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The Hotel Direct Booking Scam:
Are You Taking the Bait?

More Direct Bookings = Smart or Dumb?​

The hospitality industry is no stranger to scams, and the most enduring, devious and dangerous one to hit the scene is the direct-bookings scam.

This scam infects, just like a virus, hoteliers and hospitality professionals of of all ethnicities, mindsets, cultures, religions, and from all over the world, leveraging both same-old-same-old and creative ways to increase their direct bookings.

From the very moment Online Travel Agencies (OTAs) came to this world, the Hotel Industry has been dealing with the goal of getting more direct bookings.

Ever since though, 2 things always happened:

  • too little emphasis has been given to the hefty price tag of wanting hotel direct bookings at all costs;
  • when some emphasis has been given, the central point of discussion always being the monetary-direct cost of a direct booking strategy, but not on the overall business impact of such choices.

So, in this article, we will explore the ins and outs, real costs, benefits, advantages and pitfalls of the direct-bookings scam, and discuss how you can protect yourself from falling victim to it.

 

Why it’s a direct booking scam.

If the equation was really as simple as 1+1=2, it’d be no brainer. In fact, those avid supporters of hotel direct at all costs believe and preach this 1+1=2 theory.

The reality though is far more… well, realistic. And the main reason is plain and simple: the Hospitality digital space is a zero-sum game, like poker and finance.

Put differently: you and your hotel are a player of the game, the Online Travel Agencies (OTAs) are another player. The potential guests are players too. Your hotel competitors? Players. Google? Another player. Social media? You get the point…

Your gain is equivalent to another’s loss, or the other way around, so the net change (or final balance) is always zero.

It’s fair easy to fall into the 1+1=2 equation, right? You always want to win at someone else’s expense. But what happens when the other players of the game keep losing?

At some point someone would rather leave, or start playing a different game. This time, at someone else’s expense: yours.

Players’ specific weight in the game may vary depending on the Online Travel Agent involved, independent hotels opposed to hotel chains or groups, and other factors. But the principle remain: it’s a zero-sum game.

 

August is not November.

And summer is not winter. Day is not night. Warm is not Cold.

You don’t wear a winter coat when it’s 35 degrees celsius in the shade; rock the swim trunks instead. Your goal is to cool down, not to warm up.

It’s so obvious to sound fairly dumb, but the same analogy can be applied to the different seasonalities every hotel run into throughout the year: why do we set the same goals in August and in November?

Yet eventually this is what happens when it comes to hotels’ direct booking process. Every. Single. Time.

Push as many bookings as possible through the online booking engine, reduce commission costs, leverage the billboard effect, offer discounts exclusively on your direct booking channels.

Ultimately, no matter whether it’s August or November, a direct booking is always better than an OTA booking, right?

Right. Expect it can be wrong.

Say, you run a beachfront hotel in Europe, thus seasonality plays a big role in the hotel revenue and occupancy generation.

Market demand in August skyrockets and your location seems to be dreamed of by so many vacationers, that turning potential customers into paying guests sounds like low hanging fruits.

Perform your best in terms of guest experience, make sure your booking systems work smoothly, that the channel manager connects to and feeds the OTAs with the right room availability and rates, your website is well covered with relevant content and book direct messages to entice direct revenue through your direct booking channel.

Search engines explode of requests for your destination, your waiting list fills up as fast as your rooms and you keep raising your hotel rates because no nasty price tag seems to be stopping travel demand.

Operations, Guest Relationship, preparation of the hotel staff, a solid direct booking strategy to drive direct sales are of paramount importance.

Would you say that additional visibility is a primary goal in such scenario? Likely not.

With a blink of an eye though, August is gone, and so are September and October. You wake up a morning and you don’t even remember how sunny days even look and feel like, out of your hotel door the sky is grey, the only people on the beach are residents walking the dogs out.

And, of course, filling up your rooms becomes a mammoth task, just like racing against other hotels in the area on who offers the cheapest hotel rate: November has come!

Now, the two scenarios above might be a bit of an exaggeration, but the point is… do direct booking campaigns, Online Travel Agents’ commission fee reduction and direct hotel bookings have the same weight in November as in August?

