Direct Bookings vs OTAs in 2017 and Direct Strategies that Truly Work!

gorilla scratching head

 

Scratching your head over Direct vs OTAs booking war? Don’t…

 

First the overall:

I’ve landed in the Travel sector and particularly in the hotel chain’s scenario back in 2010, roughly 7 years ago.

 

Since the beginning of my journey in this amazing and hefty industry, I’ve increasingly come to realize genuine discomfort between ends of the same stick:

 

  1. On one hand, hotels and other types of lodging owners with their attempt to drive bigger volumes of direct business and thus increasing bottom line;
  2. On the other side, tour operators and agencies that still have an established business model and strive for continued growth and survival;

 

The recent changes and increased reach & influence of online channels in the travel booking path and consequently the rise of online giants as large scale online travel agencies (in the last decade we’ve moved from several online players to basically 2 huge ones, Expedia and Priceline/Booking), has only accentuated the distances by forcing them to compete in the same battleground.

 

Still, this is old news. Probably since the beginning of the hotel business back in biblical times, direct and third party bookings coexist (kind of) in a not very friendly and symbiotically mutual relationship.

 

Along the way several myths related with this troubled relation have been created and endured, more often due to popular believe, rather of proven correlation.

 

Honestly speaking, its easy to get why! Both from the hotel owners and from the third party perspective are lots of reasons to try and explain things their special and sometimes biased way, or as we Portuguese like to say: “pulling the ember to its sardine”…

 

 

priority blue stamp

Why direct bookings matter so much for hotels?

It’s no wonder that hotel owners prefer their customers booking directly. Besides the general proudly sensation you have, followed along with the “it’s my loyal customer” tingling, tons of reports from very reputable sources support the idea that direct business is better for hotels finances, especially relating them with CLTV (Customer Life Time Value).

 

Recent studies like this pass the idea that Direct Bookings are 8 to 19% more profitable than their 3rd party counterparts and despite most studies (like the above) are not the finest example of a well sustained and unbiased report, it sure sets the tone for the conversation.

 

To further consolidate the feeling, hotel marketing agencies, software developers, vendors, content providers and pretty much everyone else in the market –that isn’t an OTA or OTO, are also very interested in passing this idea along with their magic key to the very secret and almost unbelievable world of the “get customers without having to pay for them”.

 

The whole idea here is to get a bigger piece of the pie, both for hotels and their helpers alike, even if some “direct booking experts” are not as expert as they appear to be.

 

That being said, enough about hotels for now, and let’s move to third party providers aka. OTAs, Agencies, Operators or Travel Distributors:

 

 

Why third party providers worry when hotels get more direct bookings?

Do you really need an explanation here? Third parties don’t own hotels some make a living on your business. And if their revenue diminishes, they’ll have less money to reward stakeholders, they’ll need to cut back costs, personnel, marketing funds…you get the picture!!

 

(Added on 24th May, 2017) The above remark by no means implies that all travel agencies and/or tour operators make a living on hotels. Nevertheless, there are plenty who do. 

 

swimming to stay alive
Feel like swimming to stay alive?

Now for the hard stuff!

If you’re still reading this article (love your patience!), by the looks and so far, it may seem that every single booking coming from a third party provider (travel agency, OTA or traditional tour operator) is a waste of time and profit for the hotel.

 

Is this a good reasoning? The straight up answer is…No, because You are asking the WRONG question!

 

The question needs to be re-phrased and more closely related to this one:

 

Is this incremental revenue or not?

 

In the end of the day what really truly matters is if the revenue your hotel is getting from those different channels you struggle so much to contract and manage, is incremental to your business or if you can get it cheaper or at least more directly somewhere else.

 

For example: if you are setting up a negotiated package rate that will give you access to publish and advertise your hotel directly to an airline customer right after he completes his flight purchase, why not? How more incremental and timely can it be? You can fence your rates, while reaching out to a highly engaged, interested and relevant audience, and one that will probably have lower cancellation rates also.

 

Another example: a specialized online travel agent wants to feature your resort hotel on its hotel short list, and for that, asks for a negotiated net rate discounted around 25% off your flexible dynamic rates. Notice that this isn’t a generalist online travel agent, but a specialist, featuring probably only a handful of hotels within your destination. It’s hardly the same has having your hotel displayed in Booking.com, Expedia or even Trivago.

 

Now that we’ve established common grounds, let’s move to the juicy stuff about hotel direct booking strategies:

 

Question: What’s the best direct strategy for your hotel?

