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Going Direct: How Cutting Out OTAs can Help Hotels save on Costs in the Long Run

Online Marketing 2 Minutes
When planning their annual vacation, many people turn to well-known and popular platforms. This is not surprising as online travel agencies (OTAs) and booking portals have a wide reach and international presence that can be difficult for individual hotels to match. Additionally, these websites are often associated with deep discounts on already low prices.

But what impact do OTAs and booking platforms have on hotels?

On the one hand, it is relatively easy to market and sell rooms through popular websites. However, there are also drawbacks to using these platforms for hotels:
  • High commission costs:  OTAs and booking platforms charge commission fees for their services, which can be significant for hotels, as they have to pay a percentage of the booking cost for each guest.
  • Unfavorable cancellation conditions: To attract as many guests as possible and maximize their own revenue, many platforms offer extensive cancellation options to prospective guests. However, these negate the planned occupancy due to early bookings.
  • Unwanted discounts: From the hotel's perspective, platforms often offer deep discounts which can further reduce the hotel's margins, in addition to the commission fees paid to the platform
  • Strong dependence on platforms: Without a strong direct marketing strategy, hotels can become heavily dependent on the success of platforms. These websites can take advantage of this dependency by making increasingly demanding demands, creating a harmful cycle for hotels.
  • Lack of guest data: Obtaining data on hotel guests is crucial for successful marketing. This data allows for targeted marketing through segmentation and reaching potential customers at the right time and on the appropriate platform. However, if this data is not available, hotels become even more dependent on OTAs and booking platforms. Without control over the communication, it becomes difficult to convert guests into repeat customers and maintain a predictable occupancy rate.
  • Limited differentiation: OTAs and booking platforms do not highlight a hotel's unique features as effectively as a hotel's own website can. This lack of differentiation means that the hotel is less likely to be remembered by guests, as all hotels are presented in a similar manner.

The benefits of direct bookings

Fact is: For a direct booking an optimal hotel marketing is necessary. For this hotels need data, which the guest must give out. Nevertheless, the clear goal is to achieve the highest possible number of direct bookings for occupancy. This is because these not only provide maximum revenue, but also directly increase profits by eliminating high commissions and unagreed discounts.
Furthermore, direct reservations also make it easier to develop a well-defined brand, which can help to make the hotel more memorable to guests. This can be achieved through direct communication with guests, which can be maximized with the help of hotel marketing automation software like ADDITIVE+ MARKETING AUTOMATION.
The software is data-driven and effectively utilizes the potential of cross-selling and upselling. This increases the value of each booking, and can not only turn one-time guests into returning guests, but also create regular guests. These guests tend to book earlier, which creates a predictable occupancy that allows hotels to be more flexible with pricing.