Should You Invest More on Direct or Indirect Booking Sources?

Traditionally, hoteliers favored direct bookings. This gave them control over the reservation process and avoided commission fees to online travel agencies (OTAs). However, the recent boom of OTAs has shifted the landscape, making indirect bookings a more prominent channel.

The Benefits of Direct Bookings

There are several benefits to direct bookings for hotels:

• Higher profit margins: Hotels do not have to pay commission fees to OTAs, so they keep a higher percentage of the revenue from direct bookings.
• Greater control over the booking process: Hotels can set their rates and policies, and they can collect guest information directly.
• Opportunity to build relationships with guests: Hotels can use direct bookings to collect guest information and build relationships with guests, which can lead to repeat business.
• Improved brand loyalty: Direct bookings can help to strengthen a hotel's brand identity and loyalty among guests.

The Benefits of Indirect Bookings

There are also several benefits to indirect bookings for hotels:

• Increased visibility: OTAs have a large reach and can help to expose a hotel to a wider audience of potential guests.
• Increased bookings: OTAs can drive a significant amount of bookings to hotels.
• Reduced marketing costs: Hotels do not have to spend as much money on marketing their own website or reservation system.

How to Decide Which Channel to Invest In?

The decision of whether to invest more on direct or indirect bookings is a complex one that depends on a number of factors, including:

• The hotel's target market: Some target markets are more likely to book through OTAs than others.
• The hotel's budget: OTA commission fees can be significant, so hotels need to factor this into their budget.
• The hotel's brand: Hotels with strong brands may be able to attract more guests directly.
• The hotel's location: Hotels in popular tourist destinations may be able to generate more direct bookings.

The Importance of a Balanced Approach

The optimal hotel booking strategy isn't a one-size-fits-all solution.  Success lies in a balanced approach that considers all relevant factors. Hotels shouldn't prioritize one channel over the other.  Instead, they should create a strategy that maximizes bookings across both direct and indirect channels.  This might involve investments in:

• Marketing for both direct (hotel website) and indirect bookings (OTA partnerships).
• Website and reservation system improvements that prioritize user-friendliness and a seamless booking experience.

Conclusion: Striking the Right Balance

Ultimately, the decision to prioritize direct or indirect bookings is a business call, best made on a case-by-case basis. There's no single "right" answer, as the optimal approach depends on your hotel's specific circumstances.

Weigh the pros and cons of both booking methods before making a decision. By developing a balanced strategy, hotels can maximize bookings and profitability.

Need help getting started? Contact us to discuss crafting a winning booking strategy for your hotel!