“Wait a moment, even in low season a direct booking is better than an OTA booking, what’s the problem with that?”

Actually, there is no the problem, there are at least 2 major problems.


Single- vs. Multiple-goal pursuit.

So, basically, you want to:

  • increase your occupancy (volumes)
  • increase your rates (revenue)
  • increase your direct bookings (margins)

And likely you would want to pursuit all these goals at the same time.

To use another analogy (if you didn’t notice, I like them a lot), it’s like opening up a position for “hotel marketing manager”, requiring candidates to be able to perform hotel SEO, hotel advertising across all platforms like Google and Facebook, Metasearch engine ads, conversion rates, manage and maintain the hotel website, beautiful photography for creating stunning social media posts, email marketing, newsletters, data tracking and reporting, with previous XX-years of experience in similar positions within the travel industry, who perfectly understands how a hotel business works and all the ins and outs of hotel distribution.

Multiple tasks vs. single task.

Multiple goals vs. single goal.

In short, a blanket too short.

The deeper and vertical your focus will be on a single goal, the greater the chances you’ll be able to accomplish that goal.

Contrary to that, the broader your focus and goals become, the more diluted your results will be.

If I was to throw you a tennis ball asking you to catch it on the fly, you’d have good chances to accomplish the goal. But if I throw you 2 balls instead, catching either one of them would become much more difficult.

Imagine with 10 balls… your eye and brain focus would be so diluted and confused, that the chances that you will catch even just one will drop dramatically.


How the OTAs’ Ranking works

A few paragraphs above we referred to Hospitality as a game in which multiple players partake in the run of convincing potential guests to turn into paying customers.

Let’s now get back to our August vs. November example. To make the story very short, we can summarise the end goal as follows:

  • August: margins have priority.
  • November: visibility has priority.

Let’s think about it: if in November you need visibility more than any other period throughout the year, who’s you best ally in accomplishing that goal?

Exactly, the OTAs.

But… say Booking, Expedia Group and all other travel agents function as your decoy channel, because maybe you create discounts or special offers to entice potential guests to book through your direct channel.

The result is that these OTAs will have less chances to get bookings, right? Plain and simple.

So… if Booking gets no bookings, why should they keep granting you visibility?

Here’s where the 1+1=2 theory falls short: a marketing strategy without a solid hotel distribution strategy that takes into account ALL the players of the game, is just dumb!

An OTA is a business, just like your hotel. And like any other businesses, they reward what ultimately brings them more money.

 

Hotel Advertising meets Distribution Strategy.

This is where the logic that sustains a solid advertising structure meets with what you’ve been doing with your distribution mix and the interrelation between your hotel distribution channels.

Take Google, for example: what you are willing to pay is just one of the factors that make up the equation of how much visibility Google will assign to your advertising campaigns; conversions and CTR are among the most important variables that will decide your ranking position.

Long story short: your relevance determines your success. The more clicks and bookings you’ll get from your ads, the even more clicks and bookings Google will try to send your way.

For Booking, the Expedia Group and all other distribution channels is no different:

Say Booking brings you 10,000 impressions per month and your conversion rate says 1%, which means you generate 100 bookings.

Your main competitor gets instead 5,000 impressions, as a result of a weaker ranking position for certain queries on the BO site, but now it converts 2% (100 bookings).

What do you think Booking will do next? I’ll let you imagine.

This is of course a simplified example, but hopefully you’re grasping a bit more on the single-goal-micro-strategy concept we discussed before.

August is not November.

 

From “More Direct Bookings” to Direct Your Bookings.

Direct Sales rocks, but it’s not a goal worth pursuing 12 months a year.

Our Single-Goal-Micro-Strategy approach (SGMS) is the result of 20+ years of experience in the field, first as hoteliers, then as hotels’ providers.

Your booking sources count to the point that you can always focus on profits, but as we know this is not always the case. We believe hotel marketing should always take a deep dive into hotel distribution systems and how distribution channels work from their own business perspective.

We have helped hotels all over the globe reach their Smart Distribution healthy point, where balance between visibility the OTAs can help you achieve and the margins from your hotel bookings is always on top of our priorities.

Would you want to know more about how we can help reach that point too?

Schedule your free Strategy Session and let’s find out if we’re a good match.

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