Contributed by Paula Perrin, Sr. Market Analyst, SHR
Bob’s hotel has just gotten a new booking engine, and he and his staff are very excited. Because considering the decidedly OTA-centric world hospitality now inhabits, the almost 500 booking channels he now has swirling around his hotel must be, in his mind, lining up to shower his business with revenue from global parts unknown. Like many hoteliers, he’s also heard about the so-called Billboard Effect, a phenomenon whereby simply being listed on an OTA website has been observed to boost direct bookings. With a reach that is arguably unmatchable by any hotel, and with so many channels, plus a promised increase in direct bookings, Bob is finding it tempting to throw out his revenue strategy altogether and just let the OTAs make it rain.
But before he can even open his umbrella, he reads a Kalibri Labs report that suggests direct bookings are now where the real profit is, and other research that says the Billboard Effect may not apply anymore due to increased bookings on mobile platforms. On top of all this, once his channels are turned on, he begins to notice that each one is not producing at the same rate in the same season at the same time—and some are costing him much more than he expected.
What happened? Like many hoteliers, Bob made the common mistake of expecting OTA channels to function as something they were never meant to be; a blanket type set-it-and-forget-it revenue solution that somehow runs all on its own. The truth is, all channels need to be properly and consistently managed. With the right strategy and a little bit of homework, Bob, and every other hotelier, can turn those vital OTA connections into a profitable part of an overall distribution strategy.
Managing for Performance
It would be wonderful if every channel in your mix was of equal value, but normally, there are some that produce at a far greater rate than others. And that’s fine, because once you figure out which channels are producing and when, you can then manage to that production. Look at your highest yield channels, then at your actual profit margin on the bookings they bring to get a truer picture of where you may need to focus your efforts. For example, if bookings from your least expensive channels are too low, you may want to look more closely at these and adjust the content you are providing to each to ensure your hotel’s best online presence is working to bring those channels up.
There is another benefit to honing your channel strategy and knowing which are your best producers, and which you need to work on, and that is knowing first-hand how you and your inventory are being presented and what your hotel looks like on each of those channels. Because when it comes to managing your channel “personality” plus how many channels your hotel can reasonably keep track of, small can be beautiful. Make sure that all your channels, especially your best producing, most profitable ones, have the photos and descriptions that put your hotel in its best light.
Upping Your Direct Booking Game
Once you’ve got your OTA channel goals laid out in a more predictable and manageable way, you will want to concentrate the rest of your energies on those all-important direct bookings. Ideally, your booking engine will be able to engage today’s best technology, and you should be able to use that technology to your advantage. Concepts like curated rates—providing rates from all the most relevant booking information that is available to show or “present” to the guest at that moment—can help. Do your guests have the smoothest booking experience possible so that they do not abandon the process? This is the idea behind blended rates; to give your hotel the control it needs to link rates to an existing rate code for blending purposes. It works by filling the gaps between rates with a master rate, promotional rates included, so that guests may continue to book on their preferred stay dates, with all this blending done behind the scenes. They do not “see” the process of blending, so their experience is not interrupted. Sell limits is another technique that can boost your direct bookings. The concept of a sell limit is common in the hospitality industry and revolves around the selling of a limited number of rooms in a combination of room/date at a certain rate. Because it allows a great amount of control for ADR, using sell limits is a crucial part of every hotel’s demand strategy.
Happy Endings—and Beginnings
Now, Bob does regular audits of his channels, and has a solid understanding of what they can do and how to make better use of his time and resources, as well as his booking engine technology. Because he’s found out what many hoteliers have learned; that whether you have five or five-hundred channels in your OTA mix, understanding how those channels perform is key. By managing your expectations for those channels, and spending an equal amount of time on boosting your direct bookings, you can move toward realizing your best distribution and booking strategy—for your hotel, your brand, and your guests.