How to shift from OTAs to Direct
Probably 60% of all the hotels are to some degree dependent on OTAs. Meaning the OTAs are bringing them more than 40% of their business.
The common problem for hoteliers is how to increase their revenue with a limited stock of rooms per day and any day lost can’t be recovered. Once they have worked out how to fill the hotel, the dilemma is often how to decrease the market share of OTAs and increase their direct bookings. For those of you who aren’t hoteliers OTAs take up to 30% commissions on the bookings they send to hotels. That is a large part of the hotel’s profit.
Back in 2008 when I was the director of Hotel Taylor in Paris (a three star boutique hotel) I was living that dilemma every day. The hotel had just been renovated and was becoming quite popular on OTA sites, so much so that I had month where 80% of my revenues came from OTAs. While I welcomed the revenues it was obvious that this model would not last. It became urgent to work out a strategy to shift to direct bookings. Here is how we did it (and I say we because this was a teamwork between the hotel and our internet marketing agency).
We contacted the our marketing agency and told them to make the best website they could. We gave them carte blanche and told the designers that the site has to be better than anything on the market. The site they made had some key elements which where novel at the time, full-screen images, easy and very restricted navigation, easy to book from anywhere in the site.
2. Invest in your online marketing strategy
We took two thirds of the OTA commission budget and invested it into online marketing. Working with pay-per-click advertising, blogs and every possible means of direct marketing they had to offer. We weren’t going to make much more profit, but we wanted to be independent.
3. Use Social Media
We started working Social medias, blogs, Facebook and any other medium we could find to get in direct contact with future guests. We had to get out there and make the hotel known to real people that were all potential guests for us.
4. Print Advertising
To make things worse, aside from the OTA dependency we also had a recession well on the way. So we went even further and bought print advertising signed contracts for full page ads in travel magazines. It was expensive and the smaller hotels had not tried it before. Most of our friends thought we were crazy, but we trusted our strategy.
5. Keep working with OTAs
OTAs are not evil, they’re just expensive. So of course we didn’t shut them out and start some kind of revolution. But since our direct bookings took over most of our inventory, we didn’t have much to sell through them anymore. However we kept them all going and paid our commissions. Even if they were rather small.
6. Offer the Best Rate on your Website
This is always a heated subject, but you need to decide where you’re going to put your future. If there is no reason for the guest to book direct, then why should they?
With about one year of work, applying the strategy, spending the money, we created a reputation for ourselves and currently have a hotel that is known by the public and booked at an average of 88% over the year. With an ADR that doubled on 24 month. It’s not undoable, but it takes some courage and it takes being backed by a strong marketing agency that knows what they’re doing.