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Using Indirect Channels

Using Indirect Channels

Online Travel Agents

Using OTA’s such as Booking.com and Expedia has now become the ‘norm’ rather than the exception. They have also had a lot of bad press due to high commission levels, however before you decide whether or not to use these channels there are some facts (rather than myths) you should consider:

Advantages

  • Production - Whether you like the fact or not, once you start working with these channels, they will fill your rooms
  • Exposure - The should be seen as a marketing cost as no other method of marketing will expose your property to as many potential customers as OTA’s


Disadvantages

  • Commissions - will cost anywhere between 12%-25%
  • Allocations - Some OTA’s will demand an allocation of rooms before you can join their programme. In reality this can mean an allocation of 2 rooms on a 3 day release (meaning they only give these rooms back to you if they don’t sell, 3 days before arrival). If you are a hotel, this may seem like a small price to pay but lets look at one scenario: You have a group in for a Saturday night next month – you are fully booked and therefore cannot accept any direct bookings. However an OTA has an allocation of 2 rooms, which means that a customer can actually get better availability with an OTA than they can directly with you.
  • Using your Brand Name – OTA’s will bid on your name to get above you on Google rankings. Once you sign up to use an OTA, you allow them access to your brand name. As an example if someone searches for your property name (lets use the City Plaza Hotel), you should in theory appear first in Google’s search as someone used your brand name to search. However, once you enter into a contract with an OTA, they can bid on your name to appear above you: www.booking.com/cityplazahotel. All too often customers don’t realise that they are clicking on a third party website and feel that they are in fact booking directly with you. Whilst using your name may sound insignificant, it is in fact one of the major reasons OTA’s secure so many bookings and we as property owners loose out on direct reservations.
  • Rate Parity - OTA’s will demand Rate Parity. This restricts all properties to sell the same rate on an OTA as they are selling on their own brand website. Whilst new European legislation now enables properties to sell at differing rates on different OTA’s, there still needs to be parity between your brand website and individual OTA’s – so a catch-22! However for property owners, there is a way around the restrictive policy of ‘rate parity’ and that is to have a slightly cheaper rate that sits ‘under’ your Best Available Rate but that comes with terms and conditions (which therefore sits outside your contract agreement). This can be called ‘Book Direct and Save’ or ‘Book Direct Reward Rate’ or similar – anything that will instantly show customers that they benefit if they book directly with you.
  • Management – Managing OTA channels takes time and effort and if you are a smaller property with limited rooms to sell, you will need to be careful that you don’t get into an over-booking situation

 

All of that said, property owners need to weigh-up all of the disadvantages against the advantages of these OTA’s actually delivering bookings. One way that we really should look at this is that OTA’s should be viewed as our Window to the World. There is no other medium that allows us 24 hour access, 365 days per year to every market in the world.

Reality is that as an industry we should see the OTA’s as partners and not something to fight against. We just need to ensure we contract correctly and don’t give too much away.

OTA’s are affectively a search engine and if customers do browse on Booking.com or Expedia there is also a high possibility (some say over 80%) that they will come to our own site to check rates. This is where we as property owners need to be clever:

  • Do you have a website customers can visit?
  • Is it easily found on major search engines such as Google or Bing?
  • Is your site less than two years old with the latest technology and design?
  • Is your site mobile friendly?
  • Is your site easy to navigate?
  • Can you actually book on your brand site?
  • Can customers find where to book easily?
  • Do you have the very best availability on your own website?
  • Do you have the best rates available on your own website?
  • Do you have unique packages available that you won’t find on any other third party?
  • Is your booking process secure?
  • Are customers receiving automated confirmations?
  • Do you have messaging on your brand website / email signature and all marketing that tells customers that it is better to Book Direct


Meta Sites
Meta Sites, such as Trivago, Hotel Tonight, Secret Escapes, Wego, TripAdvisor and Google Hotel Finder, basically are price comparison sites and they will crawl other OTA websites and present your properties price on 5 or 6 channels to a customer so they can see which OTA is displaying the best price. As you can see, having Rate Parity on all OTA channels is important. If you want your own brand website to be presented to the customer, you need to pay. This payment is on a Pay Per Click basis and you pay that Meta Site whether a booking is actually made or not.

The advantage is that you have less of a risk of being booked on an OTA which the Meta Site has displayed if your brand site is shown, but you also risk being charged a fee for a click that doesn’t actually convert to a booking

The world of the OTA’s, Meta-Sites and the impact of other booking sources such as AirBnB is changing almost daily. However, what we as an industry need to realise is that they are here to stay and the impact of these channels is something we can’t afford to ignore


Inbound Tour Operators
Inbound Tour Operators (ITO’s) basically act like the traditional tour operator most of us remember in that they contract airlines / ferries / trains / accommodation providers and bundle all pricing components together to create a fully inclusive package price for their customer.

The advantage for accommodation providers is that these operators have the potential to generate a lot of business and provide what is essentially ‘base business’ for lots of properties (ie a guaranteed number of rooms that then allows you to build the rest of your business around). It also means that you can discount your rates without having a detrimental effect on your brand as the rates are packages and never disclosed to the general public.

There are several ITO’s that may suit your individual business needs as even the groups range from large coach parties to smaller bespoke groups. So no matter what size of property you are, this sector of business can have a very positive impact on business.

Tourism NI runs an event called Meet The Buyer which can expose many property owners to the main ITO’s bringing business into Northern Ireland but you will need to go to this event prepared.

  • Understand that the ITO’s will ask for nett rates which are either B&B or DBB. Make sure that you have built in a profit margin but don’t put your rates up too high as the ITO’s need to add on a margin for themselves and bundle this in an attractive package for their customers.
  • ITO’s can contract up to 2 years in advance, so you will need to be prepared to set and contract rates that far in advance
  • You will need to provide full information on your property – such as number of rooms; facilities of rooms; details on your restaurant or bar and of course parking facilities as they may bring a coach
  • ITO’s also may ask for ‘one-off’ group quotes and if they do, you will need to go back with pricing promptly. They will be pricing around so if you want to be considered, you will need to understand their deadlines

 

Download Roe Park Resort Case Study: Increasing Direct Bookings