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Takeaways from our webinar, “Optimizing Distribution Channels for Independent Hotels”

During a recent webinar, we discussed how to navigate the changing online distribution landscape with three industry experts from OTA Insight and Travel Tripper.

Topics included how to harness the power of metasearch, optimizing your website for conversions, and planning your distribution strategy around both current and predicted future booking trends.

Click below to listen to a full recording of the webinar or download our presentation here, and read on to see a list of the top takeaways from our discussion.

Navigating the changing online distribution landscape

The current online distribution space has become extremely challenging. With a proliferation of OTAs and metasearch platforms, how can you use these channels in the right way for the right purpose? And how should they fit in with your own direct channel?

One thing is certain: it’s no longer enough to activate these channels to simply try and fill rooms. It’s now vital to use each channel in a way that fills rooms in a way that maximizes profit.

In order to decide which channel is right for your hotel, it’s first important to look at the way OTAs, metasearch, and hotel websites compare in the modern booking landscape.

Diving into the data

A recent poll by Phocuswright asked travelers from the US, Europe, Australia, China and Brazil which website or apps they used to shop for accommodation and hotels. The graphic below illustrates that broadly, OTAs and metasearch platforms are dominating.

Source: Phocuswright

However, there are some regional variations worth paying attention to. For instance, 72% of US travelers use OTAs, but 44% also look at hotel websites when they’re researching. This means that at the very least, there’s every reason to have your pricing in order to capitalize on this considerable level of attention.

In China, 91% of travelers use OTAs, but 37% also research on hotel websites. So if you know you have a strong Chinese customer base, it’s clearly worth translating your website and providing culturally appealing content.

What this study reveals is how vital it is to keep track of who’s engaging with your site  in order to capture their attention and incentivize bookings.

Knowing your core market

The travel booking landscape is currently in a major period of transition. Hotels can no longer assume their core demographic today will be the same in a decade.

According to Phocuswright’s report, the biggest shift is expected to come from the Asia Pacific market. In 2016, this market represented 31% of all online travel bookings. By 2020, it’s expected to hit 37%. Big growth is expected from India, while China is forecast to leapfrog the U.S. to become the world’s biggest leisure travel spenders by 2027— doubling its annual spend in 2016.

As a result, your hotel should be prepared for the possibility that your customer base could alter in the next 5-10 years. If that happens, focusing on the dominant channels in Asia and tapping into localized bookings patterns will take on great importance.

Factors worth considering include the regions that your channels drive business from, the typical length of stay each channel generates, and how far in advance your guests are booking.

For instance, you won’t want to plan price changes in your inventory for the next 30 days if your growing overseas market books two months out for a longer stay. Optimizing for multiple nights rather than single nights will clearly be a better way to incentivize bookings from this audience.

Optimizing your web direct channel

A good distribution mix is the key to increasing the bottom line. Hotels realize that OTAs bring in vital extra business, but the price is having to fork out hefty commission costs.

In contrast, your hotel’s direct channel has one of the lowest acquisition costs. A direct booking also enables you to own your guest, allowing you to start the conversation with them before they arrive, find out about their stay after check-out, and market to them for future stays. With that in mind, here are a few key strategies to help you optimize your own direct channel.

Have the best deal on your website

The typical traveler journey involves visiting numerous sources including OTAs, metasearch, review sites, and ideally— your hotel website. So once a potential guest finds their way to your site, you need to give them a great reason to book direct.

And that reason is giving them the best deal out there. So where to start?

Offering added extras such as free Wi-Fi or breakfast can prove a great incentivize. In fact, a survey of 2,500 travelers by softwareadvice.com found that 48% of bookers would most likely book direct if they were offered a room upgrade.

Pop-ups and slide-ins are also useful tools to draw attention to deals and incentives

on your website. You can use them to promote anything from an exclusive offer to the benefits of booking direct, such as reaffirming your best rate guarantee or advertising complimentary upgrades.

Offer your guests perks and rewards

Guests loved added perks and extras, which makes them a great way to entice direct bookings. Companies including Stay Wanderful and The Guestbook partner with major retailers to offer hotel guests rewards and discounts, which are then prominently displayed on your website and booking engine. These programs are easy to set up and perfect for smaller properties without loyalty schemes.

