Driving Maximum Profit Through More Direct Bookings

By Paul van Meerendonk Director of Advisory Services, IDeaS Revenue Solutions | February 05, 2017

In today's ultra-competitive hotel environment, every dollar counts. Any competitive edge that translates into a stronger bottom line is sought out, and every piece of hotel business is evaluated to determine its true worth. With rising costs associated with acquiring new guests through third-party platforms, hotels are rightly considering their most effective booking channels and looking to maximize business from owned assets like their own website.

Guest Acquisition in a Digital Age

Today's costs for acquiring guests are significant: OTAs charge between 15-25 percent commission for every booking they secure, with hotels also paying hefty transaction fees to their selling systems if the reservation is received through them. These third-party costs influence the amount of revenue hotels are able to secure from each guest - ultimately impacting a property's bottom line.

While there are significant challenges in securing guests for the ideal price, at the ideal time, through the ideal booking channel today; hoteliers that effectively market themselves to potential guests, practice advanced search engine optimization strategies, and offer guests a unique value can greatly reduce their cost of acquiring guests.

Hoteliers currently using OTAs to secure bookings should also consider ways to use those platforms to better support their future business. To increase both business and return business, savvy hoteliers are letting their OTAs handle the initial capturing of guests, and then implement strategies and incentives that ensure those guests book future reservations directly with their hotel – eliminating ongoing third-party booking expenses.

Despite a high reliance on OTAs, the most cost-effective online booking channel for a hotel remains its own website. How can hoteliers maximize direct bookings through their website? The first step is increasing website traffic from potential guests and attracting more 'lookers.' To do this, hotels need to understand where, when and who those 'lookers' are. What dates are they searching for, where do they search and what is driving them to a particular market? Collecting this market intelligence provides data that can be used to develop targeted marketing strategies that attract the right type of 'lookers,' the ones most likely to become 'bookers.'

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.