Answer: I have no idea. There’s no such thing has one size fit’s all in the hotel business, especially considering strategy! There are however, basic concepts that should be faced as basic “rule of thumb”.

 

  • Always offer your best rates to your most loyal customers;
  • Always offer a small extra to guests booking directly;
  • Save your last rooms for your own direct booking channels (unless they get unsold repeatedly);
  • When  upgrading free of charge, do it first to guests that have booked directly;
  • In big seasonal special offers, such has Summer Sales, January Sales or Reveillon Packages, always run a pre-buy sale to your loyal customers, offering them the chance to buy it sooner & cheaper from you;
  • Your direct channels should always be the firsts to open for sales and the last to close availability;
  • Keep high-demand rooms for your website and voice reservations (this is especially true if your suites & family rooms are within your best selling rooms);

 

Regardless of above, the answer is still really simple: The best direct booking strategy is the one that will get your hotel as much revenue as it possibly can, at a controlled cost, leaving a margin for other channels and providers to help you get the highly regarded and precious incremental revenue.

 

Don’t get me wrong, E-commerce Website Basics (below) must be assured, but their full potential will never be achieved without a good, adjusted to reality strategy:

 

Quick checklist on hotel website basics:

  • A very fast, user-friendly and mobile ready website;
  • An easy to use booking engine with secure payments;
  • Direct integration with meta-search for increased reach;
  • High-quality but real photos of your hotel assets;
  • A relevant loyalty guests program;
  • Make it easy for your guests to reach you (highlight contact information, have a click-to-call and up-to-date contact details);
  • Fresh relevant content (it’s a good idea to host and update a niche blog that potential guests can relate to);
  • Social media channel integrations (Facebook, Twitter, Instagram & Youtube)
  • Display social validation signs (your Booking.com, Expedia and TripAdvisor guest review scores, TrustYou and Feefo ratings, just to name a few);
  • Showcase trust signs from independent sources (Verisign, TrustE, Symantec, etc…);
  • Your central reservations department need to answer phone calls and emails promptly, professionally and is a knowledgeable way,
  • And needs to do it at least in as many languages as you have available on your website;
  • Preferably 24 hrs a day, 7 days a week;

 

Deal breaker: putting in place a well thought-of strategy and then suddenly realizing that your hotel direct channels (brand website and voice reservations) are not working correctly.

 

hammer crushing egg
Get the basics right or you’ll get hammered!!! The hammer = OTAs. Guess who’s the egg?

 

After this, you’ll still need to take care of your web presence and digital marketing, especially for brand related searches, were OTAs usually dominate (with good reasons), sometimes even by high jacking brand keywords such as your exact hotel name.

 

When all that is done, it really comes down to strategy. And strategy depends on the type of business you’re running and the type of business you aim to run in the future.  Let’s see one simple example:

 

  • Hotels in Asset Light / Franchise Model – in this type of business, the brand is not the real owner of the property. Normally, the property owner pays a fee to use the brand and also needs to accept the brand standards. For the brand, the actual money comes from the fees and the services it provides to the property owner. Many times there’s just no real pressure on the brand side to evaluate the business at the profit (EBITDA) level.

 

In this case, the brand main interest is to have a good share of direct bookings, even if that means to sacrifice some of the profit of the hotel. That’s because the brand needs to be able to quickly prove value to any hotel owner that wants to be part of their brand chain.

 

The best way to do that is by assuring a big share of direct bookings and also a big database of loyalty customers, meaning that as soon as your booking engine is switched on within a new property, you’ll be able to immediately showcase the power of the brand and its loyalty users.

 

Don´t forget, your direct booking strategy will never be the same if you actually own hotels instead of just taking a franchise fee, but we will tackle that another day *)

 

 

About the “correct” direct booking strategy

Your job as an hotel direct sales manager, head of distribution or e-commerce director is not just to increase direct booking revenue by facilitating your customer’s decision to book directly with you, even if that’s in the job descriptions.

 

No! Your main goal must be to help your hotel or hotel chain to achieve the best possible financial indicator closer to EBITDA margin (earnings before interest, tax, depreciation and amortization). If you can’t access EBITDA in your company, you can probably get GOP (gross operating profits) and take management decisions with that KPI as a target.

 

So, the key here is to understand where you can leverage and push for more direct business, without scaring or undermining all the third party provider partners that can help you achieve incremental revenue.

 

It’s not just group, corporate or tour operator business. Even OTA business can be incremental if correctly approached!

 

 

4 great examples of how OTAs are incremental to your hotel business

 

1. IMPACT ON NATIVE SPEAKERS! Most of the times OTAs have a higher native language reach than brand websites.

Imagine that your hotel is part of a well-established boutique hotel brand, and features a complete and user-friendly website beautifully translated to English, Spanish, French, German and Portuguese (BR) languages.  Pretty nice right?

 

That said,  and overall agreeing that by offering those languages, you’d be reaching lots of qualified potential guests, you need also to consider that you’d be missing out on a big part of the available market!

 

Just naming a few: Mandarin (roughly 1Bn native speakers), Hindi (roughly 300 Million native speakers), Arabic (also roughly 300 Million native speakers) and so on…

 

According to a 2012 Harvard study, more than 70% of “consumers spend most or all of their time on websites in their own language.”

 

Not just that, but:

  • “72.4% of consumers said they would be more likely to buy a product with information in their own language.”
  • “56.2% of consumers said that the ability to obtain information in their own language is more important than price.”

 

What does this mean for your hotel?

By not providing your website users with their native language, you are automatically excluding a huge potential client base which is especially dramatic for hotels and resorts placed in highly visited / international destinations.

 

Also, if you present your customers with their native language, they’ll even consider paying a little more for the room. Guess price isn’t the only turn-on when it comes to travel!

 

OTAs, of course, are well known for having multi-language websites, with Booking.com being perhaps the leading and most perfect example of that approach, boasting a staggering 43 languages!

 

multi language websites are crucial for conversion increase

 

2. LOCAL CURRENCY! ASAP!!!

Every e-commerce manager that runs or has runed an international website knows that local currency is a key conversion factor Your customers will always prefer to buy from you using their local currency. They will feel way more comfortable, at home, less frightened on what might be charged to their credit cards.

 

By offering your customer with the option to pay and be credited in their local currency, you’re breaking an e-commerce big barrier.

 

With online travel bookings being a global adoption, it’s crucial to offer your guests with an easy to understand, free of charge-back, currency conversion or foreign transaction fees, payment method.

 

The same goes for settlement currencies. It’s very important to accept payments from your guest not just in your local currency, but in theirs also!

 

Guess who has stacks of currency options to choose from? Yes, OTAs! You’re getting good at this!!! Booking.com has even more currencies than it has languages: 51 of them to be exact!

 

 

3. REMEMBER OTAS ALSO HAVE LOYAL CUSTOMERS?

Yeap! You’re not the only one pushing for loyal repeat guests. OTAs have been doing that for ages now. You’re probably familiar with Genius rates from Booking.com or with Expedia’s Members Only Rates (got to love the Chrome extension).

 

Don’t get me wrong. I’m not saying that Genius rates and Member Only rates are not a bit shady, which they sometimes are. What I’m saying is that they can prove incremental, especially if you don’t forget to offer the same discounts to your loyal guests, just to prevent some of this rates to cannibalize on your guests.

 

The best strategy here is to fish in their pound as much as possible, without having them (OTAs) fishing on yours. Seems easy right!?!

 

 

4. DROP DEAD IS WORST THAN TERMINALLY ILL!

A bit of a shocker? Actually it isn’t. Regardless of the shocking words, drop dead is always worse than terminal illness.  And walking slow is normally better than being stopped.

 

Of course paying 20, 25 or even 30% commission is really bad, because no matter how you twist it, by the end of the day you’re always cutting directly on your net profit.

 

However, paying commissions still beats not having guests at all. The trick is not how much commissions you are pay for incremental revenue, but how much commission you are paying for guests that would probably just end up booking directly with you (sometimes just because you’re one of the few choices…).

 

A personal experience on the above subject:

I manage third party online sales channels for the biggest Portuguese Hotel Chain in its historical Pousadas hotels brand.

 

Some Pousadas are in high demand, highly competitive destinations such as the Algarve and Lisbon or Porto cities. This means that on those destinations, we need to have a very different commercial and marketing approach from when we’re selling a Pousada located on a low demand destination (like Pousadas of Queluz, Estremoz or Valença).

 

Having the same strategy and commercial strategy in Lisbon and in Estremoz (down in Alentejo, close to the Spain border), would only damage revenue and and eventually, bottom line results.

