Direct Booking Guarantees: A simple to way to beat the OTAs

Sep 27, 2016
Posted by Aaron Young

As an accommodation provider, your focus should always be on increasing the percentage of your direct bookings, thereby your revenue. Becoming too reliant on OTA’s for bookings (such as booking.com or expedia.com) gives too much control to the big players, leaving  your room rates, inventory and profit in their hands.

There is a clear conflict between OTAs and Hotels. The focus of an OTA is simply generating online sales and commission, they have no concern for the total customer service, your profit margin, your brand or your return business.

Previously Australian accommodation providers had been limited in their ability to directly market the best rates possible due to strict rate parity contracts with OTAs. Previous contracts with OTAs locked accommodation providers into guaranteeing  the best online rates to OTAs. This left many hotels in a position unable to compete with the marketing budget of the OTAs and therefore obliged to pay high commission to ensure high occupancy.Successfully marketing directly to consumers was becoming a challenge that was too great for many accomodation providers.

The good news is that this has now changed, with a new agreement set by the Australian Competition and Consumer Commission earlier this month which stated:

“Australian accommodation providers will now be able to tailor their offers to better meet the needs of their customers and their own businesses requirements. They will now be able to offer lower rates through telephone bookings and walk-ins, offer special rates and deals to customer loyalty groups, in addition to offering deals via Expedia and Booking.com.”

This means that from the 1st of September both booking.com & expedia.com have agreed to remove contractual requirements for Australian accommodation providers to:

  • Offer room rates that are equal to or lower than those offered on any other online travel agent;
  • Offer room rates that are equal to or lower than those offered on an accommodation provider’s offline channels;
  • Make all remaining room inventory available; and
  • Offer the same number and same type of rooms offered to any other online travel agent.

Accommodation providers can now take advantage of the changes in the agreements with OTAs, using the following strategies:

A Direct Booking Guarantee

While it may take some effort, creating a branded Direct Booking Guarantee is a great way to communicate with guests that they will always receive the best price and inclusions by booking directly with you!

To reinforce and promote your direct booking guarantee it is important to ensure constant visibility using your website, email signature, social media profiles and onsite signage. Having personally implemented this strategy into a number of my clients properties, the correct placement of a direct booking guarantee has provided a dramatic increase in direct bookings, resulting in less commission paid to OTAs, greater brand loyalty and increased return business.

 

Offer discounted rates and promotions to Customer Loyalty Groups and Databases:

You can now email your database cheaper rates than any OTA, if they book directly with you. With most OTA commission rates set at a minimum of 15%, this means that you can offer a 5-10% discount directly, with your guest receiving a cheaper rate and you receiving a higher Nett nightly rate, this is a win-win situation for all involved!

 

Aaron Young Consulting communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication.