5 Fundamental Ways to Maximize Your Online Hotel Revenue Channels
By Gino Engels Co-Founder, OTA Insight | January 21, 2018
Itís a tough gig for todayís hoteliers. The current marketplace is crowded - not only with other accommodation providers, but online booking channels and metasearch sites, too, all vying for the coveted travelerís dollar. In such a chaotic landscape, hoteliers need to maintain a balancing act when managing their online channels, pulling all of the right levers to fill their rooms - and profitably.
Some say that the internet levels the playing field - and while it certainly can, success doesnít come easily - it has to be earned. Without a clear understanding of that playing field, youíll fall short. Here are the five fundamental ways to maximize your revenue opportunities and come out on top.†
1. Understand The Changing Dynamic of the Market††
The travel distribution market is constantly evolving. If you fail to keep your ear to the ground, itís easy to fall behind. Some recent developments that may need to be considered include:
- The rise of Airbnb, and what hoteliers are doing about it. With a supply of more than 3 million listings, Airbnb has more available "rooms" than any hotel chain in the world. This signals a change in what travelers want - and some hotels are rising to meet the challenge by entering the short-term residential rental business (eg. Hyattís agreement with The Oasis Collection, which allows travelers to book "handpicked" homes that meet hotel standards).
- The growth of metasearch engines. More and more travellers are favoring metasearch sites to research hotels, simply because of the premise that they are meant to seek out the best rates, crawling the web for all available accommodation. Metasearch sites spend big dollars on advertising - dollars that you simply canít match on your own - this means that you benefit from more exposure. For example, Trivago is growing its share within the market by making large advertising investments on TV and on the London tube. TripAdvisor has understood how travelers are engaging with their site on mobile, and are investing in adapting accordingly. You can control how you appear on these metasearch sites by taking ownership of your hotel profile, your presence on these channels, and most importantly your rates.
- OTAs are adjusting their existing business models to compete with the likes of Airbnb and metasearch sites. There is an increasing focus on adding value to the entire travel experience, instead of just accommodation - and particularly through new technologies such as mobile apps. Maintaining awareness of changing OTA business models is essential - not only so you know how your hotel fits into their overall strategy, how you can leverage their strategy, but also to give you an idea of whatís important to travelers.
- Smaller OTAs (such as Amoma) disrupting the existing monopoly. These reseller websites are now able to gather their inventory from various sources and are able to advertise and promote their rates on Metasearch sites - giving another platform where it is possible for your hotel rates to appear, often completely out of your control as a hotelier.
- In a bid to increase direct bookings, hotels are experimenting with their cancellation policies so that they can no longer be used as a selling point by OTAs. For example, Hilton allows reservations to be cancelled up to one day before the scheduled date, and the IHG family of Holiday Inn, Holiday Inn Express, Candlewood Suites has implemented a 48-hour cancellation policy.
- Travelers are increasingly using their mobile devices throughout all stages of the travel journey - with 31% of leisure travelers and 53% of business travelers using a smartphone to make a booking. This has lead to the success of last-minute booking channels like HotelTonight, which is only available as a mobile app, and One Night Standard, which targets an affluent niche of last-minute travelers.
By understanding how online booking channels are adapting - and why - you can be more strategic about how you use these channels to bring in guests. For example, youíll know that you need to ask for reviews to increase your ranking on metasearch sites, and make sure that your direct price is always in parity with whatís being offered by OTAs.
Additionally, keeping a keen eye on the market allows you to ensure that youíre taking advantage of every opportunity there is to increase the visibility of your hotel. If a hot new booking channel is born, you donít want to be the last to know about it.
2. Understand Your Guests
Without a clear understanding of your customers, youíre going to fall short of your goals. All the data is there in the systems you use - you just need to interpret that data so that you can harness it to increase your revenue.
Look at your data and define your ideal guests - which types of guests are you trying to target?
Make sure that you know:
- The demographics of your ideal guest (How old are they? Where they are coming from?)
- Why they are traveling (Is it for business, leisure or even both?)
- How they tend to book accommodation (How do they conduct their research? Which channels do they use to book?)
- When they tend to book accommodation (What is their booking window?)
