Paying commission to OTAs (Online Travel Agents) can be crippling for small businesses. I know from personal experience that when the OTA invoice arrives, it is gut-wrenching to have to pay it.
We have friends who own a 4 bedroom B&B in a very touristy town where Booking(dot)com charge a 25% commission – new to the industry, they have now become reliant on OTAs and are paying our a staggering £12,500 each year in commission!!
One of the key reasons for setting up Welcome to Looe & Polperro was to help owner-run accommodation providers drive direct bookings, avoiding these charges which are sucking money from the pockets of the property owner and the local economy.
Why do people use OTAs to make their accommodation booking?
In my experience people book using an OTA for a number of reasons, including:
1. OTAs dominate search engine results due to the massive budgets spent – people have become inherently lazy too with a short attention span when searching online;
2. OTAs make the booking process fast & simple;
3. It’s perceived to be the best rate available (whereas a report by Which? found that 80% of rooms could be booked more cheaply on the properties own website);
3. Cancelation is very easy (people often book multiple properties and then decide closer to their stay which they will go with, down to something as simple as the weather forecast!)
So what can be done?
The first thing I would say is that it is virtually impossible to try and compete head to head with OTAs in terms of spend on the likes of Google Adwords – it’s like throwing money down the drain. However, there are some simple things that you can do (some of which may sound obvious) to try and push more people to book direct.
1. Make it as easy as possible for guests to book directly on your website. Potential guests don’t like filling out forms or emailing to enquire about availability if they can go to the likes of Booking(dot)com and book in a few easy steps. If you don’t have online booking you really are making it easier for the OTA to take the booking. There are a number of very good providers for online booking and I have worked for over a decade with https://en.freetobook.com
2. Make sure that your website gives prominence on the home page that by booking direct you guarantee the best rates and, if you can, by £x or % terms compared to other channels. Ask your website designed to add a button or banner and position it in the most visible area of your site;
3. Make sure that your website using technology to adapt itself to all screen sizes (e.g. computer, tablet & phones) – over 75% of people using the Welcome to Looe & Polperro website do so using a phone;
4. Make it easy for people to book via your social media channels – particularly Facebook & Instagram – and keep your posts & images up to date and enticing;
5. Subject to you being tied with a Rate Parity Clause, make sure that when you load rates for the OTAs that they are more expensive than on your own website by a margin that makes booking directly look very attractive;
6. If you are stuck with a Rate Parity Clause, make the terms less attractive for people booking via an OTA (for example, non-refundable deposit, a higher amount of deposit, more stringent cancelation policy).
7. Look at what other incentives you can offer to book direct – for example, early/late check in/out; welcome drink/hamper etc. Perhaps your own loyalty scheme, ties in with local restaurants for special discounts, etc;
8. Assess what you are currently spending on OTA commissions (and the % of reservations which come via OTAs) and evaluate how much could be spent, in the short term, on putting in place some of the above to save in the long term on commission fees. Try and work towards getting your reliance down to a %/spend you are happy with;
9. When you do welcome guests who booked via an OTA – on departure, give them something (postcard or business card) with a direct incentive to book direct if they plan on returning;
10. If you do use OTAs and work towards X% of reservations coming to you via these, make sure that you are not reliant on just one. If you use only one and they change their algorithm, you could be very exposed. Look at using other OTAs so spreading your reservations and asses the success of each annually.
Industry bodies, like Hospitality UK, continue to campaign & lobby for rate parity clauses, and other under-hand practices like brand-jacking, to be made illegal in the UK.
As a property owner, through Visit Cornwall and SECTA (and via the local MP) do keep pushing the message through to try and change the law. Many EU countries have already legislated that rate parity clauses can no longer be compulsory in contracts with OTAs so change can happen, it is just that the UK are very slow off to mark to do so.