The profitability of bookings from OTAs and direct hotel bookings is significant in the hotel industry. These platforms connect millions of travelers with hotel rooms, apartments, and destinations, offering powerful and efficient booking experiences.
The ease of finding suitable accommodations and comparing multiple offers makes OTA bookings popular due to quicker booking processes. However, many hoteliers have started to focus on increasing direct bookings.
In this article, we will compare OTA bookings with direct bookings to determine which option is more profitable.
What are OTAs?
Online Travel Agencies (OTAs) are intermediaries that connect travelers and guests with hotels, charging a commission for their services. OTAs function as sales channels such as Booking or Expedia, and they are widely used by millions of travelers worldwide to plan trips and choose between independent hotels or branded groups.
Apart from bookings, OTAs offer a range of services, including analytics, advertising, managing online reputation, and significantly increasing visibility. While numerous online reservation channels provide similar services, Priceline and Expedia stand out as the two dominant companies that gather most of the distribution channels globally.
What are Direct Hotel Bookings?
Direct hotel bookings refer to reservations made through direct sales channels such as the hotel’s website, social media platforms, telephone, email contacts, and email marketing. It is crucial for hoteliers to choose a reliable hotel channel manager and online booking engine to manage both direct and OTA bookings effectively. Rentlio, for example, provides an integrated hotel channel manager to simplify this process.
The increase in hotel direct bookings relies on a fast and straightforward booking process and reliable occupancy insights leading to increased conversions and reservations. Direct reservations allow hoteliers to build closer relationships with their guests, personalize their booking experiences and stays, and offer loyalty programs with better prices for future visits without commissions.
Similarities and Differences Between OTA and Direct Bookings
Direct hotel bookings refer to reservations made through direct sales channels such as the hotel’s website, social media platforms, telephone, email contacts, and email marketing. It is crucial for hoteliers to choose a reliable hotel channel manager and online booking engine to effectively manage both direct and OTA bookings. Rentlio, for example, provides an integrated hotel channel manager to simplify this process.
The increase in hotel direct bookings relies on a fast and straightforward booking process, as well as reliable occupancy insights leading to increased conversions and reservations. Direct reservations allow hoteliers to build closer relationships with their guests, personalize their booking experiences and stays, and offer loyalty programs with better prices for future visits without commissions.
How to Increase Hotel direct reservations
While the competition between OTA and direct hotel bookings is inevitable, hoteliers can leverage the best of both worlds. Sales tactics such as rate management and special offers are valuable tools for achieving desired business results.
Here are some tips on how to increase direct hotel bookings while optimizing OTA bookings:
Complete hotel PMS system
A high-quality hotel online booking engine is key to achieving more direct hotel bookings. It should provide a simple booking process and secure payment options. An integrated hotel channel manager must also be an integral part of a quality property management hotel system.
Rentlio offers a comprehensive solution with its Rentlio Pro, which includes a hotel PMS (property management system), booking engine, and channel manager. It is fully localized and adapted to all devices, making it useful for hotel managers, sales managers, and reception staff. With a cloud-based solution like Rentlio, guests can quickly and easily book available dates without the need for inquiries or filling out forms.
Distribution strategy optimization
Every OTA booking presents an excellent opportunity for direct hotel bookings. Favoring direct bookings can be achieved through various distribution strategy optimization methods. The Billboard effect, for example, can generate direct hotel bookings as potential guests often visit the hotel’s website to book directly after finding it on an OTA.
Adjusting the distribution of room availability and accommodation units on online portals such as Agoda, Booking.com, Expedia, and Airbnb can encourage direct bookings, resulting in increased revenue.
Loyalty programs and special offers
Whenever a guest makes an OTA booking, make an effort to ensure a direct booking for their next stay. Offer discounts or additional services to incentivize repeat stays and direct bookings. The same applies to your website, where loyalty programs, special offers, and promo codes can make direct bookings more attractive than OTA bookings.
The pricing of accommodation units is crucial for a hotel’s business. Implementing a competitive pricing strategy is essential when striking a balance between OTAs and direct bookings. Utilize revenue management solutions, quality, and reliable analytics to make informed decisions based on data.
Website and OTA listing optimization
According to some sources, 50% of potential guests will search for a hotel’s website after viewing it on an OTA booking portal.
Optimizing your hotel website ensures an impeccable user experience and a streamlined booking process. Enrich it with special offers and helpful content. Similarly, your OTA listing should reflect the same level of quality and information.
Ensure that your hotel’s listing on online booking portals includes all relevant information, detailed descriptions, and high-quality visuals. Attractive and appropriate content across all sales channels is necessary to generate more bookings. Remember to maintain price parity to avoid confusing potential guests.
The Balance Between OTA and Hotel Direct Bookings is Crucial for Hoteliers
In the past, booking a room was limited to calling the hotel, visiting in person, or using a travel agency. Today, booking methods have expanded, including the option to book through OTA channels.
Microsoft initiated the concept of OTAs. In 1996, Expedia Travel Services was launched in the US as an initial room-booking tool, which has evolved into what we know today. However, OTAs have recently increased hotel commissions, directly impacting revenues. At the same time, hoteliers are increasingly seeking ways to establish closer relationships with their guests and provide quality service. In this context, OTAs contribute relatively little to fostering these crucial relationships for hoteliers.
Online hotel bookings continue to increase year after year. Hoteliers cannot entirely forgo OTAs as they contribute to the overall revenue of a hotel.
A robust hotel property management system is essential for creating a balanced sales and distribution strategy, ensuring optimal distribution. The hotel channel manager, web booking engine, and property management system must be integrated and connected to optimize income and enhance the guest experience.
Consider trying Rentlio PRO to simplify the management of various sales distribution channels, leading to growth in direct hotel bookings.