Online travel agencies are coming under intense scrutiny from organizations like the CMA – and for good reason. Did you know that approximately 70% of hotel rooms booked globally, are booked via an OTA?
The relationship between hotels and online travel agencies is mutually reliant one. However, while OTAs create much-needed bookings and business, there are a number of elements that negatively effect the hotel industry as a result.
A huge number of hotels rely on OTAs to fill their rooms, but what about the cancellation rate? According to statistics, rooms booked through an OTA have a cancellation rate as high as 40%. This means that hotels relying almost solely on OTAs to sell rooms, will suffer financial losses. Here are three ways in which hoteliers can protect themselves against such shortfalls.
Furthermore, OTAs are now under much more scrutiny in terms of their selling tactics following a serious number of complaints regarding misleading sales. Therefore, you are within your rights as hoteliers, to demand a fairer service from your online travel agency partner.
Safeguard your cancellation rules
Make sure your booking strategy and cancellation rules protect you from loss. When working with an online travel agency, it’s important that payments are made on booking, rather than afterwards at the hotel end of the deal. Don’t have a cost-free cancellation policy either. Make sure there is a refund system that only refunds if the room is cancelled up more than 15 days prior to the actual booking date. A cancellation fee can also be negotiated, whereby a 50% only refund is given back to the customer for a cancellation within three days of the booking date. This not only encourages serious travellers, it also means that the hotel can still get something from that booking, even if the guest cancels it. If a guest pulls a no-show, you should also employ a no refund policy to that situation.
Overselling is a tried and tested method. However, it also requires careful handling and planning. Watch the data carefully so you know exactly how many cancellations you get from each OTA. You might be working with several – and some will routinely have higher cancellations than others. Identify and oversell only on those that have a higher cancellation rate. Only ever over sell by a low percentage – and monitor that data. While this is a good way to ensure higher bookings rates, it can also be a disastrous call if poorly managed. If you over-estimate the cancellation potential and sell too many rooms, this leads to major guest dissatisfaction. A poor review online is far more damaging to your reputation than a few cancelled room nights. So tread carefully.
Encourage direct bookings once your guest arrives
While OTAs have got better in terms of sharing guest data, hotels need to start wooing their guests from the moment they arrive. You can collect additional data from your guests on check in. Once you have that information, you can start to build a longer standing relationship with them. Make sure you can go the extra mile by offering airport services, personalised messages, additional perks such as free WiFi – or even a complementary voucher for refreshments on arrival. Making the most of your guest, means they will be more likely to book directly with you next time.