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Planning the Solutions to Drive More Direct Bookings in 2024
By Adam and Larry Mogelonsky
Tuesday, 30th January 2024
 

Have we reached 'peak OTA'? Many hoteliers certainly hope so after the gains that these third-party channels made during the pandemic.

As seen at this past June’s HITEC in Toronto, the dawn of the age of AI may, in fact, be complementary to one of the biggest trends that tech vendors are catering towards driving bookings through direct channels.

While the pursuit of ‘book direct’ has been a perennial goal since a hotel’s brand.com was first launched, right now there are a series of converging factors that are obliging technologists to upgrade their systems and take their integrated booking engines (IBE) to the next level.

These include but are not limited to:

  1. On a macro-level, inflationary opex is still eroding GOPPAR, compelling hoteliers to optimize net revenues by diverting guests away from commission-heavy channels such as the OTAs
  2. Concurrently, both Booking Holdings and Expedia are investing heavily in GPT-esque itinerary planning tools to incentivize travelers to remain loyal to them and not to hotel brands
  3. Recent advances by IBE and CRS vendors are providing more dynamic customer interfaces and more flexible package composability, all with intuitive CMS back-ends for no-code setup
  4. IBE and CRS vendors also now offer sophisticated analytics on direct channel user behavior such as heat mapping, origin market purchasing comparisons, cancellation rates by segment, interface personalization for returning users and machine learning (ML) recommendations
  5. And in the same vein of ML analytics, both chatbots for the web and conversation AI for voice are becoming ever-more calibrated in their abilities to accurately answer guest inquiries and facilitate bookings without the need for human intervention
  6. Incorporating trendy payment methods, such as book now pay later (BNPL) and room night tokenization (RNT), as IBE widgets with the goal of further minimizing cart abandonment
  7. Then behind the scenes, vendors are collecting all these various unstructured data points for the entirety of their client bases so that it can all eventually be commuted by a ML tool in order to reserve hotels with actionable insights on finding high-TRevPAR guests and lookalike audiences

Now or Never for Driving Direct

For those of you who may not recognize all the terminology and alphabet soup in the aforementioned seven developments, the most important argument in favor of prioritizing the push for direct bookings right now and as a key objective for 2024 is the second point.

Do it because it’s now or never. Once the OTAs have properly tested and launched their AI-based travel toolkits, it may be too late to win guests back; the customer experience on those third-party channels will simply be too convenient for travelers to ever switch again.

But what you may also gather from the seven points listed above is that it’s a concerted effort. There is no silver bullet for immediately converting a sizeable chunk of guests over to using your IBE. It requires tech upgrades, obviously, but also dedicated work by the marketing and revenue departments as well as from the onsite teams.

Let’s break these areas down to see what’s needed. How you divide and conquer amongst your teams to plan the approach for next year will, of course, differ by each organization’s current situation.

Revenue Management Considerations

Think first and foremost about the process by which you are using the RMS for real-time intelligence with respect to the rate parity agreement in place. Promoting the best rate guarantee should by now be standard practice, but it often places an extra burden on guests who need to bring it to the hotel’s attention – the optimal word being ‘friction’ which you want to minimize. Still, you must vigilantly watch when OTAs are running promotions so that you can react in kind.

The next area worth retraining on your RMS (or investigating replacements) is in interpreting vast amounts of forward-looking demand data. Armed with this knowledge, hotels can react in an instant to market trends and competitor actions. A great case study to review in terms of reaction timing to a compression event is the demand surge immediately after Taylor Swift announced her latest concert tour cities. To not leave money on the table, especially during off hours when the team may be out of the office, prescriptive AI-based rate adjustments can further fine-tune pricing, thereby allowing hotels to match OTA rates and even offer competitive prices without compromising profitability.

Next, you can get creative, with channel management playing a pivotal role in incentivizing the direct channel through differentiated offers. Hotels may choose to restrict certain premium room categories and suites exclusively for the IBE, thus creating a unique value proposition for booking directly.

