LanguageHotels increase revenue in a four-step approach in the BookLogic Direct Bookings Strategy to meet industry-standard rate parity agreements and increase direct bookings through dynamic packaging and special offers
30 May 2016: BookLogic has been trialling new techniques to drive online booking conversion with direct business by managing its hotel clients’ rate parity strategy. Several hotel groups and independent hotels have made significant gains by overcoming rate parity obligations set by OTAs.
The hotel-booking specialist has developed techniques to provide market orientated rate strategies and progressive discounts through dynamic packaging that offers better deals to a hotel’s customer-base. As OTAs begin to drive hotels to deliver rate parity, the hotel industry has been seeking ways to offer direct offers, promotions and room rates that will not have them penalised by their third party agents, who can charge up to 49% commission.
BookLogic has developed and tested, with resounding success, four tactics to improve visibility, conversion and bookings direct to hotel websites:
1. Pricing by customer market: rate shopping of the targeted customer market and providing competitive pricing within this market, instead of setting rates by the hotel’s location – allowing greater flexibility in setting rates by customer affordability.
2. Progressive discounts by length of stay (LoS) – direct sales have more flexibility for LoS than through OTAs and third-party channels. The hotel is able to offer discounts and special offers on alternative lengths-of-stay, especially where many OTAs cannot offer this type of rate structure.
3. Dynamic packaging to hide the room rate similar to Expedia and Hotwire: distributing opaque rates, package rates with flights, cars, transfers etc dynamically through its direct channels.
4. Loyalty programme – providing an account to customers to find better deals. BookLogic’s Booking Engine allows customers to login via Facebook or personal accounts to access private rates, therefore avoiding violation of rate parity.
“Following lawsuits in Europe against OTAs by the European competition committee, the industry is being prohibited from enforcing rate. So it’s up to the hotel how to enforce the strategy. By utilising data and technology we have identified points in the sales and booking process to offer better rates to customers to catch the direct booking,” said Oral Yigitkus, CEO, BookLogic.
“We have optimised the performance of our clients’ websites with customer centric pricing and dynamic packaging that offers market orientated rates, as well as employing similar direct sales techniques that are employed by Expedia and Hotwire. This allows our hotel partners to commit to their contractual obligations yet catch as much direct traffic and offer a better package to holidaymakers,” continued Oral Yigitkus.
Hotels improving business and providing a competitive offering in the travel market include Euphoria Hotels, Akka Hotels and Otium Hotels. All of which have improved revenue during 2015 by providing dynamic online packaging and rate setting. During a turndown in the Turkish market, reported at 50%^, the aforementioned hotel groups worked with BookLogic to offer product unavailable on OTA and third parties or have used technology systems to optimise the distribution of their room rates.
In the case of a 34-room boutique hotel in the centre of Istanbul BookLogic increased revenue by over 4,000% by introducing a online direct booking marketing strategy with market-focussed pricing and progressive discounts alongside promotions. This allowed the hotel to become more independent, avoiding being hit by the dramatic fall in sales to traditional booking channels, plus not having to enforce full rate parity strategies by offering opaque deals.
While for a 12-room boutique property catering to luxury travellers from the Eastern European market place, BookLogic created specific rates by traveller market supported by a specialised online marketing campaign to drive traffic, resulting in a 32% growth in revenue between 2014/15
Some boutique hotels with whom BookLogic increased the online direct bookings with market-based pricing, progressive discounts and promotions.
Hotel 1 (12 room)
within a few months of implementing the BookLogic direct bookings strategy the hotel achieved 32.54% growth.
Hotel 2 (34 room)
Hotel 2 managed to increase direct sales revenue by over 4,000% by adopting a SEO-driven campaign alongside the BookLogic direct sales strategy – even with the market as a whole experiencing a -50% drop.
Hotel 3 (20 room)
This hotel performed well despite the market difficulties, growth didn’t quite out-match the fall in bookings and ended incredibly well at just -5.06% on 2014. Without implementing the BookLogic direct booking strategy the hotel would have suffered considerable losses.
Hotel 4 (32 room)
Implementing the BookLogic direct bookings strategy before the worse of the market downturn hit, this hotel secured a growth of 729%. The year’s investment in a direct online rate strategy allowed the property to grow its market share.
Hotel 5 (22 room)
Throughout 2015 Hotel 7 struggled in a turbulent market as visitor numbers plummeted, yet managed to end the year 9.31% up owing to investment early in the campaign.
Conclusion
With over 70% of online bookings now generated through third parties, of which many of the high-volume booking channels charge high commission levels, hotels are looking at ways to build brand and garner more direct bookings in order to reduce distribution costs. The simplifying of technology and development of integrated systems are making it easier for hotels to manage their third-party suppliers and therefore build direct marketing campaigns. Coupled with greater knowledge and expertise of the online travel buying cycle and new opportunities to capture and interact with a wider audience hoteliers now have the resources to easily develop its own database to become more self-sustainable.
BookLogic’s range of booking systems, distribution solutions, data insights and digital marketing know-how allow hotels to manage a focused sales and marketing strategy by optimising the performance of online sales channels and marketing through PPC, SEO and IP-listing.
