Why Surging Direct Hotel Bookings actually don't excite Customers

The battle for the Hotel customers is not new. New Media and Social Media has created some interesting shifts today. Customers now have all the cards. Hotels and Online Travel Agencies (OTAs) has to act depending on how customers play their cards.

Hotels have for many years been depending on online bookings from large players like Expedia and Booking.com. And most of the OTA players demands 10-25% commission fees.

Many Hotels recent a large commission fee, but at the same time they are depending on OTAs for online visibility and last minute reservations to managing their inventory.

Large brands like Expedia and Booking.com has created large communities and typically appears on top of Google Search. This makes it very hard for many Hotels to take the bull by the horns.

Why does a large percentage of Customer prefer OTAs over Direct Bookings?

Due to rate parity, regulations Hotels can’t offer lower rates than OTAs. Hotels and OTAs and obligated to offer rooms at an exact same rate to customers.

Huge marketing budgets, better options, and variety, plus the fact that many Hotels rely on OTAs are some of the primary reasons.

• According to a Google Survey, one in three leisure travelers and one in two business travelers select an OTA for its superior site tools and options. But during the planning process Hotel sites/apps are more used the OTAs both among leisure and business travelers.

Many Hotels utilize a big chunk of their resources on the Hotels Website. And from the Google Survey, we learn that most of the visitors just come there for research and ends up make the booking with an OTA.

Beside better tools and options other reasons the survey indicates that customers select OTAs are;

• Lower price / Better deals
• Past experience or recommendations for the site
• It’s a name they heard of
• Has loyalty / reward programs
• It’s what came up at the top of the search engine

When we take a deep look at the reasons from the Google Survey we see that the challenge doesn't lay in Direct Booking in itself.

These challenges are all opportunities that Hotels can do something with. Obviously, OTAs are not disappearing with the first. Now we see more diversified and innovative challenges like:

• Airbnb
• Homeaway
• VRBO
• Craigslist

Many of these new challenges are taking more than just the commission fee away from the Hotels, they are going for the same customers.

Customer patterns: The main driver of Hotel bookings

Customers are a creature of Habits. The Hotel options available has to meet basic needs like location, amenities, price, availability all in one place.

Customers also prefer information that will add value to their experience. This is also one reason why many customers will check Hotel reviews before a booking decision is made.

There are several processes that are important for a Hotel in the booking process. The first part is to identify how to obtain the customer and turn him/her into a guest. Then add so much value to experience that customer becomes a return guest. After this point retention and ripple effects comes in play. Now Hotels want the return guest to refer the Hotel to his/her friends. Then identify the process that turns the return guests friends into loyal return guests.

Though other challenges also come into play here. We know that customers like to chop and change. And it is actually just a small percentage that can be considered true loyal guests.

Expedia and Booking.com have understood that the booking process is supported by their community. It is all about creating awareness. And the community then promotes the advantages of their service. Expedia and Booking.com have taken the time to educate their community of what really matters when it comes down to make a booking decision. And they have put in place mechanism that ensures that customers stay long enough on their site to make the booking there.

Expedia has a long tradition for collaborating with mommy bloggers that will tell stories that add unique values for the customers.

Services like Airbnb and HomeAway is all about collaboration and word of mouth.                                           

Hotels and their peers can continue to worry about the OTA fee challenge and new challenges that come with Airbnb and HomeAway.

Neither OTAs or new services will disappear with the first. It is actually more likely that new innovative challenges will take the center stage.

Why building a Hotel Community really matters

The solution for Hotels lays in focusing on alternatives. Hotels have the knowledge and experience to create awareness for pricing, location, brand name, loyalty program, reviews and the customer experience.

With New Media and Social Media customers has more access to information that will influence their booking process. The customer wants to know that their opinions and decisions matters.

Expedia and Booking.com are not sharing customer information with Hotels. For Hotels, this has generated arguments that OTAs is making harder for them to meet retention goals. And in some instances, Hotels has penalized customers that made reservations through OTAs.

I can’t tell how often I seen connections and influencers in my network raise concerns about their Hotel Experience and when I dug more into to the details I often learned that the cause very often stems from an OTA reservation.

Let me be crystal clear here that Expedia or Booking.com don’t own the Hotel Experience no matter how large their commission fees are. In the customer's mindset, they made a reservation with your Hotel and expect awesome service performances. You most definitive won't retain these customers by penalizing them because they made an OTA reservation.

A Direct Booking just doesn't excite the customer. What excites the customer is the experience. Hotels need to start telling stories that focus on the values they can add when customer make a reservation at their website. Booking a room is an action that comes as a result of that you made the customer part of your story.

Customers are as we seen from the Google Survey not very loyal to the Hotel Brand, but they are loyal to their community. This is where Hotels has the same opportunity as OTAs. Start to build Social Communities through Social Networks like Facebook, Twitter, and LinkedIn. Use these communities for education, information and learning more about your customers needs and wants. More than anything use these channels to listen. Hotels are very familiar with surveys and focus groups on gathering data that will add value to the customer experience. Use your Social Community to gather data and take actions that are in line with the communities responses.

Be responsive and provide valuable responses to for the community. By penalizing the customers that made an OTA reservation, you are actually hurting the Hotel. It is very likely that customers share concerns. And they will not tell that it was Expedia or Booking.com that would not let them have adjoining rooms, change room to non-smoking etc. In their mindset, this is the Hotels responsibility.

If you want to earn more Direct Bookings then serve your customers and their community. New Media and Social Media is tools that allow your Hotel to connect with customers in new ways. Due economic challenges for many Hotels since 2008, there has been an increase in last minute reservations. As a result, of this, we also saw an increase in New Media Applications that answered this demand.

This tells that is not only patterns but the convenience also that trigger booking decisions. Patterns and convenience are all about awareness.

No Hotels left behind

We can’t take OTAs or new services derived from the Sharing Economy out of the equation. But what we can do is create more awareness and new alternatives.

The shift in market trends will require Hotels to build new foundations and optimize old foundations. We have to work together building sustainable Hotel communities where the loyalty is within the community.

Occupancy and Revenue are important for Hotels. With new foundations, we have to allow the mechanism of communities to work. Through relationships, trust, and engagements Hotels will gain earned media. And this will be an ongoing never ending improving process.

Change don’t happen over night. It will take the time to build new foundations. Hotels that continue to resist this change will over time get out of business.

We can't leave any Hotels behind, the opportunities are here now. This is just part of a circle that brings Hotels back to do what they do best – Serve the customers.                                                                                         

What can Hotels do today to earn more Direct Bookings?

Need help with your Hotels Social Media Management? Learn how a Social Media Manager will help you… Learn More

Are Morch is the founder and owner of Are Morch - Hotel Blogger & Social Media Manager. Get more from Are on Google+ | LinkedIn | Twitter | Facebook.| Pinterest |Instagram