See our plan for hotel owners wanting to sell more hotel rooms throughout all seasons:
- 1 Meet our small hotel owner…
- 2 What’s The Big Issue With Selling More Hotel Room Bookings?
- 3 Taking The DIY Marketing Approach
Meet our small hotel owner…
Throughout 2016-2018, Selmore had the pleasure of meeting a small number of hotel owners and independent holiday accommodation owners.
These hospitality venue owners had varying levels of experience in the trade (from start-up to 10+ years) and operated as resident owner managers.
Every independent hotel is different.
Location, layout, amenities, services, staffing, strengths/specialties etc…
However, the business goal of running a hotel is the same whatever the size or type you own
‘…to serve your guests with excellence, profitably.’
The same rules apply for managing a small, independent hotel or bed and breakfast:
- fixed capacity
- perishable units
- segmented audience
- upsell + cross sell opportunities
- local area business
- typical seasonality
What’s The Big Issue With Selling More Hotel Room Bookings?
In the current business climate the big issue with selling more hotel room bookings according to our hotel owners is ‘how to sell them direct?‘.
The hotel room bookings market is in this day largely dominated by internet based sales channels.
Online Travel Agents (OTAs) such as Booking.com employ large amounts of investment capital for occupying prime paid & organic search engine positions.
This grants OTAs the entrenched advantage of becoming financial market makers for the entire global hospitality industry.
Market making by OTAs for hotel room sales
So, how does market making OTA style work?
And why is this analogy with the financial securities markets going to help hoteliers make more profitable marketing investment decisions?
OTAs set the ‘ask’ prices offered by the hoteliers, whilst also setting the ‘bid’ price offered to the customer.
The difference between bid and ask prices is their spread (profit margin).
An OTAs business gain comes directly from maximally using their perceived bargaining power to suppress the ask price from hoteliers whilst also inflating the bid price given to guests.
A market maker seeks for all potential transactions/deals to cross their table. They aim to have their hands in every match made.
As with any world-class trading platform, the commercial function of an OTA is executed with finite precision and moment-by-moment urgency.
Instantaneously mixing and matching millions of potential trade opportunities between buyers and sellers using their multi-million pound proprietary software, the OTA continuously searches its virtual trading desk using automated computing scripts for where it may maximise its yield.
Analysing A-Z market trends and leveraging on historic user data at both ends of the deal, the OTA seeks by projection to stay ahead of profitability targets ongoing – gaining in market share and further dominance of it’s market.
What advantage do OTAs provide buyers and sellers in the hotel rooms market?
As in every market where market makers operate, the advantage is liquidity.
This is the ability for guests and hoteliers respectively to buy or sell stock with ease e.g. hotel rooms, ‘quickly‘ – and at relatively ‘stable‘ prices.
Where a market is held by market makers, the effect of its operation conforms all trade features (price, product variation, presentation/communication) to a manufactured standard which becomes the expectation – persuading the palates of participants to favour its service.
OTAs have in this way consolidated their hold on the global hotel and hospitality industries.
They have become synonymous with booking hotel rooms online and have assumed the position of becoming in the minds of users (both buyers and sellers) indispensable to the trade.
OTAs are masters of margins.
They work hard to drive down the prices offered and drive up the prices bidded for. The gap in between is an opaque territory called ‘spread‘.
Every transaction made as processed by the middle man or OTA, incurs the cost of their spread – but for the benefit of offering convenience, the OTA make gains at the expense of guests and hoteliers.
Taking The DIY Marketing Approach
Many hoteliers dream of the idea of driving their own demand for their bookings themselves, but find it impossible to think beyond using an OTA.
As with any DIY project, the cost to the practitioner is the risk of loss:
- lack of experience
- time of waiting
- mistakes made
- upfront financial cost of investing a self-solution
- opportunity cost
OTAs offer immediate and proven access to market. They significantly lower the risk of marketing investment for hoteliers (sellers/suppliers).
Whereas a DIY, in-house marketing effort not only has to stand-out among other local providers, but most difficult of all, they must also rise above the overwhelming noise of OTAs and their multi-million pound marketing budgets.
Most hoteliers simply wouldn’t know where to begin.
Research success stories
Small businesses worldwide are successfully winning over online audiences everyday with some very cost effective if not zero-financial-cost models of marketing.
The internet is awash with independent DIY marketing success stories showcasing peers who have established themselves in their niches by simply doing a good job of sharing what they know best to the benefit of their customers.
Herein lies the single most powerful advantage for hoteliers marketing their services:
“…hoteliers know hotels.“
An OTA simply will never know as much about hotels as the people who run them. No matter how much they spend on content writers, they simply cannot substitute the knowledge a hotelier has of their own hotel.
Another fact also goes in favour of hoteliers gaining prominence in their market places and taking back share:
“…no two hotels are the identical.“
Hotels are not a like-for-like commodity. They each have unique features which directly impact the value of service given to guests. These qualities are often unable to be imitated.
What a great point of real marketing leverage for (m)any hoteliers with a will to taking back what is theirs, with a bit of work!
Catering to the informational needs of hotel guests pays back handsomely in sales & real business profitability.
Pre-sales and post-sales communications are equally as important for both the conversion and nurturing of new and existing relationships to optimal profit.
Providing genuinely valuable sales support instantly differentiates your business from others and from OTAs.
Being forward thinking and acting prudently in investing in the production/distribution of useful business collateral in support of your sales cycle draws your prospective customers closer in heart and mind in a way which prepares them to invest with you.
Why don’t you make buying hotel rooms easy?
Replicating the results of OTA booking engines as online sales interfaces is not actually out of the reach of a small independent hotelier on a tight budget.
By-enlarge, any independent hotel can achieve the same quality of look and feel of an OTA website by using commonly available modern web development and content management tools and techniques.
Know your KPIs
The key factor for success in converting online hotel room sales, as quoted by many an expert author in trade press articles, is user-friendliness.
The (re-)engineering of an independent hotel website to generate the right kind of demand and to optimally convert this interest into bookings rests finely upon some key principles including: quality on-site imagery, service/product information, pricing, packages, breakdown of investment choices, user reviews, local knowledge etc.
In summary, your hotel website ought to be your most adept ‘virtual sales person’.
In other words, it must reflect your expertise, experience and the uniqueness after which your walk-in prospects will gladly make their stay with you – but all within the virtual confines of your web pages.
Your investment to recreate this well resourced online sales funnel, with personal diligence and care for your customer’s benefit, can quickly position your hotel as a leader in it’s respective niche.
Such an investment in your marketing is unto long term profitability and ample earnings – both for the duration of your ownership, as well as post-transfer of ownership should you exit by sale of business.