Session three of Mews Unfold was a deep dive into Winning the Booking: Industry Forecasts. Our expert panel considered important questions about driving direct bookings, the roles of OTAs, and the importance of leveraging Google.
You can view the webinar as live right here, or you can read on for some written highlights. Joining Matt and Leah as moderators, we had:
- Henk Adriaans, Managing Director Europe, Revinate
- James Bishop, Senior Girector – Global Ecosystem, SiteMinder
- Jens Egemalm, Director of Distribution, Pandox RMC
In search of direct bookings
During the pandemic, the proportion of direct bookings jumped up. This was largely a combination of two things: first, an increased willingness to book direct to help businesses by cutting out the middleman; and second, the fact that OTAs pulled back significantly on their advertising. Our data showed an average of between 30-40% of bookings were made direct, a big bump on the usual numbers. So what can you do to get those numbers back up there now that OTAs are starting to spend heavily again?
As James said, you need to think really understanding who your guests are, what makes them more likely to book direct, and how to get them to your property. “One of the key things is understanding that we're making those marketing investments in the right part of our process and in the right place to attract the right guests. It's important to focus on getting a true understanding of that direct booking funnel. I've always looked at it in three parts: your internet traffic to your website; traffic from your website to your booking engine; and traffic from your booking engine turning into bookers. Lookers to bookers. If you don't know your conversion in each of those parts of the journey, then it's very hard to really create a strategy to improve your direct booking.”
“You might find that your booking engine is converting a crazy amount of visitors to your booking engine into direct bookings, but yet you still have very low bookings. And without actually looking at the data, you might think, "Well, my booking engine isn't much good because I'm not getting the direct bookings that everyone else is talking about." You try another direct booking engine and you've got the same problem if not worse, because actually the problem was you're getting a ton of traffic to your website, but your website's not driving those to your booking engine – or worse, you're not actually getting the traffic to your website.
Henk agreed that success in the world of direct bookings, “all starts with understanding your guests and understanding the data of your guests. I think getting one unique guest database in place where you have all the data combined, where you have a clear view on who that guest is and what he's done for you and what he's done with you... that will enable you to send the right message to the right person at the right time.”
“If the last 18 months have taught us something, it’s that we need to act very quickly with the changing rules and the changing market conditions that we've had. If you have the right data, you will be agile and you can switch quickly. Having that is the starting point of everything, and then actioning that data and doing that in a very sophisticated way that is, to a high degree still automated. Most people think automation means depersonalization, which is not the case. If you do the right segmentation, you can have automated messaging and campaigning that’s very personalized, sending the right message to the right person at the right time.”
Direct bookings aren’t always the holy grail
Are more direct bookings always the answer? Of course, you have to be logical about it. If you end up spending too much resource chasing direct bookings, it can negate the benefits. As Jens said:
“From the owner’s perspective, I wouldn't say that direct traffic or direct booking is the holy grail. For us, the starting point is the cost of acquisition for a specific booking. So if we know that an average OTA booking will cost us 15%, then we know that it doesn't make sense to spend more than 15% to drive that booking through our direct channels. That type of mindset also helps us in our marketing planning to understand.”
It isn’t always easy to calculate acquisition costs per channel and ROI. In fact, it’s often downright difficult. Here’s how Pandox thinks about it, according to Jens: "In order to calculate the cost per channel, we have the direct acquisition cost, which is great. We can track how much we're spending in page search, and we can track how much our meta search clicks costs. And then of course, you have other things like the infrastructure – the website cost, the booking engine costs – which are fixed costs, the ones that a bit cannot be directly associated to a channel.”
There may also be a slight mindset change required by hoteliers:“If we're running campaigns which we know are specifically lower or mid funnel, it's vital to have your OTA commission as your benchmark because you're not driving additional bookings: you're shifting bookings between channels.”
The role of OTAs in post-pandemic hospitality
How has the role of OTAs changed recently? What’s the current feeling on the ground about how to balance these third-party channels with more direct bookings? James shared some interesting insights: “What we've seen over the last 18 months is actually quite a change in the distribution mix for a lot of hotels. We're seeing that hotels are working with additional channels, channels that they wouldn't be working with previously. Not just new OTAs, but different types of distribution channels also.”
“During the pandemic we saw groups of properties going one of two ways. You saw those saying, "I'm actually going to turn off a whole bunch of channels because they're not going to be sending me anything. And I don't have the time or the staff to manage that relationship right now." Whereas, in other segments of the industry they said, "Let's try and get whatever demand there is." We've had a lot of conversations with hotels and put together a lot of tools and playbooks which help to steer them in the direction of what's going to be driving them something different to what their existing distribution is doing today.”
