OTAs are good for you only when you can utilize them in your favor, as a part of a well-conducted distribution and marketing strategy. But you already know it. You know that when OTAs take over, when your revenue is completely dependent on their performance – it’s time for a change; it’s time to take control.
If you don’t control your distribution chain, your rates, your marketing communication and your online performance, or let’s make it simple – every aspect of a prospected revenue generation – then there is absolutely no reason for OTAs not to take advantage of you and squeeze as much out in commissions as they can. With a hand on your heart, you know that this is how the system works, and you probably know several hoteliers that would have acted the same being on the OTA side.
Now, I don’t know if you noticed, but the solutions is in the problem itself. See it now?
Yes. The word is CONTROL. Your control over your distribution, your pricing, your marketing communications, and your online performance. The control you have over these parameters is going to be the variable that will define any future deals between you and even the most powerful OTAs.
So you ask yourself what’s next?
There is some bad news and good news.
The bad news is that there are almost no hacks that can quickly solve your pain.
The good news is that there is a plan that if you’ll follow it, then it’ll get you on the right direction towards a healthy distribution and pricing strategy, and a sustainable direct bookings online channel.
It’s a 40 day plan, and I call it – The BookingDirection Way.
Ready? Let’s Go!
Reduce OTA Commission in 40 Days – Day 1-8
Website audit and online performance analysis:
- Find out if your website is optimized for search engine discoverability. If it’s not, you may be not visible to guests who are searching for your hotel by name online when they search of impressions and guest reviews of your hotel. Make sure your meta tags, titles, and images are optimized for search engines. If your website doesn’t show up in the first few results when you search for your brand name, you may have a problem. It’s also recommended to open a Google My Business page to maximize visibility on the search engine results page.
- Calculate your website conversion rate.
Bookings on site / Visits to site = Conversion Rate
If your website conversion rate is less than 1% it means that you have a serious issue with your website booking follow user experience. However, conversion rate above 5% means that you probably have a pretty effective online marketing strategy. Anything in between 1% and 5%, means that you can do much better.
- Calculate your marketing ROI (or ROAS). If you run ads online, or have an online marketing budget, calculate the return on that spend.
Revenue from online marketing – Cost of online marketing / Cost of online marketing = ROI (or ROAS)
If your ROI (or ROAS) is negative for a period of more than 3 months, it means that something with your marketing strategy isn’t right, and you should probably rethink it.
- Map traffic source. Find out from where you are getting visits to your website. Is it social networks, search engines, meta search websites, or referrals? Compare this to the conversion rate per each channel to understand which channels are worth investing in.
- Mobile compatibility. Make sure the mobile experience on your website is the best it can be. While most online bookings happen on desktop devices, the customer journey to booking begins 45 days before, and is mostly conducted on mobile devices. If your website has a bad mobile experience, you won’t be able to convert the prospects that visited your website during their journey towards booking.
Reduce OTA Commission in 40 Days – Days 9-19
Optimize website booking flow and conversion rate:
- Most of today’s hotel websites don’t maximize their full conversion potential due to poor user experience throughout the booking flow. Make sure you chose an online booking engine that has a great experience, is mobile compatible, has a secured payment system, is fast and simple to understand. Make several bookings yourself from multiple devices to make sure that the process works smoothly.
- Pricing and value-for-money are playing a huge role here. If you can’t beat out OTAs in terms of pricing, then at least make sure that you provide a better value-for-money by offering extras.
Unfortunately, even if your direct prices are lower that OTAs prices, the online customer won’t always be able to notice that. Therefore, you need to make sure that you can communicate it properly on your site. A great way to achieve that is to use Hotel Price Check Widget. It’s a simple line of code that you put on your website (no booking engine / CRS integration required) and what it does is it shows your potential customers the direct prices on your websites compared to the prices for the same rooms on OTAs’ websites.
Want to see how our price check widget will look like on your website? We’d love to show you, go here to get it to your email.
- If you haven’t yet done so, open social media accounts on Facebook, Instagram, Pinterest & Twitter and start posting images of your hotel’s view, amenities, staff, and management on a regular basis. You don’t have to post every day but do try to stay consistent. Why is that important? First of all, potential customers are checking out your social media accounts. One thing they don’t want to see there is an empty garden. Show them that you are alive and kicking, show your smile and your true spirit of adventure. After all, travel is all about experiences.
- Consider bidding on your brand name keywords on Google AdWords. If you remember, in the previous part I mentioned that it is important to be visible on the search engine results page for your brand search queries. If your website wasn’t optimized well enough for search engines, it might take time for it to be indexed on the first page. A quick way to get there will be by using Google Ads (called AdWords). You can bid on your hotel name keywords and create a text ad that will show on the top result position every time someone searches for your hotel name on Google. Don’t worry, brand name keyword bidding is usually not expensive.
