While some hoteliers have started questioning the OTAs’ role in the hospitality industry, many still see them as the golden path to higher occupancy and survival. Don’t get us wrong, the OTAs are undoubtedly an important channel to attract first-time guests. But a newly booked first-time guest is at the point in a customer relationship where the hotelier simply cannot afford to just close her eyes and smile. Once that first-time booking is done, the OTA should have played out its role, and it should be time for you to start getting to know the guest and help her form new habits for the next booking. Missing the opportunity to maintain the dialogue with the guest implies that you prefer to fight for the guest on the OTAs’ terms next time as well - instead of fighting on your own terms, focusing your efforts on better service and price. While the OTAs thrive from this guest disloyalty (with silent acceptance from many hoteliers), taking a closer look at the guest communication can help you alleviate most of the pains that come with growing OTA dominance.
The facts
There has been a lot of buzz lately about OTAs and the booking war against hotels. The buzz is growing as fast as the the percentage of OTA bookings are. According to KalibriLabs, In 2011, there were 4.3 room nights booked directly for every indirectly booked room night. In 2015, however, that number dropped to 2.7 direct room nights for every one indirectly booked room night – a nearly 40 percent drop. Ultimately, 2016 was the first year when OTA lodging bookings in the US exceeded total hotel website gross bookings.
The main goal of these organisations is to sell hoteliers the idea that OTAs are a great showcase for their businesses and, therefore, an aid to increase sells. In one study, hotel website bookings increased anywhere from eight to 26 percent due to the “billboard effect” of hotels simply being listed on a popular OTA site. The truth is that OTAs are today a “necessary evil” and a hotel that is not present in OTAs is a nobody.
Much has been written about the art of creating a healthy mix of business, where a moderate proportion of rooms are sold through a mix of channels. However, it seems like this balance has gotten out of control and today the drawbacks of being present in OTAs may outweigh the benefits. What was before sold as a way to gain control, has become a unhealthy dependence for hotels. Reports show that an average of 76 % of online bookings go through OTA sites, which typically charge commissions between 15% and 30%.
A big part of revenue is not everything hotels end up missing on during their complicated love/hate relationships with OTAs. Shifting relationships and a loss of customer information are two other factors that hotels have started to become more and more aware of as OTAs have started to take full ownership of the direct communication with hotel guests. Just as an example, in 2015, booking.com announced that they will no longer provide hotels with their customer’s email addresses.
Going back to the very root of hospitality
OTAs seem to have a clear strategy to maintain the control of the guest, and the question is if hotels are equally ready for the challenge. Until now, most of the proposed solutions from hotels have had a strong focus in strengthening loyalty programs, putting more weight into marketing efforts, improving the booking experience in websites and offering perks when booking directly. But it seems like in the middle of all the clutter of tips, hotels have forgone the very root of hospitality.
Hotels don’t have the money that Expedia and Priceline spend on communication and marketing, and neither do they have the technology expertise in-house to match those multi-billion-dollar companies. But hotels do control the very aspect of the rooms, the guest experience and the hospitality. Hotels that grasp the power that lies within using what they already are good at in their communication are the ones that will end up winning. They will be able to attract first time guests to book through the website when coming back.
Breaking the OTA pattern with right communication
Guests are hooked to the pattern of booking through the same channel time after time. Consumers feel they make a more rational decision when having all the choices laid out with comparison parameters as nicely as OTAs do it. OTAs are even convincing guests their price is better compared to booking on the hotel’s own website. All these factors lead to strong guest habits that tie the hotel guest to the OTAs. However it is in the hands of the hotel to break these habits of repeat booking though OTAs, and this is where implementing the right measures to keep a communication flow that is both targeted and personalised is key.
In order to know guests better, hotels will have to regain the ownership of the direct contact with their guests. Having the systems in place to collect guest emails is the first step to being able to maintain a relationship and increase the rate of direct booking for returning guests. However, it will certainly not be enough to try to collect as many emails as possible from all guests, and use them in generic marketing campaigns. Guests crave personalised messages, with call-to-actions that are based on their previous stays, preferences and profile. Therefore learning as much as possible from the guest throughout the whole guest journey is key to boosting direct bookings even further.
Hotels are starting to understand the needs for having the tools to collect customer data regularly, but many are still far from standardising such processes, and work with them on a daily basis. As highlighted in a study by IBM, hotels that make an effort in order to embrace standardisation, and have all systems in place to recollect customer data and use it in the most optimal way will be the ones leading the way in the next decade.
While OTAs are a valuable channel to reach new customers, it is time for you as a hotelier to acknowledge that OTAs are stealing the control of, and breaking the communication with your guests. Hotels that manage to communicate with their guests in the right channels throughout their stay, learning more about the customer for every touchpoint are the ones that will be in the frontline. The hotels that will be able to form new guest habits by truly getting to know their guests will be the ones to see the a shift from the growing trend of OTA bookings to a growing trend in guest loyalty and satisfaction.
This is the beginning of a set of articles about guest communication that will dive into the increasingly tense relation between hotels and OTAs. We will take a look at how system saturation in combination with OTAs and the use of disintegrated tools are shaping the lack of coherence and personalisation in guest communication. We will also explore how hotels can stay competitive and relevant in today’s technologically dependent hotel industry by taking a holistic approach to guest communication.
