Spotlight on… Direct Bookers and Ancillary Revenue Are direct bookers the biggest spenders? Direct bookers: are they bigger spenders? In the summer of 2016, Kalibri Labs published research It’s too simplistic to say that ‘Direct is Best’ for every hotel, suggesting that direct bookers were ‘significantly more regardless of circumstances. Some hotels might have 70% of profitable’ than those who came via OTAs - to the tune of about their business coming from tour operators, 25% from OTAs, and 9%, on average. That figure rises to almost 18% once you factor a teeny tiny 5% coming direct. Switching off everything other in ancillary spend. That’s even without considering the fact that than that direct channel would be foolhardy at best. But there acquisition costs decrease as direct bookers return to a hotel, are steps every hotel can take to (a) maximise the value of every while they stay the same, or grow, if guests continue to use guest, and (b) adjust the habits of indirect bookers once they OTAs to book. arrive in the hotel. It’s not like most hoteliers need to be convinced that direct So, what are hoteliers doing already? And what solutions are guests tend to be better for them financially. But that Kalibri out there to help them do more? Labs research got us thinking about whether hotels - which often operate as a collection of fragmented teams - are joining up the dots between how guests book and how much they spend. This report, the first in our Triptease ‘Spotlight on…’ series, asks the questions: Are hotels aware that direct bookers are spending more with them? Do they adjust their messaging accordingly? And what solutions are out there to help hoteliers with the tricky job of upselling the guest once they’re in the property? Direct bookings We surveyed a group of hoteliers about their current practices Better rooms and free upgrades are on the cards for many with regards to direct bookers and ancillary spend. direct bookers, it seems: 33% of hoteliers we surveyed give automatic or priority upgrades to those guests who arrive direct. Others are making a conscious effort to provide a higher 47% of hoteliers surveyed said they standard of service: one hotel provides a “personal escort” to always treated direct bookers better the room of every direct booker, while another simply told us that “we’re nicer to them”. For the 21% that aren’t treating direct bookers any differently, 33% said that direct bookers are treated motivation is varied. For a few, it’s just that they’ve never better sometimes thought about it, with a similar number saying that they don’t have the resource to implement anything. 21% never treat direct bookers Nearly half of that group, though, said that they just didn’t see differently to other guests any reason to treat direct bookers differently, and they aren’t offering ‘direct booking benefits’ to encourage people to book with them. Direct bookings When the same hoteliers were asked “which type of guest One hotelier confessed that they didn’t treat direct bookers any spends most with you on top of their booking”, 50% answered differently because of a fear of penalisation from their OTA either ‘regular guests who book direct’ or ‘one-off guests who partners - which isn’t unusual. book direct’. For instance, we heard recently that despite the European For the 17% who either find that OTA guests spend more, or Union’s ruling against strict rate parity clauses between hotels that there is no difference in guest spend, it makes sense not to and Expedia/Booking.com, 79% of hoteliers are yet to vary push direct too heavily. But for the 50% who know that direct their prices across the different distribution platforms. bookers spend more, offering ‘direct booking benefits’ could mean attracting a higher-value guest as well as saving on The sway online intermediaries hold over hotels, for better or commission fees. worse, leaves many hoteliers afraid to ‘step out of line’. Of course, the overall payoff of this depends on the cost of the ‘benefits’ and of advertising them. What works for one hotel may not work for another. Direct bookings If a guest books via an OTA, do you mention the benefits We know that hotels are putting great effort into pushing the of booking direct at check-in, or during their stay? ‘Direct is Best’ message on their websites, but a third of the hotels we surveyed said that they never mention it once the guest is on-site. This was all the more surprising when we saw that 60% of those same hotels said that they sometimes or always treat direct Yes, always bookers better. Needless to say, the Triptease opinion is that if your direct bookers get a better stay, you should be advertising No, never 25% that fact far and wide - especially to guests who tend to book 33% with OTAs! For the 67% of hoteliers who sometimes or always mentioned the benefits of booking direct to their OTA guests, motivations were varied - but there was a common theme of maximising value. Yes, sometimes 42% Direct bookings “Yes - (I want them to book direct) because there’s no commission “We do it sometimes because payment!” it’s easier for the guests to make changes in their booking, but we respect the OTAs’ rules.” “We don’t do it because they’ve booked “Yes, because I could earn by that point - it’s too late.” more with directs.” If a guest books via an OTA, do you mention the benefits of booking direct at check-in, or during their stay? “Yes - no commission for the hotel, “We only mention it when there are cheaper price for the guest… a win-win issues and the guest would have been “We always mention the benefits for both parties.” more informed by our site.” of booking direct. If the guest books direct with us next time we reduce our commission, and we can provide a better service as we “No. We believe that a guest who books via are talking directly to them about an OTA is a customer of that OTA, and this what type of room they want.” relationship must be respected.” Direct bookings A number of hoteliers indicated to us that they had a policy of A hotel we know in Dubai has gone one step further, and talking to guests soon after they’ve made their booking, and employs a full-time member of staff to talk to guests who allowing the guest to switch to a direct booking if they want to. booked with OTAs. Technically a ‘Sales Coordinator’, the employee is tasked with meeting regular guests who book online, having a coffee with “We mention the benefits of booking direct them, and converting them into direct bookers. because they might not know otherwise. This gives guests an opportunity to cancel with the OTA and Their KPIs are actually based on the number of guests book with us, in a better room.” approached and converted. “I convert a lot of guests from OTAs to my site when I first talk to them after the reservation has been made. We call or email all our guests to confirm details. If a guest wants anything at all that is outside of our standard OTA policies, I tell them right away that they should book direct with us - and they do.” Direct bookings So, we know many hotels are striving to give guests a reason to book direct. But, apart from saving on commission, do those hoteliers know what they’re getting in return? We asked: Which type of guest spends most with you on top of their booking? (On room upgrades, meals in the hotel, spa access, etc.) I don’t know 20% Regular guests who book direct 40% 23% There is no difference 7% 10% One-off guests who Regular guests who book direct book with OTAs Ancillary spend An impressive 40% of the hoteliers we surveyed pointed to direct bookers as their biggest spenders, demonstrating that the value of a direct booking often isn’t limited to what it saves the hotel in commission fees. So are hotels thinking about how to maximise the value of their direct bookers? And how can they do so without compromising the guest relationship, or cheapening the value of their brand? Upsell isn’t about getting a guest to spend more by any means necessary. It’s about hitting the sweet spot of giving a guest the best possible experience, and providing them with services that they’re happy to spend a little extra on. Ancillary spend Do guests have the opportunity to purchase add-ons when Do you ‘upsell’ once the guest is in the hotel? they’re booking on your website? (Offer room upgrades, extras, etc.) Yes, always 70% yes No, never 10% 20% 30% no 32% 37% Sometimes, but there’s no defined policy Yes, when it feels appropriate