An eternal conversation hoteliers have with themselves is around the effectiveness of direct bookings vs OTA bookings. Is the balance right for their hotel? If an increase in direct bookings is the goal, how can it best be achieved and how many resources will be required to do it?
Among many tactics and strategies to boost direct bookings is a book direct campaign. Obviously a fully fledged campaign is a significant undertaking, but the good news is that is now clear evidence book direct campaigns can prove fruitful.
Kalibri Labs launched a study in 2016 assessing the long term results of book direct campaigns for hotel brands. Last year the company released its findings painting a pretty picture for hoteliers considering implementing campaigns – or have already done so.
How effective were the hotels’ book direct campaigns?
During a nine month period, Kalibri Labs called upon a database of more than 12,000 hotels and 52 million transactions to evaluate if book direct campaigns had any real impact on consumer behaviour.
The campaigns analysed were built on the goal of growing the loyalty member base and driving guest preference to direct channels.
These efforts focused around four main objectives:
- Change consumer behavior to encourage Brand.com, or other direct channel bookings by guests who might otherwise have chosen an OTA
- Increase membership in the hotel’s loyalty program driving both future bookings and improving the guest experience for more consumers
- Reduce acquisition costs for hotels by increasing the percentage of business booked through the lower cost direct channels
- Convey the message to prospective guests that Brand.com websites will have the best price available in the market
Hotel stays were examined from May to December 2016 taking in two components. The first was a purely transactional view looking at performance and cost. The second looked at the longer term upside of incremental loyalty members and how many recurring guests would need to be added for hotels to compensate for any upfront costs. Data was gained from the upper midscale, upscale and upper upscale hotel segments.
Not only was a comparison made for net revenue and ADRs between the hotel campaigns and OTAs, but a model was also used to understand the outcome if the hotels had operated ‘business as usual’ without the campaigns.
The 12,000 hotels in the study demonstrated healthy room night and revenue growth from May through December 2016 compared with the same period in 2015 with room night growth of 7.8% and net revenue growth of 9.3%.
The study was densely populated with a lot of data and additional general findings included:
- A channel shift occurred in favour of brand.com
Both revenue and room nights showed faster growth for Brand.com when compared to the OTA channel, compared to the prior year when the campaign was not in place.
- Net ADR of Brand.com loyalty rates were higher than that of OTA rates
Book direct campaigns delivered much better results for hoteliers. When comparing average rates net of direct transaction costs such as channel fees, commissions and loyalty costs, the Brand.com rates that loyalty members booked were 8.6% higher than the net average rates of OTA transactions.
- Results reflected net positive revenue outcomes
Actual results in 2016 were compared with the ‘business as usual’ projection and it was revealed a net positive revenue outcome, with the median net revenue benefit for the sample properties between +$9,000 to +$33,000 per hotel.
- Loyalty skyrocketed
Almost six out of every 10 room nights were driven by loyalty members. The growth
in loyalty contribution from 2015 to 2016 was consistent with the brand reports of 30-40% growth in membership over the previous year. Hotel chains reported record numbers of new
members with similar recurrence patterns as their normal new member population.
The study also called for a deeper dive into the loyalty aspect of the initiative. This study examined the early days of the hotel brand initiatives which focused on leveraging rate discounts to incentivise a shift in guest behavior – but since discounting is an expensive tactic that is not highly sustainable, the study highlights the opportunity for the hotel brands to optimise the loyalty/affinity programs to ensure they result in a deeper base of members.
What are the benefits of focusing on hotel loyalty initiatives?
Increasing hotel brand loyalty is an obvious and natural way to boost direct bookings and has numerous added benefits such as:
- The ability to know the guest preference
This enables your hotel to deliver a better experience by offering more appropriate products and services to meet the guest’s needs.
- A diversified portfolio of hotel booking sources
This makes for a more stable and healthy business mix overall so that a hotel does not become dependent on only one or two primary markets.
- The ability to know the guest preference
- Loyalty members are a comfort blanket
A larger member base means your hotel will better resist low seasons and harsh economic periods.
Supplementary direct booking tactics
Book direct campaigns can be delivered in a number of creative ways – just look at Marriott – but there are some fundamentals hotels should also make sure they get right for the customer.
Here are some quick tips:
- Make it easy to book
This includes giving guests all the relevant information they’ll need as soon as they land on your website, and also make it clear to them how they can complete their booking. Prominently display booking buttons and ensure it’s a quick and easy process.
- Take a focused approach to marketing copy
It’s impossible to please everyone and it’s unlikely every segment will be attracted to your hotel anyway. So it’s better to research your most relevant target group and create content that will appeal to them.
- Perfect your hotel email marketing campaigns
Email marketing can still be a great way to drive direct bookings. Get people to sign up by offering something in exchange, creating an opt-in for other offers, and set up autoresponders. Always take a warm and personal approach to emailing your guests and potential customers.
- Drive a high volume of traffic on your hotel website
Getting people to actually land on your website is a big step. The best way to do this is to create a blog and post regularly, across relevant and interesting topics travellers are likely to read.