3 Things to learn from Hilton CEO

OTA giantsHigh levels of cancellation, high commissions from Online Travel Agencies (OTAs) and competition from Airbnb are big issues that a giant chain like Hilton have in common with independent owners.

In a recent interview, the CEO of Hilton talked about rising cancellation rates, high commission from the OTAs and competition from Airbnb. Every day is a school day so I thought I would consider his comments and try and interpret them for independent accommodation owners like yourself.

High levels of cancellation

High level of cancellationNassetta, from Hilton, says “customers…have been trained to do multiple bookings and do things that have created a scene where cancellations…have skyrocketed.” He is talking about certain OTAs encouraging customers to book and cancel. OTAs don’t really care about high cancellation rates if the customer books again through them it doesn’t matter to their profitability, they still get the booking; it’s the cancelled property who loses out.

If cancellation levels are an issue for Hilton they are an even bigger issue for independent accommodation owners where each room is so much more precious. To put some numbers on it I looked at our statistics from the last 10 months and they show that certain OTAs have an average cancellation rate of 26.5% compared to 8% on direct bookings.

Our advice here is to make sure you have a cancellation policy that does not penalise direct bookings. If you can maximise your direct bookings you will also lower your cancellation rate because direct bookings are more than three time less likely to cancel.

Hilton has responded by increasing their cancellation deadline from same day to 48 or 72 hours and made sure that their direct booking cancellation policy is always the best.

High levels of commission

OTA commission risesMany of our customers tell us about the rising commission bills which seem to get larger every year as OTA bookings keep rising. Hilton mentions a lack of competition “More competition would have the effect of driving down distribution [commission] costs.” We have seen less competition as the OTAs take over rivals leaving only two major OTAs (Bookingcom and Expedia, who own most of the others).  Nassetta, of Hilton, thinks that Airbnb could change to become a competitor for the OTAs and help drive down commissions.

Is there a place for another OTA with lower commission? Hilton certainly thinks or maybe hopes so. In common with many independent owners Hilton feels the pressure from very dominant sources of bookings and hope for a path to lower commission.

Airbnb is not competition

Hilton sees Airbnb as catering to “different travel or trip occasions” this may be true for Hilton because a big hotel chain clearly has little in common with a bedroom in a home. Airbnb feels far closer to the independent small businesses that are our customers.  We also know that many of our independent customers already use Airbnb as a channel for low cost bookings so they can be an ally for everyone.

In summary, it seems that there is a surprising amount in common between Hilton and independent accommodation owners. A closer look does reveal that the same issues are faced by everyone irrespective of size along with a hope for more competition in the online travel agent space.

Previous related blogs on direct bookings

3 Ways to Power Direct Bookings

1. Show the benefits of booking directly

Why should I book directly ? Answer this question in your customer’s mind and you will increase your direct bookings. Use some subtle “book direct” images and text to show that booking directly on your website is the best thing that guests can do.

Customers need to be convinced that they should book directly, it can’t be taken for granted. Present a message that re-assures your potential guests at the exact point they are thinking about where to book. As a little gift we have created some images, please help yourself to some “book direct” images, use them freely and share them widely. Link to “Book Direct” images

2. Don’t hide your Book Now button

A potential guest has made it on to your website, so make sure that they can easily find your book now button. Is your booking button in a prominent position on all your web pages ?

Book Now
Book Direct

Your “Book Now” button or “Search Availability” should be easily identifiable and should be on every page of your website, not only on the Home Page. If potential guests can’t find it easily you are pushing them away and they could proceed to some other property or end up booking through an Online Travel Agent (OTA). Make it easy to book so you don’t lose the direct booking.

Typical errors include putting the booking button too low down on the page forcing customers to scroll to find it, others hide it under tabs and menus like Accommodation, Rates or even Contact. Show your booking button clearly, simply and prominently to increase direct bookings.

3. Reward direct bookings

Reward guests who have or are about to book directly with you. Display a special offer for direct bookers using an offer for everyone or if you want to be a bit more selective use a promo code.

special offer for rooms
special offer

With a special offer you can ensure guests can book your best rates directly via your own website. This could be for a selected period or for a minimum stay, or simply make it available for all stays, it’s up to you. Creating a reward for direct bookers will certainly increase your chances of getting the booking direct. When I do a booking directly I’m always looking for that little reward to clinch the deal.

Direct Bookings using Promo Codes
Promo Codes for Direct Bookings

Using Promo codes is more selective, the customer needs to know the promo code. There are various types of offer from the simple discount to complimentary drinks or a room upgrade. A little something that shows you are willing to reward direct bookings on your website. It’s a win for everyone, guests will feel special, rewarded and will more than likely mention it in their reviews. This helps the overall book direct message because future guests learn of the benefits of booking direct when reading the great reviews the rewards have generated.

Get creative and invent original rewards for direct booking.

To find out more about some of freetobook’s direct booking benefits take a look at Promo Codes, which can help you encourage customers to book with you again, and facebook book now button using a facebook call to action button.

Keep an eye on our blogs for tips on how to improve your direct bookings and start cutting into that commission bill.