SPECIAL REPORT
WHEN STAY AND
BOOKING BRANDSCOLLIDE
At a conference in London , David Turnbull , co-founder of SnapShot , a Berlin-based hotel demand management company , said : “ If I was starting an independent hotel from scratch , I ’ d give all my distribution to OTAs and just concentrate on the guest and their experience .” While somewhat tongue-in-cheek , Turnbull says there is some truth to the quote . He writes about the hotelier ’ s struggle between driving bookings through direct channels and OTAs . Imagine being an independent hotelier in a well-supplied market like London . Your first-year room sale objectives would be to acquire customers as quickly as possible and score the highest reputation possible on as many “ visible ” booking channels as possible . How do you achieve both objectives ?
CUSTOMER ACQUISITION No one can have the same velocity impact on demand generation as an OTA , especially for those hotels that rely heavily on transient segments of demand . Yet the industry collectively shouts , “ Direct is best ; OTAs are bad .” This is too simplistic an argument , as most hotels cannot compete with the US $ 4 billion-plus advertising budgets of the likes of Priceline or Expedia .
Hoteliers would be better served to update their mantra to “ repeat direct is best ” because acquiring customers quickly and delivering great travel experiences leads to phenomenal reputation scores , which creates opportunities to convert repeat customers and drive new demand organically .
I would also challenge the notion that direct is more profitable , especially if the strategy is to focus on short-term profit , rather than solely long-term asset maximization . If this is the case , the 20 % -plus commission paid to the OTA looks high in the P & L , but is fully transparent , unlike the
“ ACQUIRING CUSTOMERS QUICKLY AND DELIVERING GREAT TRAVEL EXPERIENCES LEADS TO PHENOMENAL REPUTATION SCORES , WHICH CREATES OPPORTUNITIES TO CONVERT REPEAT CUSTOMERS AND DRIVE NEW DEMAND ORGANICALLY .”
— DAVID TURNBULL
more-opaque costs of acquisition associated with direct such as SEO , SEM , labor costs , hosting fees , photography , marketing automation , etc . And this is before taking into account the additional costs associated with brand representation .
Once compard with corporate segments , often with 30 % to 40 % discounts from the best available rate , plus switch and transaction fees , T & E or agencies fees , the net profit of “ good business ” can be lower than their lowest price wholesaler .
REPUTATION AND GUEST FEEDBACK It is sad that in 2017 , as hoteliers further complain about the OTAs and the growing disparity between stay brands and booking brands , that they keep focusing on the reservation , rather than the guest .
The “ booking brands ” are edging into the customers ’ attention while on-property , contacting guests within minutes of arrival to ask to rate the check-in experience and their plans during the visit . Compare that to the hotelier who inquires about an experience days after checkout and by email .
The remaining asset the hotel has to control during the customer journey is the time spent on property . While retail gets 15 minutes to analyze its customers ’ behavior , after 15 hours , most hoteliers don ’ t know if the guest had breakfast in the hotel or not .
Onsite guest experience is one area where hoteliers technically own the guest , and yet we see no significant shift in how hotels plan to collect , store and effectively use data collected on property to drive real-time service delivery and guest experiences .
This is where reputation scores , premium rates , increased repeat demand ( via direct channels ) and ultimately higher profitability will derive from .
CHANGING SENTIMENT So what is the ultimate hotel-OTA relationship ? Mutual admiration . Hoteliers should also learn to get their data under control .
OTAs need to provide more meaningful tools and services beyond the core reservation transaction . Red Lion ’ s decision to shift the management of the loyalty scheme to Expedia means , most likely , Red Lion is much more focused on managing guests than managing points and redemptions .
The best relationship allows both parties to shine .
36 hotelsmag . com September 2017