5 Things Hotels Can Do to Beat OTAs

By Nathan Gawlik

Nathan Gawlik's experience includes being a General Manager of a Hampton Inn and other front line roles such as a Banquet Caption, Front Desk Agent, Housekeeper, Catering Event Manager, and Director of Sales

Hotels and OTAs (such as Expedia, Booking.com, TripAdvisor, and more) have always had a love/hate relationship. This is a result of a branding tug of war and high commission fees charged to hotels. For example, according to Expedia, Travelers are 57% more likely to book their travel through an OTA now than before COVID-19. Let's review how recent trends have led to tensions among this symbiotic relationship and five strategies hotels, bed and breakfasts, campgrounds, and other accommodation providers can take to succeed and increase direct bookings.

5 Ways to Compete with OTAs and Increase Direct Bookings

While OTAs are here to stay and are necessary for your property to be found online, there are ways that you can increase your direct booking rate and reduce your OTA commissions.

1. Improve Your Direct Website Shopping Experience

What is your direct shopping experience like for your potential guest or traveler? Does your website load quickly? Is it mobile-friendly? 70% of guests research travel on their smartphones. The speed of your website, particularly on mobile, is important and will continue to be paramount going forward. As of August of 2021, Google will give preferential placement in search results to websites based on speed and other Core Web Vitals.

Uptrend has a tool to help you test your speed on mobile and desktop. When using this tool, select the region closest to where your audience is booking — not necessarily your property location.

Another good practice is to review your Web Core Vitals, such as ADA compliance, render speed, and overall user experience, as these are going to be the most important factors in determining how your website ranks on google.

One of the ways OTAs websites beat direct booking websites is with their reassurance messaging. Guests need reassurance that they are getting the best price and that your property has flexible cancellation policies to ease them into booking a room. These are important factors for anyone paying a few hundred dollars for any service. Price and cancellation tend to be top of mind for shoppers.

OTAs are the best when it comes to reassuring their shoppers that they are getting the best price for their selection and that they can cancel with no risk. These factors coax shoppers into booking a reservation. Oftentimes, OTAs will show shoppers similar messaging to encourage booking throughout the process six or even seven times before the sales are finalized.

Here are some examples of this reassurance messaging:

Hotwire - Want to stay in an expensive hotel for cheap? Yeah, you do!
Hotwire - Find 4-Star Hotels at 2-Star Prices
Booking.com - Find deals for any season
Booking.com - You can cancel later, so lock in this great price today!
Expedia - Fully Refundable, reserve now, pay later or 30% off
Expedia - Act fast! Pricing and availability may change
Hotels.com - Limited Time Offer: Get 2 rewards nights.
Hotels.com - Travel with confidence
Orbits - Book a last-minute stay and enjoy the long weekend your way.
Orbits - Instantly get an extra 10% off with Insider Pricing

Consider adding reassurance messaging at key touchpoints on your landing page, booking engine, package add on-screen, check out screen, and more.

2. Capitalize on Pre-stay: Confirm Your Unique Experience and Upsell

People used to decide to stay and then book a reservation; now, people are booking and then deciding to stay. There is a shift in behavior. Getting a reservation no longer means it's going to translate into a stay. Post booking, pre-stay is an opportunity properties can capitalize on.

Guests know many companies are providing booking flexibility, so some are choosing to book two or more accommodations just in case their flights don't work out or there is another lockdown and they need to pivot to plan B quickly. There is a shift in behavior from deciding to stay and then booking to, "I've booked, but you really haven't got me yet."

Therefore, properties need to continue to build anticipation and excitement to further entice guests to fulfill their reservations. There was some significant research conducted several years ago that showed the anticipation of taking a vacation was actually more satisfying than taking the vacation itself. So now it falls on you to build the anticipation of staying with you to convert these bookers from "reservation breakers" to "reservation stayers."

At a minimum, your welcome emails need to provide upsells, like the ability to make dinner reservations or book a tee time, or at least gauge guest interest to further personalize their stay.

Some properties are taking it a step further and being more aggressive than in the past, opting to call guests or text rather than send them an automated email. These personal touch points teeter on the edge of being intrusive, so many properties are getting creative.

Some hospitality business owners offer a chance to win a giveaway or prize the week of their stay. This could be an extra raffle ticket, premium parking, or early check-in if the guests participate in a pre-stay phone call. The entire goal is to create genuine intrigue and reassurance in the guest.