 

 

So…Wrapping up

 

Understanding the do’s and don’ts, setting up the right strategy for your business (never make the big mistake of assuming there’s only one strategy for all business types) and implementing your direct booking strategy assertively and always considering your destination and business type, will effectively help your accommodation unit being considered within the ultra-competitive online travel environment.

 

Undoubtedly, there are still lots of different ways to improve your direct booking revenue, from brand bidding to remarketing, from correctly setting up your loyalty guests program up to ensure the correct distribution and pricing strategies and we’ll go there step by step!

 

Anyway, just don’t forget your hotel is not an island, and that probably all types of businesses are welcome when properly negotiated.

 

If in the meantime you have any doubts or comments, please feel free to drop a quick email and I’ll be happy to help as soon as possible!

 

Warm regards,

Rui Martins

Facebook Dynamic Ads for Travel is a game changer

Online travel landscape is a bit like the movie Highlanders.

Lots of contestants, all fighting for the same fable prize: just replace chopping heads until you’re the last standing immortal with getting customer’s to book with them! And despite all other web-related actions, search was on a not so long past the very best choice in terms of marketing budget ROI.

 

Highlander Connor MacLeod

 

How come? Well, search is (as you’re about to see, not sure if it still is…) closer to conversion.

 

Explaining why search is so conversion oriented

 

When you’re searching, you are probably in an interest/consideration mode and that is deeper on the purchase funnel and closer to the conversion than any other web-related activities.

 

Why point the obvious? To help you understand Google’s importance on driving large scale travel revenue, especially on a last click attribution model.

 

Whether we’re talking about Macro or Micro conversions, Google has all the tools to help you and has made everything on its power to create an environment prone to its paid search ads model AdWords: by increase paid ads search visibility, by encouraging competitiveness between announcers and consequently monetizing all of this.

 

In fact, and on a global scale, except for China, Google as long taken the “cutting heads…there shall be only one” approach and almost completely owns the search engine scenario.

 

To be completely exact in September 2016 Google had an impressive 73,02% of Worldwide Desktop Market share for Search and a whopping 95,51% of Mobile!

 

Marketers love big segmented audiences, and performance driven marketers love to measure their campaigns impact (results) on those audiences. Until now, Google has had the better on both fields: audience & measurement!

 

That’s always been the case with Online Travel. Google is still THE most important source of traffic for hotel chains, airplane companies, rentals and all the related categories. For years big brands like IHG, Marriot or Accor and OTAs like Expedia and Booking.com have supported the majority of their online marketing budgets on Google products, specifically AdWords.

 

And why wouldn’t they? Google Ads can be set by intent  what makes them reliable, capable of reaching highly interested audiences (because of intent) and an unmatched mutlti-national scale. At the same time and unlike tradicional media, Google allows rapid budget reallocation and offer brands trustworthy insights on their customers.

 

marketing-funnel

 

Travel is a Multi-Billion dollar game and Google as always tried to make the best of it. First with static paid ads, then launching Google Flights and Google Hotels, and even more recently presenting “Destinations on Google” and Google Hotel Ads that dynamically pull prices and availability from direct connections with the hotels, partners and OTAs.

 

Also, a new AdWords feature Google Price extensions is in beta at the moment but might also be used in the Travel in a near feature, allowing travel providers to show prices for related products and thus increasing CTR and probably conversion rates.

 

 

Now enters Facebook

 

For years Facebook has been considered by marketers as a never-ending promise.

Of course it has the scale. Facebook has been building a huge and active audience, and most of the time brands considered Facebook for brand awareness and even consideration purposes, but besides not being as easily accessible like Google AdWords (with local offices on several countries, hundreds of tutorials, white-papers, how-to articles, etc…), Facebook also lacked the part of the purchase funnel that drives most of the sales volume and scale: the intent.

 

Facebook bad at selling?

 

 

Back in good old 2012, after a highly controversial IPO valued at $104 Billion, Facebook decided to change is business approach to a “Mobile First Strategy” despite being 2 years late compared with Google.

 

That was the turning point!

 

By then it was crystal clear to Facebook that mobile users would outnumber desktop users, would spend more time online and there was a huge opportunity for mobile monetizing. Even do it took them roughly 1 year to get the strategy straight, they’ve soon began capitalizing mobile traffic.

