To succeed in driving direct bookings, invest in it
 
To succeed in driving direct bookings, invest in it
11 JULY 2018 1:00 PM

There’s a lot of talk about driving guests to book direct, but it takes more than lip service to make it happen. Hoteliers must actually invest both effort and money to make it work.

Here we are in mid-2018, gearing up for our 2019 budget season, and once again everyone’s talking about how important it is to get guests to book direct.

Brands are putting increased emphasis on loyalty—or at least on offering heavily discounted rates to guests willing to sign up for their loyalty program. Individual hotels are touting their best rate guarantees—or offering heavily discounted rates. Are you sensing a theme here?

In truth, all this is great. Seriously. I’m absolutely in favor of driving direct business. But too often it’s focused on the booking. And on discounting. We’re spending money to buy the booking. Why aren’t we willing to invest to buy guest interest earlier in the process?

One study shows that guests who start their booking journey with an online travel agency will reserve through OTAs about 93% of the time. This means guests who start on an OTA will choose to book direct only about seven times out of 100. By contrast, guests who start on a branded website book direct about 60% of the time (though, admittedly, they may not always choose your property to book direct).

To put it more plainly, guests can’t book direct, ever, if they don’t come to your property or brand website at some point while shopping for travel—period.

So, where’s the investment in attracting guests to visit early in their decision-making process? That includes the dream and plan phases, not just when they’re ready to book.

Think of it this way. A 150-room property selling for $130 a night and running at 64% occupancy with an 18% OTA margin—all roughly average in the current market—typically surrenders about $100,000 in top-line revenue to OTAs. How many have demonstrated the willingness to invest a healthy share of that amount in content creation to attract guests early in their browsing, shopping and buying activity? We’ve said for years that content is king. Shouldn’t we be more willing to invest in it?

By contrast, that same representative property will generate roughly $900,000 in revenue through its website (assuming industry-average 20% website revenue and giving no credit to web for voice or walk-in). If you include voice and property-direct, those numbers roughly double. How much are you willing to invest to drive that number higher? Does $50,000 sound too expensive to you? Remember, that’s still half what you’re already paying OTAs. If that’s too much, how about $10,000? Or even $5,000? That’s a huge step up from where most hotels are when it comes to content, but it can play an outsized role in driving search traffic, social sharing and, most importantly, guest desire for your property.

Think I’m crazy? Here’s a crazy idea for you: Google has announced a new program that brings a professional video director to your business to shoot a video advertisement. The price tag? $350 in YouTube advertising. That’s it. The search giant clearly understands what customers want because those customers literally tell Google what’s important to them millions of times every single day. Do you think Google might know something useful here about customer behavior?

Guests are starved for content about your property and destination—the attractions, events, shops, festivals, concerts, entertainment and businesses near to you. And the first rule of selling travel to consumers remains “sell the destination first.” Research from Google shows that travelers tend to start their travel planning by searching destination-related terms. This is a huge opportunity to attract guests to you early in their planning. Place your property at the center of their consideration set, and then turn them into reservations, but only if you’re willing to make the investment.

Budget season is right around the corner. It’s time to start thinking about where to put your money and where to invest to grow your business next year. This isn’t about building a new website or finding a new booking engine or—heaven help us—planning for a new “closed user group” you can sell your property to more cheaply. This is about investing in “the painting” (your property’s content), not just “the frame.” It’s about telling a story designed to attract and capture interest from potential guests. It’s about getting them to start their journey with your hotel in mind.

Or you could just continue to pay “loyalty” programs and OTAs and intermediaries to do that for you (to you) again. But I wouldn’t recommend it.

Tim Peter helps hotels and resorts put digital to work to grow their business. Since 1995, he has developed innovative e-commerce and digital marketing programs designed to increase sales and revenues. An expert in e-commerce, digital strategy, and marketing execution, he focuses on influencing customer behavior and delivering business results for companies worldwide. Prior to founding hospitality digital marketing strategy consulting firm Tim Peter & Associates in 2011, he led the world’s largest hotel franchisor and the world’s premier independent luxury hotel representation firm in using digital to help hotels and resorts around the globe drive billions of dollars in revenue. He can be reached at timpeter.com/hotelmarketing or tim@timpeter.com

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