OTA vs Hotel Direct Booking: Which is Better for Your Hotel?

What is Direct Booking?

Under this system, guests book hotels through official websites, phone calls, emails, or even social media pages/touch points. Yet, getting to know about the best hotels across locations is vital to make this work.  

This is possible through marketing, advertisements, blogs, and word-of-mouth or Google reviews. Simultaneously, there are still travellers who compare properties on OTAs before booking directly through hotel websites. The difference between online booking and travel agency lies in how you’re booking the property. In most cases, it involves paying commissions to either offline agents or OTAs. However, in the direct booking model, there are no such commissions payable to middlemen. Hotels can increase their revenues by taking and handling bookings themselves.

OTA vs Direct Booking- Key Differences

Now that you have a fair idea of the two concepts and what they mean, understanding a few differences is crucial. Here are some parameters by which you can distinguish them.

·        Customer Control

It goes without saying that direct booking gives you the option to control your customers yourself. You can offer them customised/best rates for properties easily. You can also attend to their specific requirements and build personalised relationships for future stays.

·        Loyalty Programs

 OTAs do not usually give access to specific hotel loyalty programs, since they deal with many properties. Direct booking engines offer access to specific loyalty programs with laid-out benefits for customers. This not only enhances revenues, but also boosts customer satisfaction.

·        Marketing Efforts

Choosing OTAs means relying less on marketing and promotional efforts at your end. This is why they usually win when hotels consider the OTA vs travel agents debate. Your hospitality company can spend less on marketing and get the vast reach that a reputable OTA platform ensures. On the other hand, direct bookings, while giving you freedom from commissions, require extensive marketing at your end.   

Which is Better?

Once you’ve got an idea of the direct booking and OTA booking meaning, it’s time to choose the best option. To be honest, it depends on your specific requirements.

Let’s first look at the similarities:

·        Both your hotel website and the OTA will function as an online brochure for your property. Guests can use them to view photographs, rooms, amenities, descriptions, etc.

·        Revenue Contributions/Growth- Direct booking volumes may be lower than OTAs. Yet, the profits are higher since there is no commission payable in these cases. While OTAs charge commissions, they also offer higher booking frequency. Thus, both these channels are crucial for your property from this standpoint.

·        Contribution to your Brand Image and Reputation- Both your direct booking engines and OTAs are vital for your reputation. Convenient booking experiences through both these channels are essential.

·        Anytime and Anywhere Bookings- Online travel agents and direct booking platforms help you take bookings anytime. Your guests only need smart devices and internet connections to book your properties.

These are the biggest differences between the role of online travel agents and direct booking systems:

·        OTAs ensure higher reach and overall visibility, helping you spend less on marketing and promotions. People are more likely to visit your website once they view you on a reputable OTA as well.

·        OTAs offer higher booking frequency, leading to skyrocketing revenue growth despite charging commissions.

·        Direct bookings, on the other hand, do not have any commissions or middlemen and help you earn more on each booking.

·        They also contribute towards better relationships with guests. You have more control over customers and can personalise experiences. You can also leverage customer data in your system for future communication, loyalty programs, tailored marketing, etc. OTAs cannot build this level of closeness with guests or enable customisation.

·        OTAs help you handle booking procedures, logistics, customer reviews and other aspects efficiently. People usually choose OTAs to compare multiple properties and also for fast booking processes. Direct bookings require extensive involvement in managing all these aspects efficiently.

There’s actually no better choice in the OTA vs direct booking debate. You have to strategically leverage the benefits of both these models to put your property on the fast-track towards success.

Benefits of OTAs for Hotels

 To sum up the benefits of OTAs for hotels in a nutshell, here are some pointers that you can note.

·        You get higher online visibility and reach across multiple customer segments

·        There are tools, insights and analytics to help you target customers effectively

·        You can easily manage logistics, booking procedures, follow-ups, guest reviews, etc. without having to do it yourself

·        OTAs come with higher booking frequency which leads to faster revenue growth

·        OTAs can help you limit marketing and promotional spends, enabling access to wider audiences

Benefits of Direct Bookings for Hotels

There are several advantages of direct bookings as well. Some of them include:

·        You don’t have to pay commissions to OTAs or middlemen. This helps you earn a higher profit share on every booking

·        You can build long-term relationships with guests, customising offerings and controlling their booking experiences

·        You can build invaluable databases for loyalty programs, future communications and marketing campaigns. This boosts brand loyalty and also lowers acquisition costs

The Role of Technology in Facilitating Bookings

Be it OTAs or direct bookings, there’s always a solid technological foundation powering growth in both spaces. Multiple advanced online booking tools are helpful for hoteliers these days. Some of them include property management systems (PMS), channel management systems (CMS) and dedicated booking engines. You can consider integrating your PMS with OTAs for centralising guest data and tracking their preferences. It can also help you personalise communication and marketing easily.

Property management systems are centralised hubs for all your activities. They encompass the front desk, reservations, billing and housekeeping. You can streamline room inventory management, check-outs and check-ins, housekeeping schedules and more.  You can also expect real-time data on pricing and availability while automating routine tasks to lower errors. Integrating this system with OTAs is a must and it will also help you manage direct bookings better.

Find the Right Balance Between Both

Striking a balance between both these systems is vital for future revenue growth and customer loyalty. Here are some strategies worth considering:

·        Provide exclusive rewards and loyalty programs to get more direct bookings

·        Customise packages for particular segments based on preferences and behaviour

·        Find the right pricing balance between direct and OTA booking prices. Investing in RMS (revenue management systems) can improve data-driven decision-making in this case.

·        Your cancellation and refund policy should be consistent across booking platforms. Most people usually have to wait for a long time to get refunds on OTAs. Offer fast booking and cancellation for direct bookings as an alternative

·        Optimise both your OTA listing and website with the right information, pictures, policies and so on

·        Whenever guests book through OTAs, build on the relationship by pitching direct bookings for the next visit. You can do this with complimentary offerings, discounts, etc.

·        Appoint a channel manager for OTAs in order to keep a track of customer preferences and reviews/feedback  

·        Use your property management system both for OTAs and direct bookings. It will give you full visibility of your operations in real-time

As can be seen, this debate should not bother you at all. Focus on using both these methods wisely to drive long-term customer satisfaction and revenue growth.