Hotels Competing For Direct Bookings
Do Booking.com and Expedia Make It Difficult For Hotels To Compete?
Two articles in my email inbox this morning got me thinking.
The more I thought, the more I could feel my teeth grinding. So much so that I felt the need to write this blog post.
The first article appeared on Skift.com – “Hotels Still Afraid To Take On Expedia and Booking.com Despite Rule Changes”
It speaks of the market power of the two main protagonists for online hotel bookings. Booking.com and Expedia.
The EU has made a number of attempts to curb certain “anti competitive” activities. Some have been reasonably successful. Others less so. Only Germany looks like it has the best interests of the hotelier in mind, insisting that hoteliers are free to offer “the cheapest price” direct, online.
I acknowledge that many smaller OTA (Online Travel Agent) websites and hoteliers complain about anti competitive practice. But at the same time I look at the market in general and I think, “so apart from complaining, what are you actually DOING about it?”
Let’s be clear about my association in this debate: I book a proportion of my hotel rooms on Booking.com; I run affiliate websites using both Booking.com and Expedia partner systems; I have hotel clients who can’t see beyond using OTA websites to try to fill their hotels and finally I work with a company that makes very good channel management software. So I can see this argument from many sides.
Easy To Use
For me, booking with Booking.com or Expedia is very easy. It is certainly slicker and more effective than 99% of the hotel booking websites out there. In many cases I can cancel right up to the date of arrival without penalty, making booking ahead a relatively risk-free task. I hate having to pay for hotel rooms I can’t use. Payment systems on these large OTA websites tend to work well. The booking and payment systems are easy to use and work well on my mobile phone. In short – they are very good at converting enquiries into bookings.
Not So Easy To Use
Contrast this with most hotel booking websites, many of which are clunky, poorly written and offer questionable PCI compliance. That’s the processes supposed to ensure your credit card details are handled securely. Pop your travel dates into most hotel website booking systems and you are often treated to forty different permutations of room type, rate plan and options. These cascade much further down the page than I can be bothered scrolling. So I don’t bother.
Rewarding To Use
When I’m not using Booking.com I’m using IHG, or sometimes Premier Inn. IHG see to it that I can get a decent price for my booking. I share my information with them, they give me a few quid off my bookings. I still have to commit to advance purchase bookings before I arrive, but their system usually works, even it it can be a touch confusing from time to time. It’s nice that they make a wee bit of a fuss of me when I arrive too (in effect, “thanks for choosing to stay with us, here are your rewards”). It doesn’t really matter to me what the rewards are. The fact that they are there and given to me by IHG gives me a nice, warm glow.
Nobody else I stay with does that. Premier Inn certainly doesn’t.
If you want to compete with OTA websites for business, you’ve got to make yourself easy to use, easy to deal with and rewarding to buy.
Focus On Dealing Direct
If you want guests to book direct with you, everybody on your side of the booking process needs to be in tune. Most of the time they’re not. Let me give you a little example.
One of the test websites we run uses affiliate links to try to earn a bit of cash as part of the testing. We applied to join a few affiliate systems. Those operated by Booking.com, Expedia and Tripadvisor were easy to join and offer good, solid reasons for us to use their links for each hotel we’re promoting. Yet many of the properties we promote on this test website are run by hotel brands. Big, international brands.
We would prefer to be able to link direct to their booking systems. It’s part of what we built the website to test and explore. In EVERY case when we applied to promote branded hotels with their own direct booking links direct to their own booking system we have been denied. Except one. There’s nothing wrong with the website. It complies 100% with the stated policies of each hotel company. It’s almost as though they can’t be bothered.
So we’ll continue to promote bookings for these hotels via OTA websites. The marketing agencies responsible for handling affiliate traffic clearly not being on the same page as their hotel clients.
You Get The Behaviour You Reward
Everybody else in the business needs to be focused on dealing direct too. You get the behaviour you reward. If you offer the same stuff on your own website as you do on an OTA website you’ll get everything you deserve. You need to make a bit of an effort. You can start by copying what the OTAs do.
If you are bound by contract to offer the same prices as you publish on your website, why not play them at their own game? Look carefully at how these large OTAs fought off the “price fixing/rate parity” challenges. They moved a part of their website behind a membership login and offered special prices and deals where only members could see them. They now have a published price and a members price. Can your booking system do that? If not, move to one that can. Quickly. Then you can start playing the attraction game properly.
Staff in your hotel need to be empowered to behave in ways that encourage customers to book direct. If your staff are telling people who walk up to your front desk to book on the website rather than take that booking direct – face-to-face – you need to change that today. It happens when you’re not there. I’ve seen it. Put the systems in place to allow it to happen and enforce them.
