Direct Booking On Track for 50% Market Share by 2022
Data by Phocuswright showed direct bookings are on track to achieve a 50% share in the booking market by 2022. There is a wealth of opportunity for marketing that's geared towards hotel guests who use direct bookings, through the hotel itself. Let's delve deeper into the tug-and-pull between direct bookings and online travel agencies (OTAs), and discuss what the circumstances indicate for hotels and their guests.
Which type of booking is leading the market?
OTAs are by far leading the pack in Europe, with 48% of the booking market share in 2020, compared to the 28.4% of direct booking. In the Asia-Pacific region, it's a different story. The margin between OTAs and direct booking websites is much smaller at 0.1%. The narrowing margin can be attributed to hotels' efforts to bounce back from their reliance on OTAs.
On OTA websites, consumers can compare hotels based on price, locations, rooms, additional amenities, and even guest reviews. This allows consumers to make informed choices. Moreover, with these filters added to the search experience, it allows agency websites to discern what it is the consumer wants exactly, and to offer suggestions best suited for the consumer. This large trove of information can be easily retrieved through a few clicks, and it is undoubtedly an advantage OTA websites have over hotels’ website bookings.
User Experience and Navigation
OTA websites are easy to use, and they are designed to simplify the user experience. According to Pegasus' data, 47% of survey respondents lean towards OTAs because of the websites' accessibility. As I mentioned, with just a few clicks, OTA websites are able to efficiently filter information. Users do not have to navigate around the website to search for suitable hotel rooms, as the website is built to be extra intuitive for both tech-savvy consumers, and those who are less familiar.
One of the first things a guest observes when visiting an OTA website is probably the search box, and its surrounding filters (number of rooms, number of guests, dates). However, when visiting a specific hotel’s website, guests are immediately bombarded with “irrelevant information” – travellers who just want to book a room are often shown the history of the hotel or the number of awards they have won. Information is random and not prioritised when it should be, to effectively engage customer attention.
Some hotel websites may even show website visitors a slideshow of their pool or restaurants. My point is, they display all this information, but they lack a call to action button that can direct customers to stay with them. For those who do have this, their “Book Now” button often leads to another page, adding another layer of friction for consumers who simply want to book a hotel room.
There are only a few hotel websites who embed the search engine, in a manner similar to OTAs, on their front page. My guess is that they want to maintain their aesthetic, and promote their brand evenly. What hotels must understand is that the contemporary tech generation is a lazy generation. This generation craves instant gratification: if we want something, we want it ready in seconds. Having to click on a button that leads us to another page is something that puts us off.
Why and How Direct Bookings are winning the market back
In recent years, hoteliers have put their best foot forward in trying to win back some of the market shares against OTAs. Major hotel brands encourage their consumers' brand loyalty by offering increasingly attractive rewards. The redeeming quality of loyalty programmes is that they allow hotels to offer exclusive discounts or perks – something OTAs cannot provide. Hotels can offer discounts for dining options, or even spa promotions.
My family has a membership with one of Singapore's hotel brands, and we often have family staycations in their hotels. I remember lamenting that we had to check out early on the morning of our departure, and how my sister commented, “Just give them a call, they will extend our check-out timing because we are members.” Though I was sceptical at first, I called and sure enough, the front desk offered us two additional hours! The fact that my sister was so sure that the hotel would extend it for us was unbelievable to me. The best part was how I was able to squeeze in an extra session at the gym. I wonder if a digital concierge would have made that experience even less stressful?
Some hotels have even started strategising with “Best Price Guarantee” offers, declaring war on OTAs. They challenge the consumers to find a cheaper rate on other websites and pledge to match the cheapest price. Other hotels even offer additional discounts for increased appeal, if guests find cheaper options elsewhere. This is a great way to increase hotel revenue. Whilst this might seem like a bold move, it relays a message to consumers that booking directly with the hotel will be the most beneficial, because they are willing to do what it takes.
In a reflection of the pandemic's lost travelling time, more bookings were cancelled than followed through this year. Therefore, we cannot avoid the topic of refund policies.
One of the biggest pains associated with booking with a third-party is the process of cancellation and refunding – a long and complicated process. Booking directly with hotels allows travellers more flexibility in changing their booking dates, and the refunding process is also much quicker. With the uncertainty of travel in 2021, hotels definitely have the upper-hand.
So what does this mean for hotels?
It is safe to assume that guests using direct bookings are an easier group to market towards, when compared to guests from OTAs. Despite this, hotels should not take this fact for granted. Instead, they should learn to better engage with this particular group of guests. Without a middleman like an OTA in the picture, any hotel has the potential to regain control of hotel-guest relationship. This can be achieved by engaging with guests even prior to arrival, as well as after departure – and of course, during their hotel stay.
At Portier, we cannot reiterate the importance of guest engagement. On average, engaged guests spend 47% more at hotels than non-engaged guests do. The additional revenue is crucial, especially in a recovery situation such as the post-pandemic era. While I cannot deny engaging with guests throughout their entire timeline can be daunting, I can assure all hotels out there that it will be worth it. Besides, the likes of technology makes achieving this goal much easier – a digital concierge may just be what you need!
Keeping guests engaged and satisfied can also help hotels win their loyalty, and in turn, more direct bookings in the future! This circular relationship is the beginning of many good things – there are many benefits when it comes to retaining loyal customers.
Consumers win too!
In the end, consumers are the ultimate winners. As OTAs and hotels vie for guests to book with them, they will always try to outdo each other, providing consumers with the best service/offers possible. Who knows – maybe I can get that three-hour check-out extension next time?