To sweeten the deal further, additional non-price incentives can be included, such as offering a same-day complimentary upgrade upon availability. Here, the optimal word is ‘exclusivity’ which you want to maximize using the variety of contemporary bundling tools offered by the best IBE vendors.

Marketing Considerations

For the purposes of this article, let’s pigeonhole this department’s turf as everything up until the customer clicks the ‘book now’ button. Ergo, we have the shotgun of responsibilities that may include the front-end website, newsletters, pre-arrival upselling platform, chatbot, conversational AI for the voice channel, programmatic advertising, traditional advertising, social media, collateral materials, and direct coordination with the public relations team. (As an aside, the helter-skelter nature of hotel marketing is one of the main reasons why we sold our travel and hospitality-focused advertising agency about a decade ago.) Nevertheless, there are some big wins we can elaborate upon to inspire you in the here and now.

As every hotelier is asking about ChatGPT, the answer is yes, incorporating this functionality into your live chat is a great way to value-add the direct channel. Namely, it’s all about providing instant support that can instill confidence in booking directly.

By deploying a well-trained chatbot, hotels can efficiently handle repetitive inquiries such as room availability, amenities, and pricing, thereby freeing up human teams to focus on more complex requests or tailored package creation. Chatbots can quickly provide information on, and other commonly asked questions, ensuring guests receive immediate assistance even outside of regular business hours.

The second domain where hotels can improve is their loyalty program. The two of us are repeatedly surprised when we ask our non-hotelier friends about such things as whether they prefer Bonvoy or HHonors. Most don’t know either one by name! Hence, customer education must be a top priority to cultivate both near-term customer acquisition and long-term brand advocacy.

As for adding a complementary rewards platform, the emotional driver here is ‘instant gratification’. Such platforms can showcase real-time rewards or time-limited promotions, creating a sense of urgency. Integrating the two is a balancing act that the marketing team must adroitly tinker with until they are working harmoniously.

Operational Considerations

As a core mission, when it comes to the onsite interplay between guests and staff, every customer interaction should be viewed as an opportunity to remind guests about the benefits of booking directly. Embracing this objective as core to the brand DNA will reverberate throughout every department to promote continuous gains.

For instance, are your teams well-versed in the advantages of your loyalty program? Do they passionately promote it, highlighting the unique perks it offers? To incentivize front desk agents to collect real email addresses from OTA guests, consider offering rewards, such as 10% off the guest’s next stay. An online staff training and communications portal can efficiently reinforce this goal and what your loyalty program offers.

Then consider the onsite points for screen-based customer engagement. For one, digital signage presents an excellent platform to showcase your loyalty program to guests. Whether in the lobby, public areas, or check-in kiosks, strategically placed digital advertising can raise awareness and engage guests with enticing promotions, especially when enhanced by QR-code-based promotions that can incentivize OTA guests to hand over their real email addresses to activate the said promo.

Then, of course, there’s the WIFI login portal as an often-overlooked opportunity to drive ancillary spending. While most portals already showcase add-ons, you can take it a step further with cutting-edge upselling platforms. These platforms enable A/B testing of different offers and incentives, identifying what resonates best with guests to drive ancillary revenue.

One Task at a Time

You may have noticed that some of the advances listed in the opening were not properly fleshed out in the ensuing ‘considerations’ sections. That’s on purpose. Again, booking direct is a concerted effort requiring far more than just the wisdom of your IT Director insofar as selecting the best IBE and setting up great integrations with other key hotel systems.

Chart a course and tackle each upgrade systematically so that you can achieve quick wins throughout the year ahead. And as a final reminder, it really is now or never, so no pressure!

Larry Mogelonsky, MBA, P. Eng. - Hotel Strategist, Industry Pundit, Veteran Marketer, and Public Speaker. Adam Mogelonsky, is the chief technologist of the company, Adam has a broad understanding of the complexities of the hotel tech stack as well as the vendors who are paving the way for increased labor efficiencies and new revenue growth opportunities.

Leveraging over 40 years working in hospitality, Hotel Mogel Consulting helps both hotel owners maximize property performance and technology vendors navigate the industry's entry barriers to realize financial success. Visit our contact page to start the conversation.

www.hotelmogel.com

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