Another strategy properties are using is to survey guests before their stay to cater the experience for them. Providing these unexpected delights helps guests be more committed and further excites and reassures guests their vacation is going to be incredible and they have made the right choice booking with you.

Now is the time to review your post-booking, pre-stay experience.

3. Are You Paying for an Advertisement that Tells Guests not to Book Direct?

A staggering 94% of hotels are being undercut on metasearch sites like Bing and Google by OTAs. Review your pricing and make sure there isn't any rate leakage.

OTA insights offer a solution to ensure either rate parity or that your property isn't being undercut by OTAs. OTA insights help you keep track of all your distributed rates across every platform. You might be surprised to find that your rate is advertised as higher than your OTA competitors.

If you are paying for an ad on Google, and guests are booking through OTAs for a lower rate, it is just adding insult to injury. This means money is going out the door for the Google ad and you are likely paying 15% commission to an OTA on a rate that isn't as high as you would like to offer. This can be incredibly frustrating.

4. Advertise, Advertise, Advertise! Capitalize on Your Return Guest Rate.

Travelers can be hard to reach, especially with the events surrounding COVID-19. Being discovered by guests at the right time can be difficult; that's where advertising comes in.

Facebook can help you by identifying users who are actively seeking to travel. These are called Facebook Trip Consideration. They work by showing your Facebook ad to prospective travelers that have recently visited your website or even other travel-related sites in your area.

There is a cost to run these Facebook ads, and key performance indicators are measured in impressions rather than actual bookings or clicks.

This is where Google has the advantage on the cost of an ad. As of March 2021, Google Hotel Ads has started offering what they are calling free booking links, which can be set up in the Google Hotel Center, shown below. According to Google, "Free booking links include the name of the booking partner who is selling the room, along with the room rate for the itinerary selected. Booking partners pay no fee for free booking links, and Google doesn't collect any payment for placement or user engagement with these links."

It's important to note that free booking links are different from Google Hotel Ads. These are still being offered at a cost. Typically properties will select the commission pay per click option for these ads. The range can be comparable to other OTAs but is often far less than the 18% average. Using this bidding strategy allows partners to pay only when the guest's stay has actually occurred. Google also boasts a rather small cancellation rate per booking of around 13%. We cover Google Hotel Ads in another article found here, and we review Facebook Trip Consideration in another article found here.

5. Offer a Loyalty Program at Your Hotel

Travelers that are a part of a loyalty program spend twice as much on travel as those guests that aren't part of a loyalty program. However, according to a Phocuswright November 2020 study, 68% of hotel loyalty members participate in two or more loyalty programs and even elite tier members still cheat as much as 50% of the time.

Membership does not denote loyalty anymore. However, it does help with direct bookings. Membership can help shape shopping behaviors. 79% of hotel loyalty members will start their shopping journey on the brand website they have a membership over a third-party intermediary.

If a guest knows they have unused rewards waiting for them at your hotel, they are going to try to book with you first, over your competitor.

Summary

The bottom line is that large chain hotels will need to offer unique stay experiences to be able to compete with the marketing OTAs have used to appeal to the millennial and younger traveler. Here are five key activities you can do to beat OTAs:

Think mobile-first, and test your website speed. You will likely need to do this again once 5G becomes widely available. Reassure and entice your guests to book with you on your site with frequent messaging, speaking to their desire to get the best rate, flexible cancellation, or other pain points they may be experiencing.
Post-booking, pre-stay marketing should fall front and center in your marketing efforts. There is a fish on the line, but they could come off at any moment.
Control your rates among all the sites where you are featured. Review rate parity inconsistencies regularly and address them as needed.
Advertise with alternative marketing channels like Facebook and Google to cast a wider net and get new guests.
Loyalty programs help to drive people to your website. It's up to you to convert them into paying customers.

Resources

TripTease
Hospitality Insights | Reassessing the relationship between hotels and OTAs
Hotelspeak | Why Increase Your Hotel's Visibility on Google Hotel Ads
Phocuswire | Expedia Claims OTAs in Crucial Position for Travel Industry Recovery
eHotelier | OTAs and the Billboard Effect
SEC | Expedia 10-Q
Expedia | Quality Counts: The Value of OTA Travelers

MARKETING

OPERATIONS

CASE STUDIES

THEORY

MARKETING

OPERATIONS

CASE STUDIES

THEORY