Friday, March 28, 2014

Improve direct booking through incentives

Mega online travel agencies are costly distribution channels for hoteliers. Hoteliers suffer from huge amount of revenue loss due to the high commissions charged by the Online Travel Agencies i.e. from 10-25 percent. So how can hotels bring customers to their own website for direct bookings instead of visiting an OTA?  A recent survey conducted among 2500 customers by Software Advice finds the answer:-

If a hotel wants to implement your suggestions on offering a free room upgrade or any other perk, how and when should they do this?
Our survey showed that consumers don’t agree on what free room upgrade they prefer, so it’s best for hotels to have a variety of room types available. This upgrade should be promoted to travelers at every possible chance: social media channels, the hotel’s booking page, within hotel marketing emails and other materials.

Is it really cost effective to offer a traveler a free room upgrade just to get them to book direct, saving the hotel the 10-20% OTA fee?
An upgrade to a room with a better view shouldn’t cost the hotel much, but the cost effectiveness of offering a room with a kitchenette, balcony or living room will depend on the particular hotel’s availability, rates and season. Even if the incentive costs as much as the OTA commission, the hotel has an opportunity to delight the guest and drive brand loyalty.

Even though a perk like free room service wasn't the most popular incentive, do you feel it could still convince travelers to book direct?
I think free room service is a strong incentive for consumers to book directly, as the results showed that travelers are highly motivated by offers of food and drinks. Food is also a relatively low-cost offer for hotels.

Should hotels take the traveler's age into consideration before offering perks like these, or even certain kinds of perks for certain age ranges?
In general, perks for free food and drinks should be effective for all ages, but different types of gift cards can be more effective for different ages. For example, our survey shows an older couple might respond better to a gift card for a local restaurant, while younger travelers could be more convinced by a gift card for a local theme park.

Were you surprised by any of the survey results?
I think it’s reasonable to expect people to be motivated by food and drinks since dining is such an important and often expensive aspect of traveling. However, I was surprised that the results for the most convincing room upgrade were split so evenly.

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