How to shift from OTA to Direct bookings

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).

1. Website

We contacted the best webmarketing agency in our area (WIHP, which is where I work now) 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 was this one www.paristaylorhotel.com some key elements where, full-screen images, easy 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. Best Rate Guarantee on your website

This is always a heated subject, but you need to decide where you’re going to put your future.

—

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.

5 Comments

//

• 
  Tom Costello February 9, 2011 at 12:39 pm

  Martin,

  We will launch a new online leisure travel site on Monday, February 14 known as Hotelmine, that serves as a “direct connect” between the customer and the hotel.

  Hotelmine combines a unique Business 2 Consumer platform with a robust Peer 2 Peer architecture that allows customers to book direct with the hotel and to share their research, travel plans and transactions with family and friends on the top social media sites.

  Since we are a direct channel distribution option, there are no commissions to pay or GDS fees.

  Tom Costello
  CEO
  Hotelmine

  Reply
  • 
    Martin Soler February 9, 2011 at 4:10 pm

    Hi Tom, thanks and this sounds quite interesting, I believe in direct connect and consult hotels to improve their direct connect methods. One of these is a site called http://www.explorotel.com which is a commission free distribution site with lots of additional features.
    Send a beta test link and I’d love to give it a trial run (plus consult it to our clients).
    Best, Martin

    Reply
• How did you hear about us - Hotel Marketing Survey by WIHP | Hotel Marketing Blog - Mirarmedia by Martin Soler May 18, 2011 at 2:39 pm

  [...] over to the website, it needs to be a win-win partnership. The article I wrote in February about shifting from OTAs to Direct bookings is still the best way that partnership will work and remain healthy for both [...]

  Reply
• 
  Phil Butler November 4, 2011 at 11:42 pm

  A very insightful article Martin. I visited the hotel website you linked to, superb except for the lacking SM buttons. Your other strategy suggestions, spot on as well.

  http://www.youtube.com/watch?v=88DcpcKtmMc&feature=player_embedded (video)

  I hope you guys will investigate a new client of ours, Global Hotel Exchange, about to launch in January. This free market matrix and platform, by Tom Magnuson of Magnuson Hotels, should put your advice (and some more) into shoe leather.

  Thanks for this helpful post though, you guys do good work and I hope together we can all help the industry and the consumer.

  Always,
  Phil Butler
  Editor: Everything PR News
  Partner: Pamil Visions PR

  Reply
  • 
    Martin Soler December 15, 2011 at 4:08 pm

    Thanks for the comment, sorry for the delay in answering. Awesome video for the Global Hotel Exchange, gotta try that out. About the SM buttons, I see what you’re saying, but there’s a reason for that. In the words of Dieter Rams “Good design emphasises the usefulness of a product whilst disregarding anything that could possibly detract from it.”
    A user arrives on a hotel page not to be sent to a social media page but to find his room. SM buttons would detract from that purpose.

    Reply