Rinse & Repeat… Why you should have a Book Direct Strategy
I feel that I often repeat myself when I speak to hotels about the why they should have not only a Book Direct strategy but a STRONG Book Direct strategy, but what often surprises me is that even with a mountain of enthusiasm during a meeting or a conference, hoteliers often don’t carry everything through. They often get bogged down with the ‘to-do’ list or perhaps a web-designer gets protective of their design and they don’t want to implement changes… but I felt that over the next couple of weeks it would be good to take everything back to basics and give you an action plan which I hope you feel is achievable.
But before I do that, let me explain the reasons why I feel we should all be on the ‘Book Direct’ band wagon:
1. Lowest Cost of Sale
Seems obvious I know but of course your brand site has a much lower commission level than any OTA. With OTA commissions sitting anywhere between 12% and 25%, your brand site is costing you much less. However, to understand the true cost of your brand site, I would encourage you (or your revenue system) to include the cost of driving people to your site and by that I mean your Pay Per Click campaigns; social media advertising; costs of implementing an organic strategy on your chosen search engines and of course the management fees involved. To understand the true value of your brand site, you must understand all the costs involved. In basic terms, if you are spending anything to drive people to your website, then that is a direct cost of sale.
2. Much lower cancellation rate
We know that OTA’s actively promote the ease of cancelling and some are even emailing customers to tell them to cancel one hotel in favour of another which has just dropped their rates! Unacceptable in my view, but the fact of the matter is that the ease of cancelling that OTA’s promote has a direct impact on our business. I would urge you to do your own analysis (or have your revenue system do it for you) but monitoring the number of cancellations each OTA has each month, should be one metric you regularly review. These cancellations have a massive impact on your revenue and rate decisions. As an example, I have one city centre hotel with 60 bedrooms who regularly receive £15,000.00 worth of cancellations from booking.com alone each month! So ask yourself, what impact is this having on the decisions I make each month on pricing? Am I closing out channels too early as I feel I have secured OTA business on the books which won’t actually materialise? Am I moving rates too soon and potentially blocking out direct business? Do the maths in your own property but with access to the properties I work with, I can tell you that OTA cancellations sit at almost 50%. Direct is usually around 10% – now those stats are definitely impacting your business.
3. You own your guest experience
As you know, most if not all of the OTA’s have stopped sending you customer details and it is close to impossible to communicate directly with your guests prior to arrival. But that is a fact that often hoteliers forget – these are your guests, not booking.com’s; not Expedia’s, they are yours. We of course have the opportunity to capture guest information when they arrive but wouldn’t it be much easier if we were so clear on our Book Direct strategies that they came to us in the first place? That way we know who has stayed before; we know their likes and dislikes; we can build loyalty. Never under-estimate the power of an email address (and I have more on that in the next few weeks – watch this space!)
4. Direct guests tend to spend more
Again I urge you to to the maths (or have your revenue system spit out the reports for you) but on average, direct guests spend more. The average booking value is higher and the incremential spend while on property tends to be higher too. Let’s look at the facts: Hopefully you are only adding your transient rates to the OTA’s (your bed and breakfast or room only rates) and hopefully you are keeping all packages and offers on your own site. If this isn’t the case, then please change it today! We need to give people a reason to Book Direct and one of those reasons is that we always not only have the best rates online but we also give our customers access to the best packages and offers. Direct bookings therefore tend to book DBB rates, Spa packages or Golf deals. They average booking value increases as does the direct spend.
Once a guest books direct; sees that they have been given the very best rates; understands the level of personal service we can give our direct guests, then they are more likely to return direct. Simple!
Before we go on next week with actions on how we start to implement a STRONG Book Direct strategy, I felt it was worth outlining some of the reasons why we should be spending time on this at all. And if you are in any doubt, go to your Finance Team and ask how much OTA commission you paid out past year, I can guarantee you might need to sit down afterwards! Your OTA bookings should NEVER out-weigh your direct bookings and if they do, then I urge you to take every step possible to flip that (stay tuned next week).
The team at Right Revenue is always here to help so if you need any guidance on any of the above, please just email: firstname.lastname@example.org