A simple way to beat the OTA’s
As an industry we are still pondering the dilemma, ‘how can I drive more direct bookings and nudge my hard-won guests away from the OTA’s?’
So instead of dwelling on that question, may I ask you a new question… ‘how much will you spend on your digital marketing budget next month?’
I bet most of you will know how much your digital marketing company will charge as a management fee each month – box ticked! And many of you will know how much you expect to spend on your digital marketing campaigns as you have already advised (and by advised, I actually mean restricted) your agency on how much budget they have to spend.
So, the second question… ‘how much will your OTA commission cost next month?’ This is where the fun starts as I am guessing that the majority of owners, General Managers, Sales & Marketing Teams, and even our hallowed Revenue Managers will not know how much OTA commission will be taken next month. And this of course is where the problem lies…
We are all used to allowing our Digital Marketing experts a certain budget to work within. These budgets are often restricted and managed heavily. I have often sat in meetings with Digital Marketing agencies where they are asking for increased budgets and are told. ‘sorry, we can’t afford to allocate more spend’.
But let’s think about that, budgets are often seen as marketing costs and very rarely measured against the cost of getting a booking or a cost of sale. If they were, then the results may be surprising! And let’s face it, digital marketing is the most transparent way of marketing your hotel. If customers aren’t clicking, you aren’t paying… so why are these budgets restricted? Why are we not capping the amount of commission we want to spend on OTA’s rather than capping our digital marketing campaign which of course is your Book Direct campaign?
As an industry, we often don’t measure the leakage of commission to the OTA’s and we certainly don’t measure it against the costs of securing a direct booking through digital.
Here at Right Revenue, we often see hotels with too strong a reliance on OTA business, with up to OTA’s channels equating up to 70% of their total sales! Yes, seriously! The average can be around 40% and let’s face it, you aren’t going to get that down to 20% overnight. So set yourself a target for 2024 to reduce your OTA reliance by even 5%. Ask your Digital Marketing Agency to help you achieve that. Allocate even a portion of the spend you would have had on that OTA commission to digital and watch the magic happen…
Our Top 5 tips which might just change your mindset:
Always, always spend to promote your brand name - If you have revenue going via OTAs, brand campaigns should be running close to 100% of the time in key markets on both Google and Bing.
Make sure you always have the best rate online – rate parity is a thing of the past
Offer an incentive to book direct. These could be as simple as great packages which can’t be bought anywhere else; or perhaps a free upgrade; late check-out; early check-in or a glass of bubbles on arrival (and read on for one more great idea!)
The average ROI for brand campaigns is around 15:1 at the moment, so for every £1.00 you spend, you should get at least £15.00 back. In real terms, this represents a commission of circa 7%, which is a significant saving on OTA commission which as we know can be up to 23%. Saving money on commission will allow you to put a budget into awareness campaigns and grow your occupancy over time.
Google has recently changed how match types work. Ensure any Google search campaigns bid on exact match keywords. Not doing this will cause unnecessary spending and lower your ROI.
So, my advice… start thinking of your budgets differently. Get a handle on how much commissions YOU want to spend to secure a booking via the OTA’s and move your focus to your digital budget. A simple shift in mindset will make a huge difference…
Oh, and I promised you one more tip for driving direct, so here it is…
I recently stayed at a hotel that on arrival, gave me a little note and a branded coffee travel mug. The note said, ‘as a thank you for booking with us directly and for saving us a heap of commission which the online travel agents take, please use this mug to enjoy a complimentary coffee tomorrow morning. Thank you for booking direct, that means a lot to us all at XXXX Hotel’
What a lovely touch and a rare moment where I am surprised. I used that mug the next day for my complimentary coffee as I left. I walked around the city with it all day. Went to meetings with it and basically gave that hotel some free marketing all day – genius!
Okay… a second tip to surprise your direct guest… why not make a donation to a local charity for every booking you get direct. It can be as little as £1.00 but we are all travelling more ethically now, and our guests are making choices based on our carbon footprint and our stance on all things ethical. So tell your guests on your website that you are donating to a local food bank or homeless charity (as an example) and then remind them when they check in that you have done that with a little note left for them. Again, this a lovely opportunity to surprise your guest…
I hope 2024 brings a new way of thinking about budgets and spend - and a move towards clever direct booking strategies. Good luck
(and a huge shout out to our friends at Big Flavour for their help in providing the stats for this article)
