Direct Booking vs OTA: Which you should choose as a Hotelier?

OTA commission is a burden. But is direct booking the answer? This article is designed to provide a clear understanding of direct booking vs OTA. We aim to equip you with the knowledge to optimize your booking strategy, enhance guest satisfaction, and ultimately, boost your business’s success.

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Understanding Hotel Bookings

Today, guests have multiple channels to book their stays, each offering different benefits and experiences. Understanding these channels is key to optimizing your booking strategy and improving guest satisfaction.

What is Direct Booking?

Direct booking refers to reservations made directly through a hotel’s channels – be it the website, phone, or even a walk-in. This method gives hotels complete control over the booking process, from pricing to customer interaction. 

Read More: 15 Powerful Tactics to Increase Direct Bookings for Your Hotel/Villa

What is OTA booking?

OTA bookings are reservations made through third-party platforms like Booking.com, Expedia, Airbnb, or others. These platforms provide hotels with extensive exposure to a broader audience, often at a global scale.

OTAs operate by listing hotel rooms available for booking, often providing details such as room types, amenities, pricing, and hotel policies. They also feature user-generated reviews and ratings, offering potential guests an easy-to-understand overview of what to expect. When a customer books a room through an OTA, the platform typically collects the payment and then sends it to the hotel minus a commission fee.

Pros and Cons: Gain the best of both worlds

Direct booking offers greater control over customer experience and higher profit margins by avoiding OTA commissions. However, it requires investment in digital marketing and SEO to drive traffic to your channels. OTAs, on the other hand, offer significant visibility and ease of use but come with a pretty huge cost and less control over customer interactions.

Each booking channel has its own set of plus and minus. Confused yet? Don’t worry. Together, we will learn about what’s best for your hotel. But first, let’s break down every pros and cons of direct and OTA bookings. 

Direct Booking:

Pros:

• Higher Profit Margins: By avoiding OTA commissions, hotels can enjoy higher revenue per booking.
• Enhanced Guest Relationships: Direct interactions allow for personalized guest services, fostering stronger relationships and loyalty.
• Brand Control: Managing your booking channels means you have full control over how your brand is presented and communicated.
• Data Ownership: Direct bookings provide valuable customer data, enabling targeted marketing and improved service offerings based on guest preferences.

Cons: 

• Higher Marketing Costs: Attracting guests directly requires investment in digital marketing, SEO, and website optimization.
• Limited Reach: Independent hotels may struggle to match the global reach of large OTAs, potentially limiting exposure to new markets.
• Resource Intensive: Managing direct booking channels demands time and resources, including maintaining a user-friendly booking interface and customer service.

OTA Booking:

Pros:

• Extensive Market Reach: OTAs provide access to a wide, diverse audience, often on a global scale.
• Reduced Marketing Burden: Hotels can leverage the OTAs’ powerful marketing and SEO capabilities to gain visibility.
• Ease of Use for Customers: The convenience of comparing multiple options in one place makes OTAs appealing to travelers.
• Potential for Increased Bookings: Particularly during off-peak seasons, OTAs can help fill rooms that might otherwise remain empty.

Cons:

• Commission Costs: OTAs charge commissions for each booking, which can significantly reduce the hotel’s profit margins.
• Less Control Over Guest Experience: Interaction with guests is limited, making it harder to offer personalized services or handle special requests directly.
• Brand Dilution: Relying heavily on OTAs can diminish the distinctiveness of a hotel’s brand, as properties often appear similar on these platforms.
• Over-Reliance Risk: Excessive dependency on OTAs can leave hotels vulnerable to policy changes or commission rate increases.

Direct Booking vs OTA: It is important to be balanced

The key for hoteliers is to find a sweet spot between direct bookings and OTAs. This balance allows hotels to maximize the unique advantages of each channel while mitigating their respective drawbacks. Every scenario has its own approach, so we have to understand when is best to use them. Let’s dive deeper on this topic.

When is OTA Booking More Beneficial?