Reduce OTA Commission in 40 Days – Days 20-31
Now that your website conversion rate has gotten better, your search engine visibility has improved, and your hotel’s social media presence looks legit, it is a great time to start bringing in more traffic to your website. There are several sources that would be great for hotels:
- Facebook Ads:
Facebook has an amazing advertising platform. It’s not difficult to operate, you don’t have to pay in advance to start running ads, and a minimum spend is not required. Run Facebook to two sorts of audiences:
A – People who visited your website. It will require you to install a Facebook Pixel on your website. The pixel sets a cookie on the web browser and later allows you to show Facebook ads to previous website visitors. It’s a very effective way to target potential customers that are already interested in your hotel offers, but who haven’t made a decision yet. If you run an ad with a special offer or a discount coupon code, you will be surprised by the high performance such ads can drive.
B – New prospects. Try reaching potential customers by targeting Facebook users based on their interests, or even by building Lookalike audiences based on your customer lists. More on Facebook Lookalike audiences – here.
- Google AdWords: Google’s ad platform is especially great for capturing potential customers that are now searching for information regarding a product or service.Yes, you are right – it’s very hard to compete with OTAs on the Google ad platform. But there are many opportunities as well. OTAs run ads in bulks. They don’t really pay attention to the long tail keywords campaigns. If your website conversion rate is good, and you know that your direct offers are better than OTAs’ offers, then take the risk and bid on long tail keywords on Google.For instance, let’s say that you are a hotel in London. So bidding on the keyword “hotels in London” may be not effective and expensive. But if your hotel is pet-friendly, why not make sure that when someone is looking for a pet-friendly hotel in London, your ad is the most visible?
- Metasearch website:
Metasearch is a very different kind of online traffic channel compared to Facebook and Google. Metasearch users are usually “Ready-to-buy” users. The most important factor when considering a metasearch campaign is your website conversion rate. Unlike Facebook and Google ads, which you can use to establish your brand by providing useful content with your ads, it’s a different story with metasearch. These users are looking to book, they have already conducted their research regarding their destination and pricing. Therefore, if the booking experience on your website isn’t good enough, they will bounce and probably never remember visiting your hotel brand, as they are only interested in a quick and safe online booking.
Metasearch campaigns are a little bit more complicated technically. Running a metasearch campaign requires an integration between your booking engine / crs inventory and their ad platform. Metasearch ad platforms are also less flexible than Google or Facebook platforms where you can easily change bids and daily budget. In many metasearch platforms, you will be allowed to change bids and budget only a couple of times per week, making this ad operation riskier for hotels.
But again, the upside is the great conversion rate and the opportunities to be able almost instantly drive direct bookings.The top metasearch platforms today are: Google hotel ads, Kayak, Trivago & Skyscanner.
Reduce OTA Commission in 40 Days – Days 32-40
After the first 32 days, you should be reaching the point where you have an online direct booking channel that drives bookings. It probably won’t be optimized and your budget won’t yet be spent wisely. To get there you have to go through an optimization of your marketing campaigns and budget.
- Choose a metric that will be used to measure the effectiveness of marketing budget spend. It might be ROI (or ROAS), conversion rate or cost per booking. Although ROI (or ROAS) is the definitely the most accurate one, you might find at the beginning the Cost Per Booking metric easier to use for optimization.
While the ROI (or ROAS) metric takes under consideration the total revenue generated, the Cost Per Booking metric focuses on the ability of each marketing channel/initiative to drive direct bookings. After you’ve mapped the channels that drive the most direct bookings and prioritized them by Cost Per Booking, you’ll be able to optimize each one individually towards a ROI (or ROAS) goal.
- Focus on the channels that delivered the best results according to the chosen metric. Try to understand why certain channels worked better than others and use different conversion attribution models to understand how channels affect each other. (More about attribution models – here.)
- Based on your findings, set goals and targets for each channel based on its performance. Plan an annual marketing budget that will be performance based per each channel. Invest more in the channels that create the most value for you, but do not completely neglect other channels, as they might have a role of pursuing potential customers across the long path of their journey towards direct booking.
Don’t waste any time. Get started on your plan to reduce OTA commissions and develop a sustainable direct booking channel.
There are 2 extra things that I’d like to send you over by email:
1. A checklist to begin your 40-day plan to reduce OTA commissions.
2. A free demo of BookingDirection hotel price check widget that will help you increase your direct bookings conversion rate.
If you only want to sign up for a free demo, fill your email address in the box below.