 

With the mobile 1st approach, some wrongs suddenly became very clear:

 

  • For relevance and engagement, ads served needed to be native (easily integrating in the users experience and not disrupting it);
  • Big data needed to be analyzed fast and efficiently, producing actionable outcomes – that was solved with strategic partners like Adobe;
  • A new way of audience targeting needed to be found to connect consumer habits, demographics and several other signs that could potentially help either influence and/or understand intents from Facebook users. That was done by partnering with 3rd party data giants such as Datalogix (later bought by Oracle) in order to cross-reference online and offline data and establish purchase/conversion patterns;
  • The existing standard in audience segmentation-  cookie based –  showed several restrictions, especially considering online landscape with its micro-moments (Google’s new marketing model), cross-browser, cross-device content consumption;

 

Since then, Facebook has release and tried several usefull features aimed at increasingly target and segment audiences by all sorts of filters, events and interests.

 

Some as crazy has life events where you can literally choose from new relationship to newly engaged or to newlywed. I imagine 1800-Flowers has a special relationship with this set of audience…

 

Facebook Remarketing has also evolved and has became increasingly consistent on delivering fairly good results, also because of better targeting and segmenting as well as newly released ad types like Canvas, that provides a full page ad story-telling seamless experience on mobile.

 

If you manage online marketing for a brand, try this:

  • Have the Facebook base pixel installed on your website & app and then install the pixel for tracking conversion-related events.
  • Load your active email data base for Custom Audience Ads.
  • Split-test different campaigns according to your conversion events above & another campaign for your Custom Audience and then…

 

Just feast your eyes on an up to 4% on cost per conversion with epic, accurate and result driven Facebook Remarketing Ads!!!

Bum!!! Nailed it!!!

you my friend nailed it meme

 

Up to 4% on cost per acquisiton?!? That’s a number that only brand bidding campaigns with search ads can reach!

Display is (was) far far away from that cost per conversion rate!

 

Do you get now what worries the AdWords team at night?

Display can tap into the largest part of the web: content. Suddenly, for performance campaigns, you’re not restrained to what people search!

Apply these on highly compeling product ads along with dynamic remarketing and custom audience look-a-likes, and you start guessing fast why Facebook is suddenly becoming Google AdWords worst nightmare…

 

So now for the main question: what Facebook Dynamic Ads for Travel brings to the table? Will cover that below.

 

 

Facebook Dynamic Travel Ads – a good AdWords complement?

 

First of all: what are Facebook Dynamic Travel Ads?

It’s a bit like Facebook Dynamic Ads, just focusing more on the Travel Industry.

 

Facebook explains Dynamic Ads fairly good:

“With Dynamic Ads you can promote relevant items from an entire catalog across any device. Display ads for thousands of items to the right audience and automate the process. The solution has three major elements: 1. Set up a product catalog. 2. Build your audience from your website and/or mobile app. 3. Create and deliver ads for your catalog”.

 

So it’s just like regular Facebook Ads, but instead of manually creating every single ad for every product you sell, Facebook will not only automatically do this for you, but it will also customize them according to your customer audience.

 

Again, its very similar to a Google product, Google Shopping Ads, but without the hassle of people having to search for it!

 

And now, Dynamic Travel Ads:

“Automatically promote your travel inventory on Facebook. Facebook’s dynamic ads for travel leverage cross-device intent signals to automatically promote relevant products from your inventory with unique creative on Facebook.”

 

Facebook is diving DTA (Dynamic Travel Ads) in 2 major categories:

  • Hotel Remarketing purposes;
  • Destination Display for awareness and inspiration purposes;

 

How can you do it?

  1. Set up your Hotel or Destination Catalog
  2. Build your Audience for Travel
  3. Create and deliver ads for your hotels / destinations

 

Do you get now how Dynamic Ads work? The cycle is very well explained below:

Cycle of Facebook dynamic product ads

source: www.stitcherads.com

 

With Facebook tapping your audience for user intent signals, automatically feeding your product images, description and pricing to your remarketing audience and then extending it to similar intent-driven shoppers, it’s easy to foresee that these Ads will have a fairly good conversion rate along with the opportunitie to increase the brand’s reach to similar audiences, always keeping in mind conversion goals!

 

 

Why a game changer?

 

Just as explained before, Google takes a huge share of online travel marketing budgets because it allows you to tap into the interest phase of your audience. Also, they’re a global presence so it makes it easier for big brands to scale fast on this model.

 

With search ads you know what your customers want, because they express it in writing (keywords) on Google search. That’s why every time someone is searching for your travel brand, you need to be there. That’s also the main reason why OTAs and Metasearch Websites are there….

 

The main players in this game are Expedia Inc and Priceline (who owns Booking.com), and they are willing to invest heavily to take their fare-share on Google paid real estate!