Launching a New Hotel:

For a newly opened hotel, establishing a market presence and attracting initial guests can be challenging. OTA can provide you with these things: 

1. Instant Exposure: OTAs offer immediate access to a large pool of potential customers, which is crucial for new establishments that have yet to build your brand presence.
2. Trust Factor: New hotels often lack customer reviews and history. Listing on a reputable OTA, where users already feel comfortable booking, can lend an element of trust and credibility to the new property.
3. Market Data Insights: OTAs provide valuable data on market trends, customer preferences, and pricing strategies, which can be extremely beneficial for a new hotel fine-tuning its services and offerings.

Read more: How to Optimize The Effective OTA Strategy for Hotels in 2023?

Entering a New Market:

What if your hotel is not entirely brand new, but you want to enter a new market? OTAs can serve as an effective channel to reach audiences unfamiliar with the brand. It can help you with these things:

1. Localized Marketing: OTAs often have tailored marketing strategies for different regions, helping hotels tap into local demand effectively.
2. Cultural Adaptation: For international expansions, OTAs can bridge cultural and language barriers, presenting the hotel’s offerings in a way that resonates with the local audience.

When is Direct Booking More Beneficial?

Strengthening Guest Loyalty:

For hotels that have already established a strong brand presence and a returning customer base, direct booking becomes a crucial tool in deepening guest relationships. To do that, direct booking can help you to:

1. Personalized Guest Experience: Direct interactions with guests allow for customized service, from tailored room selections to special requests, enhancing the overall guest experience and fostering loyalty.
2. Loyalty Programs: You can leverage direct bookings to promote your hotel loyalty programs, offering exclusive benefits and rewards that encourage repeat bookings.

Brand Control and Data Management: Direct booking channels offer complete control over your branding and messaging, allowing them to convey your unique value proposition effectively. Direct booking can help you to understand: 

1. Brand Consistency: Through direct channels, hotels can ensure consistent branding and messaging, which is vital in maintaining a strong brand identity.
2. Valuable Customer Data: Direct bookings provide access to rich customer data, enabling you to understand your guests better and tailor your marketing and service strategies accordingly.

Maximizing Revenue:

For hotels where the brand is already well-known, focusing on direct bookings can result in higher profit margins by eliminating OTA commissions. It can help you maximize the hotel revenue by doing these things: 

1. Reduced Dependency on OTAs: By driving bookings through your own channels, you can reduce the fees paid to OTAs, directly impacting the bottom line.
2. Dynamic Pricing Control: Direct booking allows hotels to implement dynamic pricing strategies more effectively, adjusting rates based on demand, seasonality, and customer preferences.

Into the mind of the travelers: Know your audience

It is no secret that people tend to choose OTA rather than directly booking their stay on your hotel website. In 2022 only, over 800 million people used travel apps to plan their trips. This preference can be attributed to a few key reasons.

We have to admit that OTA apps are very convenient. The main appeal of OTAs lies in their user-friendly platforms. It allows travelers to easily compare various hotel options and often provides attractive discounts and loyalty benefits.

OTAs present a wide range of accommodation options, which are very suitable for users’ different budgets and preferences. This is especially useful for those exploring new destinations.

One more thing: honest guest reviews featured on OTAs are important in guests’ decision-making, as they offer real insights into the hotels.

Aside from its huge commission, understanding these OTA preferences is necessary. However, promoting the unique advantages of direct booking, like personalized experiences and loyalty rewards, is equally important. This approach can help attract OTA users while encouraging loyal guests to book directly.

Conclusion

In the complex world of hotel bookings, the choice between direct booking and OTAs isn’t an easy one. It relies on various factors like your hotel’s market position, brand strength, and specific business goals. 

By understanding the distinct advantages and challenges of each approach, you can craft a booking strategy that not only meets your operational strengths but also resonates with your target audience’s preferences. Embracing a dynamic and balanced approach is key to thriving in today’s competitive hospitality landscape.

Frequently Asked Questions

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Thanks for exploring direct booking vs OTA with us. You’re not alone in this journey. SATUVISION is ready to guide you with expert hospitality marketing, helping craft strategies that boost your bookings and guest satisfaction. Let’s collaborate to bring your hotel towards greater success and more profits.

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