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Are all hotel booking engines made equal?

For many hotels, choosing the right booking engine often comes down to price. Rather than investing in the best product, the CRS vendor offering the cheapest deal can seem like the most attractive option.

But price shouldn’t be the only factor when you’re weighing up your booking engine’s potential ROI. Long-term, the performance of the product can have a major impact on your bottom line and direct booking revenue.

In the following article, we’ll describe why choosing a superior booking engine really matters, and we’ll also outline the ways it can have a dramatic and lasting impact on your business.

Why investing in a quality booking engine matters

OTAs continue to win far more direct bookings than hotels—primarily because they offer a superior user experience. The vast majority of people prefer using OTAs because they simply find them easier to use when they’re searching and booking rooms.

So when you weigh up ROI on your booking engine investment, consider whether it will significantly improve user experience for your potential guests, enough so that a guest who would have booked on an OTA books directly on your website instead. Put another way, will it shift high-commission OTA revenue to direct revenue? If your chosen booking engine doesn’t improve your direct business, you’re wasting your money.

Many CRS and booking engine models run on a commission model, generally charging a small percentage fee of the realized booking. While it can be tempting to simply pick your hotel’s booking engine based on the lowest commission fee, it is far wiser to first run an analysis to see the potential overall impact to your bottom line.

In this evaluation, you’ll want to run a rough calculation using your current distribution mix. Consider the percentage of bookings that your hotel typically receives from direct vs. channel manager/OTA, as well as the percentage commission paid on those bookings. Total the revenue after commission, and use this as your baseline.

Now it’s time to make a few assumptions: run the numbers to see what the revenue looks like if you were to shift 5 or 10% of your bookings from OTA channels to direct. With high commissions ranging from 15-30%, every percentage shift you make adds a significant amount of revenue to your bottom line.

Shifting bookings from OTA to direct

When it comes to evaluating booking engines, you’ll want to work with the provider whose platform makes the greatest impact on shifting OTA bookings to direct. Simply choosing a booking engine based on the cheapest fee could actually result in less revenue.

Consider the chart below. You’ll see that Booking Engine A involves paying a smaller commission fee than Booking Engine B, but it also brings in a smaller share of direct bookings than option B.

Hotel booking engine comparison

In this instance, the cheaper product may save you more per booking, but end up costing you more in revenue. Ultimately booking engine fees are generally negligible for making product comparisons; the key evaluating factor should always be how much direct business your booking engine will support.

What makes a “good” booking engine?

So what kind of advantages can you expect by investing in a superior booking engine?  Below, we outline three specific areas your hotel can hope to see significant benefits.

Complete flexibility over pricing and inventory management

A basic booking engine can be extremely limiting due to an inherent lack of flexibility. As a revenue manager, this can lead to some extremely frustrating (and costly) implications, such as not being able to quickly update room rates to meet changing market conditions.

In contrast, advanced booking engines give you complete flexibility and control over pricing and inventory management. Modern systems include dynamic pricing, a tool that lets you dynamically adjust room rates based on a range of filters including reservation dates, length of stay, lead time, booking device, and geographical location.

Advanced systems also include tools such as auto-generated landing pages that can be quickly created and displayed on the hotel website. These pages can be used to advertise special deals or market at niche groups with targeted promotions. Revenue managers can also track campaign effectiveness by assigning landing pages with a unique URL.

Alongside these two powerful features, quality booking engines can come with a range of added extras, including brand portals for hotel groups, multi-room and multi-rate booking capabilities, and loyalty integrations that allow guests to easily redeem points on the hotel website.

Conversion-oriented design

One of the most important ways to increase conversions is by allowing guests to book a room in a few simple steps. Major OTAs such as Booking.com and Expedia are masters at this. They’ve engineered their entire user experience to move users from browsing to booking as quickly as possible.

The good news for hotels is that the core principles they employ are simple enough to replicate.

In particular, consumer behavior can be heavily driven by integrating the kind of urgency triggers that all OTAs now use. For example, advertising a limited-time deal alongside a countdown timer that shows exactly when a deal ends creates desire and reinforces the need to act fast or risk losing a great offer.

Example of urgency triggers on booking engine

Advertising high levels of demand also works well. Urgency-driven copy such as, “Hurry —  Only 2 Rooms Left!” creates a sense of scarcity and plays upon the fear of missing out.

Using images can also significantly increase booking enquiries. A TripAdvisor study found using just one photo boosted the likelihood of a booking inquiry by 225%. When choosing the best images for your hotel, include multiple angles of rooms, showcase your top amenities, and use larger photos—they’ve been shown to boost conversion rates.

A clutter-free design can also heavily influence how users interact with your website. Minimize information on each page and reduce the options you give guests at once to reduce overwhelming them with choice. For instance, consider limiting the amount of add-ons you offer in the booking phase, and break decision-making into multiple stages.

When customers reach the checkout, simplicity is crucial once again. People don’t have the patience to fill out endless personal information to book a room. By asking for the minimal amount of data (name, address and card details), you’ll reduce buying friction and increase conversion rates.

Seamless connection to your PMS and hotel website

An advanced booking engine is also able to seamlessly connect with both your PMS and hotel website, working as one single unit. This integration comes with a number of distinct advantages, improving internal efficiency and offering a much-improved user experience.

For instance, when your website and booking engine are connected, your guests will receive a far more fluid experience as they browse and book rooms. In the example below, The Manhattan Hotel Times Square displays room types and tonight’s rate all in one view.

Example of Manhattan Times Square's seamless connection to booking engine and work

The latest rates are pulled directly from the CRS, making it easier for guests to immediately start considering making a booking decision.

After clicking on the rate, users are taken to another page displaying the latest real-time offers—again, pulled from the CRS. In this case, a 20% discount and “+3 Free Rewards” provide incentives to book now rather than delay.

MTS example of booking engine

This entire browsing and booking process takes place entirely on the hotel website. There’s no clunky transition to a separate booking engine, and guests don’t have to hunt down room rates. Everything they need is displayed clearly and logically as they move towards the checkout.

In addition to an improved user experience, an integrated system also benefits revenue managers by enabling them to avoid unnecessary replication of room details. For instance, adding photos, special offers or adjusting rates only needs to be done in the CRS. Once complete, these updates will automatically appear on the hotel website.

An advanced booking engine also facilitates a two-way integration between the PMS and CRS. Sometimes, integrations don’t send all the necessary data back and forth between these two systems, which can lead to frustrating and time-consuming mistakes. With a seamlessly connected system, these communication issues are eliminated.

An investment worth making

A high-performance booking engine can help hotels significantly strengthen their own direct channel, increasing overall revenue. They allow far greater flexibility over pricing and inventory management, feature conversion-focused integrations, and allow hotels to react with lightning speed to shifting demand and market conditions.

While it might be tempting to invest in the least expensive option, the long-term benefits of choosing a quality booking engine really do stack up, helping to drive the success of your direct business.

Gautam Lulla

Gautam Lulla

Gautam is CEO of Pegasus and an outspoken expert in hotel technology and distribution. When he's not busy disrupting the status quo, you can find him ripping powder on the slopes. Contact him at gautam@pegs.com.

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