Why Do Travelers Book with Expedia Instead of Booking Direct?
Expedia’s CEO, Dara Khosrowshahi, was interviewed by Bloomberg's Alex Steel and Scarlet Fu on May 11, 2016 (click here to see full interview). He spoke about the incredible growth his company has seen this quarter at 37% in room nights booked. He went on to talk about how important execution and innovation has been in their growth as a company.
When asked how they are handling the shift in the hotel industry, with hotel brands using other forms of technology and marketing strategies to cut out the middle man, he replied that Expedia spends over 800 million dollars a year on technology and also went on to tell how Expedia is a tech company and not just a hotel or airline company. He also added that they get over 450 million visits to the site each month and have more to offer on selection than any other sites in the world.
What Makes Expedia (and other OTA sites) Better to Travelers than Booking Direct?
Expedia does many things well, but most importantly, they have been able to use their big budgets and huge market share to understand the data to its fullest, helping them serve their online visitors with real value propositions. Cornell University School of Hotel Administrators reported a case study called “The Billboard Effect” and showed the amount of bookings that take place on non-OTA sites that are being distributed from the OTA sites like Expedia, Booking.com, Hotels.com and many others. The study confirmed that 51% of travelers who book their stay go to the hotelbrand.com website first, to learn more about the hotel they have found on the OTA, but they end up booking on the OTA site for the better value they receive.
Case Study Research by Cornell University School of Hotel Administrators
Increasing the credibility of the study done by Cornell University School of Hotel Administrators, Google released a case study called the Traveler’s Road to The Decision. In this case study, Google shows the entire process of the traveler’s journey during their decision to book their next trip - all the way to conversion. As we know, Google holds a magnificent amount of the world's data and does an outstanding job of telling a story with that data. In this study, Google confirmed 53% of bookings made on an OTA first travel to the hotelbrand.com website to learn more about the brand before going back to the OTA to book.
Google explains that travelers book with OTAs because of the simple-to-use tools, better pricing, loyalty programs, more familiarity with the brand and more value to book. With both of these credible studies validating that over 50% of travelers book their stays online do indeed spend time on the hotelbrand.com websites, we started asking ourselves: Why have hotels not been able to convert this significant amount of traffic into direct bookings? The problems we found: hotels do not have access to the same technology, loyalty program technology, value proposition technology, guest engagement technology or neuromarketing technology.
How OTA Hero Can Help You with Direct Bookings
After analyzing the two case studies above, we decided to fix this problem by developing technology that would allow hotels the same tools as the OTAs, but customizable to fit their brand - allowing the hotel to add even more value than the OTA - ultimately increasing direct bookings. After integrating a suite of tools called OTA Hero with a hotel wanting to increase direct bookings and lower their high OTA fees, we found some very interesting data and revenue growth. After analyzing their revenue after their integration with OTA Hero for a full year, we found that we were able to retain 35% of the 53% of revenue from the previous year in direct bookings, bypassing the OTA fees.
- Hotel gross revenue is $3,000,000.
- 20% of their revenue is from OTAs. $600,000 is being brought in from OTAs.
- We know 53% of that $600,000 is coming to your brand's website before going back to the OTA to book their stay.
- On average, we are able to retain 35% of that 53% - growing your profitability by $111,300.
OTA Hero is a suite of tools developed to solve problems in the hotel industry through innovative technology and implementation. OTA Hero is a proprietary software, developed by IMEG (Internet Marketing Expert Group), a company who helps hotels optimize and grow revenue by increasing conversion, value propositions and total guest experience. OTA Hero is proven and integrated with hotels already. An OTA Hero demo takes less than 15 minutes and can be implemented seamlessly with your brand. To learn more about how OTA Hero can optimize and grow your revenue, schedule a quick demo here.