And what of the behemoth that is Airbnb? They’ve been one of the companies who have lately benefited from a change in booking behavior. James continued: “Airbnb as a distribution channel was probably the only one that had a very nice V-shape recovery and grew even further. It's not purely vacation rental stuff; there's a lot of hotel inventory in there as well, and hotels coming off the back of that doing really well. So yeah, I can see those types of channels actually providing additional value to more property types going forward.”
It’s worth remembering that OTAs can effectively be acquisition channels for future direct bookings. Once a guest has booked through an OTA, you should do everything you can to gather as much data as possible from them. As Henk said:
“OTAs are top of the funnel from a CRM perspective. But once you have that guest through one of those OTA channels, you need to do everything possible to make the next booking of that guest direct. You now have the relationship, you now have the data – start marketing to that guest so the next time that he comes to your property, you get them to book direct. Not only will there be more money on the table left for you because you're not paying that high premium, but secondly, you're starting to own that relationship.”
One of the best ways to do this is reaching out before the guest arrives and asking them to check-in online. Their email address is probably the most important piece of data you can capture, but the more you do, the more tailored you can make your future marketing. Here’s Henk again: “If you start enriching your guest database with that, that means that you now are building that relationship yourself. And that will boost your direct channel because the richer your database is, the better your conversion, and then the more detailed and personalized your campaigns will be.”
An OTA warning
“I think there's lots of value in working with OTAs,” Jens agreed. However, he also struck a tone of warning. “With that said, there's lots of frustration. I’ve heard from hotels that certain ways of working or certain roll outs during the pandemic might not have been as popular among hoteliers. It's more of a customer centric approach where the customer is the guest and not the hotel.”
Jens gave the example of a program called Risk Free Reservations, which they were automatically opted into by an OTA. It sounds good at first glance, but once you dig a little deeper you can see that it’s another way that OTAs are filling their own pockets. “They market it you like this: if you are selling a non-refundable rate, instead of charging the guest when he cancels, let us find another guest for you, which sounds good so far. And if they don't find another guest, they’ll refund you the amount.”
“We found out later on that what actually happens is when that guest cancels, they will sit on the rate if it's a long lead time and wait until prices increase. And when the public price has increased, they'll sell that lower rate, and then they'll win the booking. So that's the replacement, undercutting rates. It's not a transparent way of working.”
The impact of Google Travel
Google Hotel Search was released last year to considerable fanfare. But what difference has it actually made to hoteliers? There isn’t much hard data around its usage or success yet, but even so our panelists agree it’s an important show of intent.
“I think in general, the feeling around Google and how they're changing the way that hotels show up in search results is exciting,” said Jens. “We have seen for years that our search budgets are shifting towards meta-search, which is natural because people are clicking where it's intuitive to click and not on the page search text ads anymore.”
“Normally Google is quite good at what they do, so I wouldn't be surprised if Google Travel is going to continue. They can pretty much do everything now that they can do on a review site or an OTA. Generally, I don't think that necessarily Google will go all the way and become an OTA; I think they can monetize well enough through their meta-search and that side of things.”
What it has done is highlight the importance of your Google My Business page – you can read a few tips on how to optimize it. Jens continued: “This is an interesting opportunity for hotels: are we focusing enough in terms of optimization in that environment? Before, Google My Business had been a little bit neglected. But now, it's not only like your information box, this is your listing. This is where you put your facilities. This is how everything will show up.”
James agreed: “It's certainly a real indication of intent there from Google in terms of getting more content, getting better content, getting hotels to be more serious about hotels on Google. As Jens said, the actual listing piece or your Google My Business has become a listing. And it is really important to be managing that. Google reviews is becoming the de facto go-to place for consumer research."
If you’re looking for a few final words of wisdom, you’re in luck. One of the most important things to remember is that there are experts who can help you if you don’t have the time or expertise to focus on direct bookings and digital marketing.
As Henk said, "If you're using a system like Revinate, you're looking at single digit cost of acquisition – even sub 5% cost of whatever booking you get. And with a direct connection to the PMS, we can very clearly tell you what the return on investment is of any campaign that you have. Having that insight and making you see what marketing can do and what it can generate for you is something that hotels are looking for.”
“Most hoteliers are not experts in digital marketing,’ James agreed. “That's where I think it's critical to involve partners, be that digital marketing experts or even productized solutions that are doing that marketing role for you and the attracting the right guests with the right messages to your website and giving you the data in terms of the conversion – i.e. who actually ends up in your hotel.”
With any luck, you’ll be generating a lot of guest data. Learning how best to use and optimize that is at the heart of a higher percentage of direct bookings and a lower cost of acquisition.
Remember, this writeup is only a taste of the full Unfold session. To watch the full recordings from every session, just follow the button below.
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