How Booking Engines Increase Revenue and Capture Market Share
By Bob Carr Chairman & CEO, Heartland Payment Systems | April 17, 2011
Co-authored by William Collins, Executive Director, Vertical Market Strategy, Heartland Payment Systems
As many hotel operators know, when most travelers go to book their hotel rooms, they grab their mouse instead of their phone. During the third quarter of 2010, nearly 56 percent of hotel bookings were made online. Today, the idea of calling a hotel to make a reservation seems outdated to a lot of people, especially with the proliferation of online booking tools which compare prices and deals across a variety of properties at a specific destination. These tools make it easy for customers to look, book and pay.
Unfortunately, while extremely useful for guests, popular online travel agents and aggregator websites tend to sap profits from independent hotels. With commission fees as high as 25 percent of the total stay, many small and independent properties are simply losing much-needed profit when using these third party sites.
Some small and independent operators have chosen to forgo an online booking presence all together. A 2008 industry survey found that 28 percent of independent hotels see no point in receiving online reservations, while 43 percent saw no point in being present on online travel agencies. Yet, nearly 50 percent of travelers overall use the Internet to plan and buy travel according to Forrester Research. The data and indicators show that independent operators are not embracing the online trend as tightly as their larger or chain counterparts - although this is increasingly how consumers want to book reservations. It is essential for independent properties to understand the importance of implementing direct online booking capabilities as the key to their success and improving property profitability.
Eliminating the Middle Man
Successful businesses have always managed to increase their profits by cutting out the middle man, and in the hotel industry, that middle man is the online travel agency and other third parties. In order to increase both revenue and profitability, independent operators must look beyond such websites and instead direct their efforts to enhancing and developing their own sites. The simplest and most effective way independent hotels can move away from online travel agents is to establish a way for guests to book reservations directly through the hotel website.
Contrary to popular belief, implementing booking engine software is neither costly nor difficult. There are numerous companies that specifically cater to small and independent hotels, motels, lodges, cabins and resorts and provide them with complete property management systems, including a direct website booking system, or independent booking engines that will work with an existing PMS. Not only do these systems eliminate the dependence on third parties, they free up your staff's time to focus on other important duties.