You Made The Monster
Well perhaps not you personally, but the industry in general. On the face of it, these websites wouldn’t exist if you didn’t make your rooms available to them to sell. They know it. That’s why they try to make life hard for you if you want to deal direct with your customers. Booking.com were quoted in the Skift article as saying,
“These modified agreements ensure accommodation providers don’t free-ride on the Booking.com platform…”
Hmm. That sounds like a nice, friendly, win-win business relationship, doesn’t it?
With commission rates moving north of 20% I don’t think many of their hotel customers are getting a free ride.
They Need The Money
Booking.com and Expedia need these commission rates to keep their own marketing efforts going. Finding new customers costs money. Protecting their access to these customers costs money. The hotel industry in general evacuated the internet as a route to market and abdicated it to the OTA websites. It left a vacuum for them to fill. Keeping that space occupied costs money.
The OTA websites maintain their presence because they are prepared to spend money on it. They invest in their technology, they publish marketing campaigns, they invest heavily in pay per click (PPC) marketing on Google, Bing and Social Media. They encourage affiliate traffic (starts at 5% of your booking, thanks very much) to reach places on the internet where the “niche” markets exist.
You made these behemoths. They can’t help being what they are. They need to survive too. It’s you who provides their oxygen. It’s your rooms.
How Hotels Can Compete
Ok, it’s your rooms but the OTAs own the route to the customer. Unless you’re doing your own offers to regular customers or trying to entice prospects to join your special offers club, the OTAs will continue to own the customer.
If you get a booking from an OTA for their first stay in your hotel and you don’t capture them direct for their subsequent stays you only have yourself to blame when you pay that commission invoice.
How can you compete?
Start by answering these questions:
- Are you qualifying visitors to your website? Do you make any effort to understand why they want to visit? What can you do for them that Booking.com can’t? Come on now, you own the hotel. There must be something.
- Do you add resident guests to your email list as they check in? Do you have an email list? If not why not?
- Are you using an email autoresponder to manage your email lists and messages to prospects, current guests and previous customers?
- Do you offer direct booking deals to regular customers? Are you offering members rates and deals in a way the public can’t see them? (unless you let them…)
- Are you offering a compelling reason to buy? Now!? – For me, Booking.com offering me the chance to book ahead without a cancellation penalty is a big plus. How would you get me to book your hotel? In my experience, hoteliers allow themselves the luxury of focusing on the times when people don’t turn up, rather than focus their energies to ensure people do turn up and are looked after when they do.
- Are you giving people a good excuse to book now?
- Do the pictures on your website show people enjoying your hotel? Or are they simply pictures of an empty restaurant? Think about it.
- Are you making things too complicated? Technology is wonderful, but it can sometimes lead you down the path of making things complicated just because you can. Keep it simple.
- Do you know how much a new customer is worth to you?
- Do you know how much it costs to acquire a new customer?
Before you can hope to compete with any OTA website, you need to know the answers to those last two questions. If you need help to work it out. Ask me.
Don’t Be A Prat
Finally, if you’re going to start dealing direct with customers it’s likely you will want to use OTA websites to capture their initial booking. Then you can start encouraging the customer to visit again by offering them direct deals.
There is a movement within the hotel industry which suggests what might happen to guests who had the bold affrontery to book using an OTA instead of booking direct: They will get the worst rooms, next to the lift shaft or the kitchen air extractor or above the banqueting suite where the disco runs until 2am on a Sunday morning. It’s up to you of course but if you’re a hotelier who wants to make a good impression on these people it’s probably a good idea that you do so. Think about it. It has just cost you between 15% and 25% of the value of the booking to be introduced to this new customer. They might be worth an awful lot more to you in the future, you’re only at the very start of your relationship with them. Do you really want to make their experience of your hotel the least they can expect? Or do you think it might encourage them to book direct next time if you show them what the benefits of doing so look like?
In those moments when you haven’t slept properly for three weeks you might make a bad decision and choose to penalise a customer for using the wrong booking channel. Don’t be a prat and dwell on the past, look to the future instead. What is the best way to get that customer to book direct next time?
Do Not Get Sidetracked
The second article that caught my attention was about Expedia experimenting with virtual reality 360 degree presentations of hotel rooms.
This is all well and good but it’s an example of the “latest bright, shiny object” that gets in the way of solid, professional marketing. Technology allows you to do many wonderful things and I strongly urge you to embrace the bits that can help you achieve results. However do not let a loss of focus get in the way. Your customers are asking critical questions YOU MUST ANSWER long before they think of looking for a 360 virtual reality, immersive experience of your bedrooms. Bedrooms aren’t unique. People have seen them before.
If you want to compete for direct bookings – Concentrate on what really matters.