OTAs have transformed the way travelers book their accommodations. However, for hotels, these bookings come with their own set of challenges, as OTAs have a profound impact on the revenue of hotels.
High commission rates, additional fees, and price parity significantly affect the bottom line of hotels. And, as you probable know, OTAs have created a situation where hotels often have limited access to their customer data, making it difficult to establish a comprehensive database of guests and to effectively segment their customer base.
Luckily, hospitality professionals that understand the challenges and opportunities associated with OTAs can leverage technologies and software, like Directful, to build direct relationships with guests and start converting OTA users to direct bookers.
4 main challenges related to OTA bookings are:
- Reduced profit margins
- Lack of control
- Diminished brand value
- Lack of OTA guest data
OTA vs. Direct Bookings: The True Cost of Choosing Third-Party Sites
When OTAs first began partnering with hotels, their main selling point was the ability to reduce the cost of acquiring new guests. At that time, paying the 20-30% commission fee on a customer who had never heard of the hotel before was reasonable. However, today, many hotels have become overly dependent on OTAs, leaving them with few options to compete and optimize margins.
Despite the existence of price parity agreements, hotels and OTAs should continually monitor pricing practices to ensure compliance with these agreements. OTAs still find ways to violate these agreements, that’s why it’s so important to hoteliers to focus on increasing the number of direct bookings.
Price parity agreements are just one of the ways that hotels can be hurt by their relationship with OTAs; other challenges include:
- Reduced profit margins: When hotels are required to offer the same rates on all channels, they may be forced to lower their prices on their own websites in order to remain competitive with OTA prices. This can result in reduced profit margins for the hotel, as they have to pay commission fees to the OTAs.
- Lack of control: Price parity agreements limit a hotel’s ability to control the prices that are being offered on various platforms. This can be particularly challenging when an OTA offers discounts or promotions without the hotel’s consent.
- Diminished brand value: OTAs frequently offer discounts and promotions that can devalue a hotel’s branding. When guests see a hotel’s rate on an OTA that is significantly lower than the hotel’s own website, it can create a perception that the hotel is not worth the full price.
Hotels must strike a balance between OTA and direct bookings, and here are some steps that will help you to start converting OTA guests into direct.
Don’t Lose Your Guest: How to Gain OTA Guest Data
The lack of access to OTA guest data also impedes a hotel’s ability to create personalized experiences for guests, as hoteliers may not access to important information such as guest preferences, past stays, and spending habits with OTA bookers. This can make it more challenging to tailor their services and amenities to each guest’s individual needs, which can ultimately impact guest satisfaction and loyalty.
Usually, OTAs hide guests’ real email, address, and phone numbers to prevent hotels from reaching out directly for future bookings. They generate temporary guest emails to control the conversation with guests, which ends after the stay and the email expires.
Hotels that know how to establish a direct relationship with OTA guests can successfully convert an average of 10 bookings per month from OTA to direct bookings, according to Directful’s data.
So, what can be done to overcome this longstanding issue and obtain the guests’ real contacts?
Collecting OTA guest information at check-in or requesting part of information post-stay are indeed smart strategies, as they allow them to obtain crucial information directly from guests. However, it is still important to have a plan in place to gather missing information when hotels do not receive complete details or when guests fail to provide necessary information.
Fortunately, modern technologies such as AI and machine learning algorithms can provide a solution to the challenges posed by limited access to guest data. Hotels can use third-party data aggregators, like Directful, that specialize in collecting and consolidating guest information from various sources, including the information from OTA booking confirmations.
As a result, hoteliers can proactively engage with guests who book through OTA platforms, even prior to their arrival.
Another advantage is that these tools can help to get comprehensive profiles of each guest and segment the hotel’s customer base. This segmentation can then be used to create targeted, personalized campaigns that speak directly to each segment’s unique needs and preferences.
How to Market to OTA Guests: 3 Proven Strategies
Let’s review three powerful strategies that hotels can use to market to OTA guests, convert them to direct bookers, and provide better deals to certain guests without violating the price parity agreement.
