REPORT FROM THE U.S.—For hotel suppliers, the name of the distribution game today is “direct bookings.”
Brands want travelers to book direct with their sites because it justifies the fees they collect and gives them more negotiating power with online travel agents. Owners want travelers to book direct because it is the least costly channel to acquire a booking. Operators want travelers to book direct because, aside from wanting to make their owners happy, direct bookings allow operators to establish rapport with guests before they arrive on property, thus improving the guest experience and increasing the opportunities for upselling.
Hoteliers are finding one of the best ways to convince travelers to book direct is through their respective loyalty programs. Direct bookings and loyalty membership go hand-in-hand, sources said.
“It’s almost the chicken and the egg. Is loyalty driving the booking, or is the special offer driving the loyalty?” said Paul Wood, VP of revenue management for Greenwood Hospitality Group.
Wood said he has seen evidence that loyalty drives direct bookings, and direct bookings have created loyal customers.
For example, Greenwood looks at business clients who book about 80% of their business with Greenwood hotels and 20% elsewhere. To get 100% of their business, Greenwood will work with the respective brand to offer double loyalty points. On the flipside, Greenwood is experiencing rapid growth on the direct mobile channels, and those guests tend to become loyal, he said.
“In five of my nine markets, mobile bookings over smartphones have increased more than 1,000%,” Wood said.
Through its participating hotels, TravelClick is able to track whether a hotel reservation or stay is for a guest who participates in that hotel's loyalty program. Looking at transient demand only, TravelClick recently noted loyalty demand is growing.
Over the first five months of 2013, transient roomnights grew 4% year over year, while the loyalty customer portion of transient roomnights grew by 9%. Over that period, roomnights from loyalty customers accounted for nearly 60% of total transient roomnights, up from 56% over the same period in 2012, according to TravelClick.
Regarding loyalty and channel mix, TravelClick noted loyalty program members accounted for nearly 80% of all roomnights booked through brand.com, while 85% of all roomnights booked through an OTA came from guests not affiliated with the hotel's loyalty program.
“Loyalty members do tend to book directly, and the direct booking experience is more likely to establish the emotional connection and brand connotation with customers that will drive loyalty,” said Marc Liebman, VP of reservation products at TravelClick.
Liebman said it’s important for hotels to maintain a strong “book direct program” to drive higher loyalty and more repeat bookings. Adopting a “best rate guarantee” program on the hotel website and creating a well-presented and appealing rewards program that is promoted via the website are two ways to accomplish this, he said.
Apps and loyalty
Hotel suppliers are beginning to understand the power of mobile in driving loyalty. Through proprietary apps, brands can offer travelers convenient ways to book hotel rooms while on the go.
Choice Hotels International has been dedicating resources to its mobile presence, in attempt to gain more loyal guests, since 2009 when it launched an iPhone app. The company recently unveiled RapidBook, enabling travelers to make reservations quickly and easily on a mobile device. RapidBook allows travelers to store whichever preferences they choose, and then the mobile booking engine recalls the guests’ preferences and payment information at the time of booking.
“It makes booking a three-step process—you go into the app, search your destination, select your hotel, click a hotel and book,” said Robert McDowell, senior VP of global distribution for Choice. “We’ve really streamlined the process for guests.”
Michael Menis, senior VP of digital and voice channels for InterContinental Hotels Group, said loyalty and mobile go hand-in-hand. He said IHG is focused on promoting loyalty through direct bookings on IHG’s reservation channels, including mobile and web.
“Today, we offer guests who book directly on one of our brand websites the most powerful website rate guarantee in the industry, the Best Price Guarantee,” he said. “The Best Price Guarantee is IHG's pledge to its guests that we offer the best published online rate available for IHG's brands.”
Menis said mobile content that streamlines the travel experience for IHG’s guests and helps them plan and book travel ultimately drives guest loyalty.
More concisely, both loyalty members and mobile users can be viewed as “closed groups.” Therefore, brands and suppliers can offer those groups discounted rates to steer them away from high-commission OTA channels while maintaining parity agreements.
Jeff Linden, CIO of Red Roof Inns, said the economy chain often offers promotions to its RediCard members that are at discounted rates as compared to third-party distributors.
“We do that fairly regularly; that’s another incentive to joining the program,” he said. “We can market to them directly, and we can offer them specials that we can’t really offer to third parties because of the amount of money that the OTAs take anyway.
“In essence, if they can book with us we can give them an even better rate.”
Outside of using technology to capture new loyalty members, hoteliers are evolving the way they use customer-relationship management to retain guests. Often cloud-based, CRM systems allow hoteliers to store guest preferences—such as room type, smoking or non, floor preference, even pillow type—and then better personalize a guest’s stay.
“To the extent we can know what you like, then we can place you where you want to be in the hotel,” Linden said.
CRM also provides front-desk clerks an opportunity to make the guest feel special right at check-in.
“You can determine the value of each guest,” Linden said. “Is this the guest who stays with you 100 nights a year? The more people stay with you, the more they want to be recognized. It’s that extra touch on a greeting or welcome we can give to someone.”
“One of the biggest things about the loyalty program is keeping communication open and keeping Choice Privileges members at the top of our mind,” McDowell added. “You want to drive your guests to a higher level of engagement.”