Imagine you were in a clothes store looking at a coat, uncertain whether to purchase it, and a sales assistant approached you and said: "I'd buy that coat right now, if I were you, because a customer who is the same size as you has just walked in and she definitely wants to buy that coat."
Would her intervention make you more likely to buy the coat? Would a fear of missing out persuade you to complete the purchase?
What if the interaction was with a high street travel agent and while considering vacation destinations, the sales assistant said to you: "I would book quickly if I were you because I spoke to another customer who wants to stay in this hotel. If he books it first, you'll miss out."
Would you consider such behavior helpful or pushy? Would it convince you to book or only succeed in making you walk out? These questions are relevant because such pressurized sales interactions take place all the time. The only difference is that they take place online.
When the personal touch of a sales assistant is replaced with an algorithm, sales become a different animal – particularly when it comes to booking hotels rooms.
Online travel agencies are quick to pile on the pressure on potential travelers, who are often confronted with hard-sell messages like, "book before it's gone" and "limited hotels in this location". Some engines, too, display real-time page views or the number of rooms left, particularly when availability is low.
The drip-feed of such messages are designed to elicit a fear of missing out (FOMO), to instill a sense of panic and persuade you to act impulsively. This strategy can be effective, but its manipulative and often deceptive nature is an affront to the concept of traditional customer service. In the long-term, using these messages can risk damage to a hotel's reputation and its ability to build loyalty.
Removing a property from OTAs is a daunting alternative; these services have turned the game on its head in a sector where customer service is at the heart of the industry. They are hi-tech giants with an all-pervasive presence. They create opportunities for hotels to reach potential guests, but it comes at a cost, and not just in substantial commissions: hoteliers lose the ability to provide personalized, genuine service.
Nonetheless, if the COVID19 pandemic lockdowns have taught us anything, it is the importance of adopting technology – such as online check-in and check-out – to provide solutions to problems. Hoteliers who wish to compete with OTAs for a larger slice of the bookings pie need to arm themselves with the tools to drive direct bookings.
They need to marry specific integrated tech solutions to traditional values of hotel customer service and bring the offline experience online for potential guests.
So how and where do hotels compete?
The going rate
Rate parity is the foundation for competing with OTAs, but surprisingly, many hotels fail to overcome this vital first challenge. If a hotel can't match OTA rates for their own rooms, they'll never truly be in the race at all.
OTAs provide customers with membership scheme discounts, exclusive mobile-only discounts, and geolocation offers to meet customers' booking needs. However 'exclusive' these discounts are isn't important; money talks, and consumers are always eager to save. OTAs use rate blending to mix different rate plans and build the lowest possible price for long-stay guests. They also use AI to personalize and prioritize the hotels list and content they filter for customers.
To compete, your direct channel booking engine should always offer the best possible rate options, including mobile, geolocation discounts and blended rate functionality to ensure guests are offered the best price for multiple nights on a single booking and to maintain rate parity with OTAs. Such functionality has been available for some time, but the problem has always been integration and providing customers with a seamless journey through their purchase.
This is particularly apparent when it comes to payments; too many hotel booking engines don't have direct payment integration and being taken offsite to a separate payments page is a red flag in terms of trust and credibility for many customers.
Similarly, being unable to facilitate secure payments leaves hotels at risk of charge backs. Often, hoteliers rely on OTAs because they will bear this risk on behalf of a hotel, but they require a higher commission to do so. Even then, the hotel only gets the money later, so they miss out on immediate cashflow.
To compete, your booking engine needs to facilitate secure payment integration. The banking world has already decided that the days unsecured payments are ending; two-factor or authenticated secure payments are the future and the technology is already here. Integrated authenticated payments provide reassurance for hotels and customers alike – and have the bonus of providing hotels with immediate cashflow.
Another part of that reassurance comes in the nature of the customer journey. Creating trust is vital in the early stages of the customer journey, and OTAs appeal to travelers because they provide a marketplace where people can assess and compare hotel options throughout the world.
Travelers also use OTAs over other booking platforms due to the ease of use and quality of their websites. Their websites are reliable, easy to navigate and aesthetically pleasing. This helps to create trust – in the same way as it does for any customer walking into a bricks and mortar store. There is confidence that the system works and that booking transactions are handled securely.
To create the same level of trust, your guests must encounter visual consistency across all your channels. Your booking engine must deliver an excellent user journey and consistently reflect your website. Having a strong brand experience at every point of interaction with your guests leads to greater guest loyalty.
Design consistency and customization are important, but so too is seamless integration, and only solutions which keep the user in the same page, domain name and sub-domain will provide the level of reassurance that allows you to compete with OTAs.
Make it personal
The link between personalized experiences and online commerce is well established. Research from Epsilon into travel and leisure websites/mobile apps found that 87% of respondents were much or somewhat more likely to do business with those offering personalized experiences.
OTAs use artificial intelligence (AI) to generate an experience personalized to each customer – showing the most relevant hotels, rather than just listing them by price, and highlighting relevant nearby services and experiences available based on the information provided by the customer. Until recently, competing with OTAs in the area of AI software solutions hasn't been feasible, but new technology is driving change.
My own company, P3 Hotel Software, has started to roll out an AI solution that is integrated with our own booking engine which analyzes guest data gathered by booking engines and uses it to provide personalized booking experiences for customers in the same way that OTAs do.
The potential for this innovative technology to gain a competitive edge over OTAs is significant. Not only can AI-powered hotel booking engines improve revenue management and operational efficiency, it also gives hoteliers valuable data insights needed to successfully implement dynamic pricing models and offers more personalized guest experience.
Hotels can outperform OTAs on personalization and build customer loyalty in other areas, too, such as implementing their own loyalty programs. Loyalty has proven incredibly important to hotels during COVID restrictions, where much more custom was local, and the measure of a hotel's reputation was often revealed.
Hotel booking engine software can enhance loyalty programs by displaying available rewards when a guest is booking another stay, and tailoring promotional offerings for restaurants, spas, and other property amenities.
When a booking engine is integrated with the hotel central reservation system, it can further attract loyalty by providing guests with the ability to reserve a table at the property's restaurant, book a spa treatment, schedule a golf tee time, or reserve parking.
Such functionality has additional benefits for hotel operational efficiency and can even help alleviate a pressing issue the hospitality industry is grappling with – the labor shortage.
With technological innovation allowing for better connectivity across a property, an industry-leading booking engine can seamlessly integrate into all a hotel's digital channels, reducing the need for manual labor by increasing booking automation efficiency and streamlining. It won't magic restaurant or housekeeping staff out of thin air, but it has become a significant reason for investment in technology.
Service, not FOMO
With the tools to compete on rates, payments, trust, loyalty and personalization, the importance and value of customer service becomes a clearer win for hotels when taking on OTAs and driving direct booking revenue.
In an industry that prides itself on service, offering reassurance to potential guests rather than relying on aggressive sales tactics employed by OTAs has vital long-term benefits.
By using direct booking engines, hoteliers can establish trust, foster loyalty and offer a more personalized experience in the critical first stages of the customer journey.
After all, what would the person shopping for a coat have done if the sales assistant had said: "Don't worry, we'll hold that for you for 24 hours until you make up your mind."