Direct Booking Series: Online Pricing Strategy

The direct booking movement started several years ago with the rise of many hotel software technologies. It’s to retaliate against the fighting between OTA and wholesalers for online distribution. As the service owner, the hotel was hurt by the aggressive business model for online travel.

This blog post series will discuss the best ways to get direct bookings. Most of the Bookandlink team comes from hotels. They have worked in sales, revenue, and e-commerce before. Here are some tips that they share with the clients.

A pricing strategy is the starting point for direct bookings. A good pricing strategy can help hotels generate revenue. 

 

OTA Pricing Strategies

Hotels can use two types of common online pricing strategies to beat OTAs. Hotels can hit the parity rate or reduce the rate slightly below the OTA. Or, hotels can sell something special that is not available in the OTA. 

Lowering the rates in your direct channel may help the hotel to generate more direct bookings. We find that many hotels reduce their direct booking rates by 5%. The price match policy also allows hotels to create direct bookings. Several hotel partners offer up to 10% off if guests find any rates from a third party lower than the hotel’s direct rate. Several terms and conditions may apply. They said it works very well for walk-in guests and also to check their disparity rates between OTA.

Some of our hotel partners are selling packages in their booking engines for direct booking only. These packages are not available in OTA. The most common package is an all-inclusive stay offer. They also offer family room package bundling. We will take a look at this more deeply in our upcoming series.

💡: Hotels can use the “Rate Multiplier” feature in ChannelKu to modify the rate automatically before pushing the speed to the OTA. This feature is entirely free to our hotel partners.

How much do the differences matter between hotels’ and OTAs’ rates? No success formula says this number is better than that number. However, on average, we found a 5% difference is capable of generating direct bookings.


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Competitive Pricing Strategies

Like a human, each hotel is always different from the others. However, hotels must look at the surrounding area for business to keep guests coming to their hotel. Hotels need to consider how their competitors’ facilities, room sizes, room types, and many other things are similar. 


💡 Hotels can subscribe to the “Rate Shopper” feature in Bookandlink to check the surrounding competitors’ online rates in OTA.

How far does the radius need to be reviewed? We found that it is essential for hotels need to look at their competitor within a 5 to 10-km radius.

How does the hotel determine its competitors by pricing? Hotels need to consider their position in the middle, where they fit in with competitors whose prices are slightly higher or lower than theirs.

How about the facilities comparison? We found out facilities comparison is necessary but not a priority compared with location and pricing.

 

Occupancy Pricing Strategies

In hotels, occupancy-based pricing responds to fluctuations in demand by adjusting room rates accordingly. Hotel room rates determined by occupancy tend to go up as demand increases. You can split it out using global occupancy or room type occupancy model as the template to increase the price.

💡 Hotels can use Bookandlink’sDynamic Pricing” feature to change the rates automatically based on occupancy levels.

How to determine the pricing increment? We believe that each hotel has its policy about rate increments. The safest way is to adjust it to meet your seasonal rate. You can also group the room based on the category to maximize your revenue instead of using global occupancy as the main template.

 

Promotion Pricing Strategies

Some hotels lower their prices during the off-season to attract more people. This method is prevalent in OTAs. Hotels can do it if they have an internet booking engine like BookingKu.

The standard promotion practices are: Early Bird, Basic Deal, Last Minute, and Stay Pay. Each of these promotion practices has a different purpose.

Early Bird: Hotels can grab bookings in advance.

Basic Deal: This can be used as a real or decoy promotion.

Last minute: to attract a last-minute reservation

Stay Pay: To aim for guests to extend their stay in the hotel.

 

💡 BookingKu, an internet booking engine from Bookandlink. The deals can be created, combined with extras, and sold as a package.

How can a hotel create an effective promotion? As far as we can tell, hotels always place the highest discount on Early Bird, followed by Last Minute Booking, Stay Pay, and Basic Deal. It is essential to combine all of these promotions and calculate them to meet the booking pace.

 

Need more information about direct booking? Contact our sales team.  

Are you Bookandlink’s clients looking for assistance in applying the above tutorial? Connect with our support team. 

Are you Bookandlink’s hotel partner and looking for other ideas? Connect with our partnership team.