Why the Defeatist Attitude Toward Direct Online vs OTA Bookings?
By Max Starkov
Friday, 16th February 2024

Earlier today, a hotel director of marketing (DOM) commented on LinkedIn: 'OTAs offer an outsourced marketing program where you only pay if they send you bookings, many hotels have tried to do it all themselves and it ends up costing a lot more'.

Quite the defeatist statement by a hospitality marketing professional, don’t you think? Direct online bookings are NOT costing more than OTA bookings, and here is why.

In the course of 20 years at my company NextGuest(now merged with Cendyn) we measured the true cost of direct online bookings across our 5,000 plus hotel clients, mostly 4- and 5-star independent hotels, midsize and smaller boutique and luxury brands, including property website amortized over 36 months, website maintenance, hosting and analytics, consulting services, digital marketing (SEO, SEM, online media, email marketing, metasearch, etc). The average cost was consistently 4.25%-4.5%.

Compare this to OTA take rates of 25% and more, now even reaching 32%-33%, adding the additional premier positioning and visibility commissions, commissions for mobile bookings, discounts to the OTA loyalty members (360,000 hotels already provide those).

In addition to the lower cost of acquisition, there is another very important reason for why direct online bookings are many times more valuable than OTA bookings: they are first-party data generators!

The property’s first-party customer data is the only “single source of truth” of your guests that can be used in guest communications, guest services, CRM communications and marketing automation and drip marketing campaigns in the pre-, during- and post-stay, email marketing, personalization and digital marketing, loyalty marketing initiatives, etc. to improve dramatically the customer experience, efficiency and profitability.

This latest third-party cookie and privacy moves by Google, Firefox and Apple, as well as government privacy regulations like the European Union’s GDPR and California’s CCPA underscore the importance of first-party data, which allows marketers to establish direct relationships with their potential, past, present and future customers.

Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist

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