In 2016, several major hotel brands launched aggressive campaigns to drive direct bookings. Hilton’s is among the best known, with its catchy “Stop Clicking Around” campaign. The company claimed this was “its largest campaign ever.” Hyatt, Marriott, and Intercontinental joined the fray, and what was once just a campaign became a long-lasting news story about the big brands waging war on OTA commissions.
How did it work out for them? According to a recent Skift report, Hilton CEO Christopher Nassetta said that HHonors enrollments increased 80% year over year. At this point, Hilton reports direct business channels (only including .com and app) account for 25% of business versus OTAs at 10%. Nassetta says that direct business is growing at a much faster pace than third-party bookings. According to Hyatt CEO Mark Hoplamazian, their loyalty campaigns have resulted in much more than increased numbers of rewards members (and their bookings). Instead, Hoplamazian says they have driven “higher market share, higher channel share for Hyatt.com overall. It just so happens that the actual booking pattern isn’t primarily of member discount rates.” By all accounts, efforts are paying off.
What does this have to do with independent hotels? Independents are seeing the trickle-down effects of the flags’ investments in the direct channel. This is primarily because the leading brands are spending millions to promote the idea that direct booking is better for travelers, offering additional value gained implicitly by booking directly rather than via third-party channels. This awareness, which influences booking habits on a large scale, is good for everyone.
The hotel industry forecast for this year shows slow but stable growth. However, according to STR, this year the independent segment is projected to have the largest increase in ADR (+3.0%) and in RevPAR (+2.7%). Independents have an opportunity to seize more profitable business than anyone else this year, and this greater awareness of the direct channel is crucial.
In order to take full advantage of the trickle-down effect of the brands’ investment in direct bookings, independents should shore up not just their mobile presence but also ensure reservations agents are well trained and prepared to field calls from guests who are poised to book directly with the property. The voice channel (left out of the above data on direct bookings) is essential for independent hotels, especially those that fall into the high-consideration category.
Additionally, independents should capitalize on loyalty programs. The drive by the big brands to increase loyalty membership and provide exclusive rates to that segment has given new energy to rewards programs. And if you wonder if this applies to independents, know that it does. A Cornell Hospitality Report showed that guests spent more money and increased the frequency of visits to a property (visiting 50% more often) when they were enrolled in a loyalty program for upscale and luxury independent hotels.
As hotel brands continue their effort to bolster direct bookings in 2017, independents can prepare to reap the benefits of further increases in direct inquiries. It doesn't have to be difficult if your property follows a few fundamental steps.
Start by following current best practices in online distribution and marketing. Make sure you increase staff appropriately at call centers and make sure agents are coached to capture all incoming inquiries as well as caller data that can be leveraged down the road for campaigns. And finally, considering implementing appealing loyalty programs or joining an independent consortium to provide guests with added benefits.
For more information about taking advantage of the direct channel as part of a comprehensive review of channel strategy, check out our Lift and Shift white paper.