1. Direct to Guest Marketing
One of the advantages of hyper-personalized direct to guest marketing is that it provides a powerful solution for hoteliers to overcome OTA price parity restrictions. While hotels cannot offer a lower rate than what’s displayed on OTAs publicly they can still offer targeted discounts to specific guest segments.
Direct to guest marketing allows hoteliers to establish a deeper relationship with guests, providing them with a personalized experience that OTAs cannot match.
By adopting direct to guest marketing, hoteliers can take control of their guests, pricing, and drive direct bookings. This type of marketing not only helps boost revenue, but also helps to build stronger relationships with guests and increase their loyalty.
2. Drip campaigns
Drip campaigns are a type of automated email or text marketing campaign that sends a series of pre-written personalized content to guests over a period of time, usually at set intervals. One of the key advantages of drip campaigns is the ability to achieve hyper personalization.
For instance, hoteliers can employ hyper-personalized drip campaigns to offer room upgrades to guests who have booked high-end rooms in the past or promote late check-out options to those who have shown interest in flexible check-out times.
To discover more about how hotels can efficiently send personalized deals automatically, be sure to read our article “6 Must-Know Strategies for Personalized Hotel Marketing Campaigns.“
However, before embarking on these strategies, hotels need to have a well-maintained customer database that includes accurate and up-to-date information on their guests.
3. Keep the Conversation Going
To create a seamless guest experience and build guest loyalty, hotels need to effectively communicate with their guests throughout their entire journey, from pre-booking to during-stay and post-stay. This means engaging with guests at each stage of their journey with the hotel to provide helpful information, personalized recommendations, and special offers.
“According to a recent Skift & Oracle study, almost 30% of travelers expressed a high level of interest in using automated messaging for most customer service requests, citing the convenience of texts and chatbots over speaking with a person.
Another 48% of respondents were interested in automated messaging services, with their interest varying based on the type of service requested. And only 9% indicated a preference for speaking directly with a human for all their service needs.”
In this context, utilizing a platform that can engage with guests directly using hyper-personalized content automatically is not just a nice-to-have for hotels — it’s a must-have. By automating certain aspects of customer outreach, hotels can save time and resources while still delivering the level of personalized service that guests expect.
Reaching out to lapsed guests, including those who previously did book through OTAs, is crucial for hotels as it provides an opportunity to win back their business and drive revenue.
By segmenting guests based on the source of their reservation and engaging with lapsed guests through personalized marketing campaigns, hotels can encourage them to return directly to the hotel’s website instead of using OTAs. This not only helps to build customer loyalty, but really helps to reduce the hotel’s reliance on third-party booking channels.
For more insights on how to effectively re-engage with lapsed guests, check out our blog article on “The Art of Retention: How to Reach Back 80% of Your Past Guests Easily”.
How to easily implement direct to guest marketing and automate drip campaigns?
One tool that can help hoteliers to implement direct marketing is using customer data platforms (CDPs) or guest portals, as Directful, which is integrated with your hotel PMS and booking engine. CDPs are designed to provide a 360-degree view of each guest including their behavior, preferences, and interactions with a business across multiple channels and touchpoints.
CDPs are gaining popularity among hotels of all sizes because they offer a more comprehensive and integrated approach to managing customer data than traditional Customer Relationship Management (CRM) systems and PMS. These platforms offer features like guest segmentation, text and email marketing, and more, to help hoteliers deliver hyper-personalized content and offers directly to guests.
Hotels that are using Customer Data Platforms (CDPs), like Directful, are generating on average up to 60% of their revenue from direct bookings.
By adopting the strategies outlined in this article, hotels can reduce their dependence on OTAs and take control of their pricing and revenue streams, building stronger relationships with their guests in the process.
Direct marketing is an excellent way for hoteliers to overcome OTA price restrictions and offer exclusive discounts and promotions to guests. Modern technologies such as AI and machine learning algorithms can provide solutions to the challenges posed by limited access to guest data.