More than 51% of travellers are currently using online travel agencies (OTAs), such as Expedia, Booking.com and Hotels.com, to book trips. This makes OTAs a popular distribution channel for hotels. Before OTAs, hotels would sell to wholesalers, who in turn would sell the rooms to tour operators. These tour operators would then sell them on to travel agents, who would finally offer them to end consumers.
Considering this long and rather complex process, OTAs were seen as a convenient distribution channel in the early days. However, while OTAs today can help independent hotels reach new guests, they also charge a high commission cost.
Considering the high distribution channel costs, over-reliance on OTAs as a source of business is seen as a threat to hoteliers worldwide. We actually advise our member hotels to tread carefully when it comes to OTA distribution. There are plenty of other ways for a hotel to give their RevPar a boost – such as increasing direct hotel bookings or optimising their Global Distribution System (GDS) usage.
How hotels can reduce the cost of sale
1.) Invest in an attractive website
As a hotelier, your hotel’s website should be the most profitable channel, allowing for significant cost savings per booking. Your website should be attractive (make sure it includes high-quality images), be easy to navigate, and as user-friendly as possible. This also requires ensuring that your web content – such as rates, inventory and offers – is up-to-date.
What’s more, your website needs to be accessible from mobile devices. Mobile bookings are on the increase, having grown by 1700% in just four years, and people are now five times more likely to leave a website if it isn’t mobile-friendly. So what does a mobile-friendly website looks like? Have a look at our blog article on how to make your hotel website accessible from all devices.
As soon as your website is optimised, you’ll start noticing an increase of direct online bookings. We’ve actually written an article on this with 5 top tips on using your website to increase online hotel bookings – have a look.
2.) Improve guest experience with a booking engine
Another way to ensure you are increasing direct bookings is by incorporating a booking engine on your site. There are a number of benefits to this, such as being able to offer a 24/7 service, freeing up your workload, receiving insights into booking data and increasing revenue per booking.
Furthermore, because OTAs encourage people to make early bookings, they tend to have an average cancellation rate of 40%. Guests that use the booking engine on a hotel’s own site, however, tend to only cancel 10% or less of the time. It’s a win-win situation really!
Here’s more about the benefits of using a booking engine, and how to set one up.
3.) Put aside a budget for digital marketing
With almost 60% of hotel bookings being made online (that’s a total of 148.3 million bookings!), your online presence is more important than ever. This includes optimising your digital marketing strategy to ensure you are reaching the target audience in the right place. Here’s our ultimate digital marketing checklist for independent hotels, have a look to see if you tick all the boxes.
Promoting your hotel on social media is a great way to raise brand awareness and to engage with potential guests, especially younger ones, online. And it can result in hotel bookings too: competitions and discounts tend to do particularly well on this channel. Overall, a great way to keep your marketing cost per booking (MCPB) down! Here’s more on how to successfully promote your hotel on social media.
Another digital channel to think about is search engine marketing. By doing keyword research and optimising your website for SEO, you have a much higher likelihood of ranking on Google when people search for hotels in your local areas. And remember that images need to be optimised for SEO too.
Finally, Google Hotel Ads are the easiest and quickest way for your hotel availabilities and rates to show up on Google search, Google maps and Google assistant. This is a great way to reach people who already have a strong booking intent. Here’s how to set up and manage effective Google Hotel Ad campaigns.
While digital marketing is something a hotel can do in-house, it can get complex and time consuming quite quickly (especially when advertising budgets are involved). We recommend working with a representation company or agency that offer digital services as part of their package. Trust us, it’ll make your life a lot easier.
4.) Increase guest loyalty
The best way to drive repeat business for your hotel is to build customer loyalty by looking after your guests. Always ensure that you clearly state that it’s cheapest to book directly through your hotel’s website, and reward those that actively book on your website. You could, for example, offer them special deals or exclusive benefits for their next stay if they continue booking through you.
Many hotels have now caught on by implementing special loyalty programmes for returning guests, in which they tempt people with best rate guarantees and member discounts.
5.) Review the possibilities of the GDS
Over 600,000 travel agents use the GDS to book flights, hotel rooms, car rentals and destination activities every single day. What’s more, GDS production continues to grow year on year by up to 10% worldwide, having experienced a record year in 2018 with over 75 million generated reservations. As a result, the GDS as a distribution channel is far from disappearing any time soon.
For hoteliers, it’s an excellent way to reach overseas travellers and generate more corporate bookings. It also gives hotels greater control over the messages and images that end consumers see than an OTA normally would.
For more information, have a look at why the GDS system is still as important as ever for hotels or download our free guide to everything a boutique hotel needs to know about Global Distribution Systems.
6.) Work with a good representation partner
The best way to receive more direct hotel reservations is to work with a representation partner that can offer a well-balanced mix of all the above. At HotelREZ, our hotel representation and global sales programme offers an entrepreneurial approach to revenue growth.
While we specialise in GDS distribution, we also offer other hotel representation services such as direct agent visits to promote properties, and provide independent hotels access to our preferred partnership programme. This is combined with an actionable hotel marketing strategy to optimise your website, PR, social media and any online design requirements.
Have a look at our distribution, representation and marketing services to learn more.
Reduce distribution expenses and receive more direct hotel bookings
The best way to reduce your cost of sales and increase profits is to sell more rooms through direct bookings while working with a representation partner to optimise your GDS presence. If you’d like to find out more about what a representation partner does, have a look at the difference between a hotel technology provider and a representation company.
At HotelREZ, we provide quality distribution, representation, marketing and consultancy services to more than 1,500 hotels in over 100 countries. We help our member hotels ensure their GDS distribution is working favourably for them, represent them with various revenue growth and business development programmes and make sure their marketing is helping them raise brand awareness.
Ready to reduce distribution costs and compete on a global scale? Get in touch with us today.
HotelREZ Hotels & Resorts was founded in 2004 by Mark Lewis, an experienced hospitality industry professional and entrepreneur. Over the course of over a decade, the company has grown to be one of the leading hotel representation companies dedicated to marketing and connecting independent properties with bookers worldwide. HotelREZ now provides distribution, revenue, sales consultancy and marketing services and support to more than 1,500 hotels, apartments and hotel groups in over 100 countries including private label GDS chain code solutions. HotelREZ Hotels & Resorts is a SAAS company.
HotelREZ manages the brand Best Loved Hotels, a collection of unique global individual properties, with a dedicated GDS Programme, together with a Website and printed Directory, aimed at the high-end leisure agency and traveller. HotelREZ also incorporates the global World Rainbow hotels, the world’s only GDS enabled LGBT global hotel consortia representing some 1200 hotels in 230 destinations across the globe.