The Balancing Act: Direct & Indirect Sales for Your Hotel

The entire hotel distribution strategy has changed as the digital realm becomes the go-to for hotel searches. Nowadays, hotels are tasked with enticing guests to book directly through their websites while maintaining visibility across various OTAs. As the industry swiftly moves towards a digital-centric future, many bookings now occur through hotel websites or OTAs. Yes, we are talking about indirect bookings via OTAs and direct bookings via your hotel's website - the two essential room sales streams. Understanding the interplay between these two channels, leveraging them effectively, and striking a delicate balance for an effective distribution strategy is crucial for you to sell more and earn more revenue.

The essence of direct and indirect bookings

Direct bookings are those made through your hotel's own channels, such as their website or via phone calls to the hotel. You must pay attention to this method as it usually incurs no additional costs from third parties. It also allows you to cultivate a direct relationship with your guests, providing a personalised service that can enhance guest loyalty and satisfaction. Most importantly, guests booking directly with you are less likely to cancel their reservation and spend more during their stay.

On the other hand, indirect bookings come through external channels, such as Online Travel Agencies (OTAs), travel agents, and other third-party platforms. While these channels introduce your hotel to a broader audience and can significantly increase your sales and occupancy rates, they come at a cost. Commissions for OTAs can cut into your hotel's profits, but their extensive reach and marketing capabilities often justify this expense. However, you must also be careful about a bit higher percentage of OTA booking cancellations.

The role of technology: Channel Manager and Booking Engine

For direct bookings, a booking engine integrated into your hotel's website facilitates a smooth, user-friendly reservation process. It lets guests check availability, view rates, and book rooms directly with you. This cuts out commission costs and strengthens the direct relationship between you and your guests and its guests. A seamless booking experience can significantly enhance customer satisfaction and encourage repeat bookings.

Technology plays a pivotal role in managing these bookings, especially indirect ones. A hotel channel manager tool allows you to handle your listings across multiple OTAs efficiently. It ensures that room availability and rates are updated in real time, reducing the risk of overbooking and rate inconsistencies. This tool is indispensable if you aim to maximise your presence on OTAs without the administrative headache of managing each site individually.

Finding the right balance

While direct and indirect bookings have advantages, relying too heavily on one channel can lead to vulnerabilities. Over-dependence on OTAs, for instance, can erode profit margins due to high commission rates and weaken the direct relationship with guests. Conversely, focusing solely on direct bookings may limit your hotel's market exposure and potential guest reach.

Strategies for achieving the much-needed balance

Optimise your website: Ensure your website is visually appealing, easy to navigate, and mobile-friendly. Integrate a secure payment gateway and assure your guests that card details will be safe if they make payments to book their accommodations.

Leverage SEO and content marketing: Invest in search engine optimisation (SEO) and compelling content to improve your website's visibility. Engaging blogs, videos, and social media content can draw potential guests directly to your site.

Utilise a hotel channel manager for OTA distribution: A channel manager can help manage your presence across multiple OTAs efficiently, ensuring your hotel is visible to a wide audience without the administrative burden.

Offer direct booking incentives: Provide exclusive benefits for guests who book directly, such as complimentary upgrades, free breakfast, or discounts on future stays. It can encourage guests to book directly for exclusive perks.

Gather and act on guest feedback: Use feedback from both direct and indirect booking guests to refine your services and offerings. Positive reviews can enhance your hotel's reputation across channels.

Convert OTA guests into direct guests: Serve them better and exceed their expectations. Let them know that they stand to gain more if they book with you via your website next time. Communicate with them directly and offer them additional benefits.

Measure your performance: Harmonising your direct and indirect bookings involves closely tracking and evaluating your outcomes and making necessary tweaks. Utilise analytical tools, data summaries, or dashboards to monitor how well you're doing against your goals and standards. For example, which OTA is giving you more sales, the demography of guests booking via your website, what promotional activities work for you, which time and season of the year gets you more OTA bookings and direct booking, etc.

Striking a balance between direct and indirect sales channels allows you to leverage the vast audience and marketing prowess of OTAs while also cultivating a loyal customer base through direct interactions. Such a balanced approach can lead to a more diversified and resilient booking strategy, cushioning against market fluctuations and changing consumer behaviours.