Why Targeted Marketing is Critical for Hospitality
By Kenny Lee Vice President of Marketing, Revinate | September 06, 2015
OTAs may be an inescapable part of the hotel business – and they can be an excellent way to attract new customers. But those OTA fees take a big bite out of revenue. Hoteliers may need OTAs, but they can work to reduce their reliance on them – and the amount they pay them. The key to doing this is earning repeat business from guests who book directly. And the key to earning that repeat business is targeted marketing.
Hoteliers understand this: in the March 2015 edition of TripAdvisor's TripBarometer, 80 percent of those surveyed agreed that increasing repeat business was "very important" to the future of their hotels. The second most-important item was increasing the number of direct bookings, at 77 percent.
A quick exercise shows why getting guests to book again directly through you instead of through an OTA is so valuable. Let's do the math on just 10 rooms, at average OTA booking commissions vs average booking engine commissions:
10 rooms x 365 nights x $149/night = $543,850
If booked via OTA, average commission of 20% = $108,770
If booked direct, average commission of 4% = $21,754
Incremental revenue if 10 rooms are converted to direct bookings: $87,016
That's right. If a hotel could win back just 10 rooms from OTA bookings, it could increase revenue by 16 percent.