bookers into direct bookers. It’s also key that you maintain reviews on these platforms to keep a solid reputation.
Does a good digital marketing programme give a return as good as the OTAs can with their big budgets?
Paul Roden, owner and manager of the independently owned Losehill House Hotel & Spa has seen significant growth through following a similar programme - with online sales increasing by 823%, “Investing in our digital marketing has been extremely worthwhile. We have been able to communicate with a large proportion of our customers in new ways which has seen our revenue increase.”
A rounded approach with OTAs being just one tool in the toolkit provides not only a better return on marketing spend but gives you more opportunities to grow your reputation, reach out to targeted audiences and develop the character and story of your hotel.
When it comes to OTAs you want to get your slice of their pie, rather than them taking a slice out of yours.
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