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Hotel distribution is a hot topic, which is why it’s important to understand the difference between a hotel direct booking vs OTA booking and which is better for hotels. While OTAs have large advertising budgets, which can increase your hotel’s visibility, this also comes at a cost, namely in the form of commissions. Direct bookings, however, are the most cost-efficient and valuable bookings for a hotel.
In this article, we will look at OTAs and direct bookings in more detail, discuss their differences, explore which are better for hotels, and explain how Mews can help to bring more bookings directly to your hotel.
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What is an OTA?
An OTA is an online travel agency that gives consumers a chance to research and book travel products such as hotels, flights, packages, and more. These online travel agencies are virtual marketplaces that connect potential clients with a variety of suppliers. As a hotel, you can distribute your hotel rooms on an OTA’s website but in exchange, you have to pay a percentage of the total booking costs (usually around 15% commission) for their services.
Find out how to minimize OTA’s commissions.
The services OTAs offer can range from analytics to advertising, tools, and insights so that hotels can be sure to target the right guests. They can also help manage your online reputation and tremendously increase your visibility.
What is a direct booking?
Direct bookings are when guests reserve a room via one of your hotel’s direct channels such as your website, social media, the phone, or an email. To manage these kinds of bookings, it is important to have a hotel booking engine that is easy to use and decreases website abandonment. The faster and simpler the booking process is, the more likely it is that you will be able to maximize these types of bookings, which is key to improving your hotel’s bottom line.
Direct bookings are propelled by social media and search engine marketing campaigns, word of mouth, reviews, or other actions that help potential guests to find you. When guests book directly, it is easier for your hotel to nurture the relationship and allows for personalization and better targeting for future loyalty campaigns. Plus, there is no need to pay commissions when guests book through direct channels.
What are the differences between OTAs and direct bookings?
An OTA and direct bookings are similar in their goals: allowing guests the possibility to easily find and book a room at your hotel but are quite different in the way this can be accomplished. OTAs are a good short-term and complementary solution to your hotel’s own booking engine but relying on them as your primary source of bookings can be extremely costly. Let’s compare the value of each booking channel..
Opportunities for alternative revenue
While OTAs may give you the chance to upsell, there is no better way to upsell than by using your own booking engine where you can highlight your products and extra services at different points in the booking process. With attractive photos and descriptions, you are more likely to have the opportunity to drive ancillary revenue.
Visibility and comparison
Visibility and reach are two areas where it is difficult to compete with an OTA. For starters, they have huge advertising budgets that are difficult for a small property to beat. A lot of potential guests often start out their booking process by looking for hotels on an online travel agency to get an idea of availability and pricing. Being able to use an online travel agency as a base of comparison is one of the reasons, they are so popular.
In the case of guests booking online instead of directly, building a relationship with them before arrival can be more challenging. This is because OTAs often hide guests' personal information. Whereas when guests book directly, the hotel has access to their information, making it easier to coddle them and warm them up even before they arrive. This gives you a chance to better personalize the experience and cultivate loyalty.
Which is better for hotels?
When looking at hotel direct bookings vs OTAs there are a lot more differences than similarities. While both can help drive revenue, build your hotel’s reputation, and allow guests to make reservations, direct bookings are without a doubt more beneficial to hotels overall as they give you access to one of the goldmines in online marketing: data. Customer data can help you personalize the experience, collect valuable insights, and better customize your buyer journey.
In a perfect world, hotels would only rely on direct means for booking as it is the most profitable and provides the best margins. Find out how to increase direct bookings at your hotel.
How can Mews help you to bring more direct bookings to your hotel?
One of the keys to bringing more direct bookings to your hotel is by having the right tools in place. This means a fast website that is optimized for mobile, a booking engine, a transparent booking experience, secure payments, and customization. By using Mews booking engine you can be sure to capture more direct bookings, improve your hotel’s conversion rate and thereby boost revenue.
The Mews Booking Engine provides a transparent and intuitive booking experience that allows guests to clearly see availability and restrictions that may impact their ability to book for their desired dates. It also offers hoteliers the ability to manage – and customize – rates, offer upsells, and collect analytics. Plus, the Mews Booking Engine is highly localized with multiple languages and currencies and works on any device. By delivering a simple booking experience, customized for your business, you can be sure to increase direct bookings with the help of Mews.
We’ve looked at hotel direct bookings vs OTAs and how OTAs can be beneficial for hotels due to visibility and reach and by delivering top tools and functionalities for hotels without their own booking engines. On the other hand, by driving more bookings via your hotel’s direct channels, you can increase your margins, which can positively impact revenue. At the same time, you have more control over the guest experience to boost loyalty and lifetime value. With the right tools like Mews, you can be sure to drive more bookings directly to your website and hence continue to experience growth.
Eva has over a decade of international experience in marketing, communication, events and digital marketing. When she's not at work, she's probably surfing, dancing, or exploring the world.
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Mews Data Dive 2023