Book Direct Strategies – Steak or Sausages?
So before you start reading, I feel I must warn you that some might find this blog a little controversial. Some may say that as hoteliers we should ‘put-up’ and ‘shut-up’ and be grateful for what OTA’s bring us and add to our business, but can I just throw this thought out and see where it lands with you all…
I feel I should also mention that this idea is not mine. I first listened to a prolific and well respected European hotelier (who prefers not to be named), speak at an event a few months ago. And although I am just a humble consultant: without a lobby, bedroom, restaurant or bar to call my own, his speech resonated strongly with me. I had hoped to take up the fight for the hotels I represent but therein lies the problem. If I may explain by going back to the butcher analogy….
Let’s say today you visit your local butcher and order some steak… It gets delivered and you cook it, serve it with a fantastic glass of Merlot and enjoy. It was delicious and well worth the money spent and next week you decide to do the same thing again. But this time, the butcher delivers you sausages… Not the nice juicy steak you had last week but hey, he charged you the same. Is that fair? I think not…
So lets bring the analogy back to OTA commissions. First time around, we as hoteliers should be prepared to pay a high commission for an OTA to deliver a booking. After all, they are marketing our property for us and have in real terms, delivered to us a bright, shiny new customer. So let’s all suck up the 15-25% commission and say thank you very much.
But what about when that same customer comes back to us a second time through the same OTA. Are they coming back to our hotel because of the service that OTA provided? Doubtful. They are coming back because our product was fantastic; our beds were comfortable; our rooms were clean and spacious and our staff were friendly, helpful and welcoming. So should we really be prepared to pay that same OTA the same commission to deliver the same booking that we worked so hard to serve and impress first time around?
Shouldn’t we pay a reduced commission – more sausage than steak pricing? Shouldn’t there be some way of an OTA recognising that they are a facilitator for our product and that it is our service level and fantastic product that breeds loyalty?
Now I know that the OTA’s don’t see it like this and that they are actively encouraging loyalty of their ‘brand’ by offering loyalty programs that for example offer the 10th night free etc but for many independent hotels, this kind of loyalty program is difficult to compete with as they don’t have a portfolio of hotels for guests to move around within.
There are also of course ways that we can communicate and reward returning customers but like everything, this type of guest communication comes at a price.
But taking all of that aside, haven’t we forgotten that these guests are ours? They come to our hotels because of us as hoteliers, our team and our product. The OTA’s are faceless, software systems that are demanding high commission for repeat guests that we work hard to serve and welcome.
Now as a consultant, I have tried to engage with one dominant OTA without success. It seems that they won’t speak to any trade representative and will only speak to individual hotels. So as a market dominated by independent hotels, it is difficult if not impossible to have a voice that is heard. There are few willing to stick their head above the parapet.
So again this all comes down to contracting. Should we be brave enough to stand up and request these terms? Just a thought and I will leave that one with you…