- How long they tend to stay with you (Do certain guests have a longer LOS?)
- What days of the week they book on (Weekday or weekend?)
Your existing data helps you determine which guests are most profitable - and how you should be targeting them. For example, if you find that Chinese leisure travelers are very profitable and they are a part of your strategy, then target Ctrip. If you want travelers from India, focus on driving Make My Trip,or if you want leisure travelers who tend to stay on the weekend, use Booking.com.
To really start playing the channel optimization game, you need to be calculated and strategic in your approach to attracting guests, instead of casting your net wide and hoping for the best.
3. Consider Your Pricing Strategy
To increase your hotelís revenue, you need to effectively manage your pricing versus whatís out there in terms of your competition.
Make sure that you:
- Understand your competition. Instead of just looking at rates, take a step back and look at the complete picture - when looking at your competition and how they're priced, ensure you compare apples with apples. Compare the different LOS, the specific room type and its amenities, and anything included in the package for the stay to ensure you have a full understanding on how your rates stack up.
- Ensure your direct booking strategy is working in your favor. For example, offer freebies like drinks, activities, amenities, shuttle pick-ups and drop-offs to drive more direct revenue and provide the best value offering to prospective guests. Make sure that you have a professional booking process in place (ie. a secure online booking system with confirmation email) so that you donít leave guests wondering if youíre a legitimate business. You should also be asking for email addresses and reviews when OTA guests leave your property, so that you can send them promotions that will entice them to book direct next time round.
- Understand how to drive guest loyalty. You can use a point-based system (awarding points for things like booking via the website, and allowing them to spend their points on a variety of things), an instant-reward system (eg. a free drink for writing a review on TripAdvisor), or partnership rewards (eg. giving them 10% off a meal at a neighboring restaurant). Thereís no need to reinvent the wheel - for ideas, have a look at whatís being offered by other successful member loyalty programs, like those offered by Room Key or Booking.comís Genius program.
- Effectively manage pricing in line with holidays and events. Planning forward when it comes to big events in your area helps you take advantage of key revenue opportunities, rather than merely following the market pricing changes. Align key events with your marketing activities and your revenue strategy. For example, you could offer an exclusive package which includes a shuttle to and from the event venue. Conversely, during quieter periods without events also consider creating specific promotions to drive occupancy levels.
4. Consider Your Rate Parity Strategy
Rate parity (and disparity) is a continuing battle for hoteliers. Make sure that youíre doing the best you can to drive direct bookings and maintain a balance:
- Provide better rates to a limited audience. You may not be able to advertise these rates publicly, but you may be able to highlight these exclusive offerings to your existing database, membership program or social media followers.
- Rooms to add perceived value. Offer freebies to get guests to choose you.
- Use a rate shopping tool to actively monitor your online booking channels, so that you can respond in real-time.
5. Leverage your OTAs
In 2017, Phocuswright reported that approximately 70% of consumers book through OTAs. So while you may dislike OTAs for their high commissions, realise that they can help you tap into markets that you simply wouldnít be able to reach on your own. This is largely due to the fact that OTAs have deep pockets when it comes to marketing your property (consider that Priceline spent $4billion on marketing in 2016).
Other things you can do to get the most out of your OTA partnerships include:
- Building up your reviews. Having a lot of positive, authentic reviews will help you increase your ranking and visibility (not to mention, reviews are a great tool for driving conversion).
- Complete your online profile. Invest in taking professional photos and writing complete descriptions about your property.
- Work with your market manager. You will usually have a market manager assigned to you - leverage their expertise. They will know what the hottest trends are, include you in travel packages and help you with your paid advertising campaigns.
...and donít be overwhelmed.
Itís easy to feel intimidated by todayís travel distribution landscape. Travelers are changing the way they buy, new players are disrupting existing monopolies, OTAs are buying each other, and hoteliers have access to so much data that itís become a full-time job to interpret it and put it into use. The key is to find ways to interpret this data, act on it quickly and leveraging technologies that can help with this. As long as you continue to strive to understand the market - and, most importantly, your guests - youíll be able to tap into the opportunities that, as a whole, make all the difference to your bottom line.
HotelExecutive.com retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.com.