Email signups

You can also encourage visitors to request alerts on exclusive deals directly on your website using email signups. By acquiring a guest’s contact details, you can target them with future marketing and offer them the best rates as part of closed user groups.

If your booking engine supports guest profiles, you can also sell private member rates on your booking engine (which should be exempt from OTA price parity rules). The example below illustrates how this looks on the Travel Tripper RezTrip booking engine.

Private member offer on booking engine

Engage with international markets

As more bookings start coming from international travelers, your website has to be ready to convert a new wave of guests.

To begin with, look at the countries that offer the biggest potential to your hotel as a revenue stream. You can use Google Analytics and run reports from your own CRS or PMS to identify which regions might be worth targeting.

When you’re chosen a country or region to target, be sure to provide a consistent experience that displays the same language and currencies on your website, booking engine and any international campaigns you run.

As a strategy, pricing your direct channel geographically is a great way to sell the lowest rate on your website to a specific overseas audience. A tailored message and offer will be far more likely to get this audience to convert on your site.

Maximizing on metasearch

There’s still a lot of confusion about how OTAs and metasearch platforms are different from one another. So first, a quick explanation.

OTAs such as Expedia and Booking.com are booking sites that offer a multitude of products, including flights, car rentals and hotel reservations. They also use metasearch engines such as Trivago and TripAdvisor to promote these services. The revenue they generate comes from the commission fees they earn on bookings.

In contrast, Metasearch sites are rate-shopping tools. They compile room rates from multiple booking websites into one search engine platform. Their revenue comes from the ad spend of OTAs and other travel companies.

It’s important to remember that people visit metasearch sites to shop for the best deals. So if you don’t show the best rate at all times, or at least offer rate parity, you’ll be losing out on a huge chunk of business.

Understanding different metasearch channels

While metasearch platforms share a lot of similarities, they also have unique differences and best practices that need to be understood.

For instance, TripAdvisor conducts a lot of A/B testing on areas such as its advertising copy and how many top results are shown, so you need to constantly monitor how these changes impact your campaign results. Having an updated TripAdvisor Business Listing is also highly recommended to ensure your review data is serving you well.

Trivago represents an increasingly attractive option. It continues to build market share (especially in the U.S.), and it usually involves comparably low spend and high returns on spend. But this isn’t a guarantee and constant testing is advised.

The same testing strategy applies to Kayak, which has a record of trialing different ways to display room rates—a factor that can impact your CPC.

As a general rule, metasearch will help you generate more direct traffic while spending less. Why less? Because metasearch algorithms are designed to charge a higher dollar amount per click if your rates are higher than your competition, especially if you bid to be among the top results.

Why metasearch is essential

Far from a luxury, metasearch should be seen as essential. If you don’t invest in it, you’re missing out on getting crucial initial exposure.

In an eye-tracking survey commissioned by Travel Tripper, it was found that 86% of people saw the metasearch ads (located in the right hand column of Google’s search results pages). This reveals just how much attention users are paying to these results during a typical search.

As a general approach, Travel Tripper has found that the higher your position in the right hand metasearch box, the better your chances of generating traffic to your direct channel, ultimately increasing conversions and return on ad spend. However, as we’ve discussed before, bidding for the top spot on metasearch platforms isn’t always the best approach—especially if budget is limited.

Optimizing metasearch channel

Balancing your distribution strategy

As the online distribution landscape evolves, staying still isn’t an option. To compete in the coming years, hotels must research and test the benefits of each distribution channel to see which offers the biggest benefits.

Equally, building a strong direct channel remains essential, both to avoid hefty commission fees and to maintain communication with guests both before and after their stay.

The travel booking landscape also require constant analysis. Given the growth of the Asian Pacific market, looking at the potential of overseas channels and adapting how and where you promote your hotel may have a defining role in your future success.

Joan Evelyn Lee

Joan Evelyn Lee

Joan is VP of Operations at Pegasus, helping hotels worldwide efficiently manage their distribution channels and maximize direct bookings. She loves cooking, traveling, and all things New Orleans. Contact her at joan@pegs.com.

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