Hotel Industry Blog

Hotels must think more strategically and collectively about direct booking

By Des O'Mahony | On Mon, September 14, 2015

In all the noise and opinion about rate parity changes, the pros and cons, some simple realities about the dynamics of the industry are often overlooked. For example, online travel agents (OTAs) are crucial to hotels’ business because they provide the reach into the general market that a single hotel cannot possibly achieve. And there will always be a need for that regardless of how the prices compare from OTA to hotel website.

That’s because a primary disadvantage for independent hotels that OTAs can continually capitalise on is that hotels cannot (or do not) behave collectively. Hotels are so busy competing with each other that they hand a significant amount of business to third parties at a high cost to themselves, rather than figure out ways to hand it to each other and benefit from reciprocation! For OTAs, it’s like divide and conquer except that the hotels oblige by doing the dividing part themselves.

Hotels are so busy competing that they hand business to third parties rather than figure out ways to hand it to each other!

The brands and chains have worked hard in this area of course, and can move business between properties through association and brand building. Pushing their business towards direct is happening more and more, as seen by Marriott’s clever #itpaystobookdirect advertising campaign recently. But the brands and chains are still walled gardens, passing business among themselves but not outside the brand.

Is there another way?

Many (but not enough) hotels adopt the sensible policy of telling their guests at checkout to please book direct with them next time. It’s that few precious moments of personal facetime with your guest when you can give them a message that sticks, and if it’s not policy in your hotel it certainly should be. Even if the price is the same, a personal request is often a strong psychological inducement to action. Don’t underestimate it.

OTAs have been leveraging this for years of course - encouraging their users through shrewd email marketing to return to the OTA platform when booking again, and making more and more use of “private” clubs to encourage their users to stop looking elsewhere. This makes sound business sense if you’re an OTA, and they’ve done it very well indeed. But independent hotels have failed to figure out how to work collectively when it comes to customer acquisition, effectively handing the advantage to OTAs.

That’s because they concentrate on customer acquisition for their own hotel only, whereas OTAs don’t need to care about which hotel their customer books once they do book.

But here’s the thing:

Hotels need to think at a higher strategic level when it comes to booking direct. At Bookassist, we advocate that hotels should be encouraging their guests to book direct at ALL hotels, not just theirs. Getting the message to every single hotel guest that any hotel would welcome direct bookings when next they book gives hotels an opportunity in this one small way to work collectively for their greater benefit.

Maybe your guest doesn’t book with you next time, but the message to book direct gets around and all hotels eventually benefit. (Ramping this up to offer some form of collective benefits or awards could be a next step.)
Remember, the hotel industry is larger than any OTA if it can just work collectively for its own benefit. Getting a larger slice of the online pie and redressing the balance of business with OTAs and other distribution avenues is a reasonable thing to work for. There’s plenty of business to go around for all.

Suddenly, hotels are vouching for their industry, not just their hotel.

So, suppose tomorrow every hotel told every guest at checkout to book directly next time at their next hotel, no matter where they decide to stay. Suddenly, hotels are vouching for their industry, not just their hotel.

Just imagine what a game-changer that could be.

—-
Dr Des O’Mahony is CEO and Founder at Bookassist (http://www.bookassist.com), the multi-award-winning technology and digital strategy partner for hotels worldwide, and is a HSMAI “Top 20 Extraordinary Minds” recipient.






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