Top 10 Ways To Drive Direct Bookings in 2019
By Stuart Butler Chief Operating Officer, Fuel Travel | June 2019
For more than a decade, the lodging industry has enjoyed tremendous and continuous growth. For many properties, RevPar and ADR are at record highs, and yet, profitability hasn't always followed suit. With the onset of digital, the complexities and choices of how and where to invest marketing dollars have encouraged some to sacrifice their margins by taking the easy route and simply relying more and more on OTAs.
I get it, I really do. OTAs offer a very simple and attractive solution to a not so simple problem. They are equivalent to turning on a faucet and you are all but guaranteed that you'll see a steady stream of bookings. So, where's the issue?
Well, what happens in the very near future, when we see another economic downturn and we experience a significant drop in demand? Those properties that are over-reliant on OTAs today will face a battle for their very survival. You see, OTAs really started coming into the picture in a meaningful way in the previous economic downturns, when properties could no longer generate enough demand on their own. In these instances, properties used the OTAs to supplement the business that they already had. It was supposed to be more of an "in case of emergency, break glass" type strategy. It was never meant to be THE strategy.
Fast forward to today and many in our industry have become lazy. It's not uncommon for properties to be 50%+ reliant on OTAs, and in extreme cases, I've seen properties who are in a 90%+ situation. So, where will these properties turn when the demand drops?
The problem is that many properties have settled for their existing share of the pie and they are happy to pay 20% of their revenue to a third party to maintain that comfort level as opposed to working harder and smarter now in order to afford themselves protection at a later date. OTAs were supposed to be an insurance policy - somewhere that a property will be able to turn to in their hour of need. Instead, the OTAs have become the single largest source of business and there's not going to be an effective way to turn the faucet to increase the flow come the hour of need.
The brutal truth is that OTAs don't care about your property; they don't even care about your destination. They just care about the customer, which is precisely why they've been able to gain such a massive chokehold in the market. To me, this is the scariest part of this whole mess. The OTAs own the hearts and minds of the guest. Despite not controlling the most important part of the travel journey, they have focused on owning the aspiring, planning, booking, remembering, and sharing phases. Leaving hotels to worry about the actual stay, without having a meaningful relationship with the guest at all. This is the secret to their success. The OTAs own the relationship.