 

Over the course of 2015 Expedia claims to have spent a staggering $3,3 Billion on online advertising, Priceline Group around $2,8 Billion with AdWords having a lion’s share on their marketing share.

 

The big problem is that you don’t really want to put all your eggs in the same basket, and that’s why travel giants see Facebook Advertising, specifically Dynamic Travel Ads as such a game changer! It’s has global scale, a huge audience to reach and finally the technology to convert!

 

Bellow you can see IHG beta testing Facebook Dynamic Travel Ads with it’s IHG Rewards Club:

IHG beta testing Facebook Dynamic Travel Ads

 

Bellow you can see Waterford Lux Resort Dynamic Travel Ads:

Facebook Dynamic Ads for Travel

 

Facebook Dynamic Ads and soon other social platforms Ads will offer a viable opportunity to combine high scale marketing investments with increasingly higher conversion rates, therefore allowing brands to either shift a bigger share of their marketing investment or to keep on scaling their marketing dollars but acquiring customers at different stages from the usual “search by keyword, intention stage”.

 

Analyzing and accurately identifying the correct consumer patterns, signs, habits and behaviors prior to purchasing travel products is the key to a continual increase on ad relevancy and accuracy.

 

Will Facebook be able to significantly gain marketing dollars share that were previously directed to Google?

 

What’s your opinion? Leave your thoughts below!

 

Best,

Rui

People based marketing and how Facebook is changing segmentation

The last 5 years have been lavish in technological leaps! Powerful mobile devices, multi-touch technology, cloud computing and big data compiling and analysis have completely changed the way we live life, communicate and consume content.

 

Of course when life itself evolves, so should marketing! For instance marketing segmentation is changing.

 

And what is changing in real life that impacts your marketing segmentation?

 

  • Cross-device, cross-browser, omni-channel experience is expected;
  • People definitely have more choices combined with less time;
  • That creates a minimal attention span that needs to be efficiently addressed with compelling perfectly tailored and segmented content;
  • Your audience has grown a mind of their own that can get very loud very fast (check what happened to DKNY and how they’ve successfully handled it);
  • If you don’t nurture fans on their own terms, they won’t by passionate about your brand, advocates will be lesser by the day and you’ll find yourself losing them to another brand that does all of this;

 

And that’s what happening today! Marketing and especially online marketing has changed immensely and there’s no way back to the good old days of search ads or media buying only agencies. Audiences are now looking for highly tailored, specific and customized experiences wherever or on whatever they are.

 

People Based Marketing
People Based Marketing

 

We go online differently depending on where we are, the device we have on, the time of the day and mood (discovery, search, entertainment) we’re in.

 

These are great and bad news to publishers and advertisers everywhere!

 

We now need to impact people in a way like never before, and that involves personal, seamless, diversified and creative advertising depending on every one of the above factors.

 

Both a big opportunity and challenge:

 

 

How to effectively segment and market to people?

 

What used to be THE SEGMENTATION STANDARD is still used by most marketers:

Until now users have been identified in the web with small bits of code (cookies) and those bits of code do their jobs very well on defining what ads we see or the customer experience we get, with just one small detail – they do that on the devices they’re stored in.

It’s like with cookies you have to see every single device as a different persona and that’s a big problem…every one of us has/his several personas!

 

Not sure if you do?

Let’s go back and remember the cross-device, cross-browser experience with one simple example:

  • Your work pc is blocking Facebook, Youtube, sports news websites and other not work related web content.
  • You won’t visit them on your work pc but you’ll probably spend lots of time on those websites or apps while in your personal pc, tablet or smartphone. That will happen on your smoke or lunch break, and you’ll probably visited the websites that are blocked on your work desktop computer.

 

That’s why cookies are so very last year. In fact cookies are so outdated that they don’t work cross devices, or with other operating systems / browsers or even with apps. And this is what we do all the time, we keep on hopping around from one device to another!

 

If a marketing agency representing a soccer club was aiming to segment and publish ads to advertise a soccer product and they were using cookie based information only, odds are you would ended up never seeing those ads even if your lunch break persona was really into that soccer club products…

 

Do you understand why cookie based ad serving is very inaccurate? Most times you end up wasting a substantial part of your marketing budget due to poor segmentation.

 

Loud and clear: cookie based segmentation is almost dead and the throne contender is:

 

 

People based marketing, how?

 

Marketing should allow people to have the products they want, where they want them regardless of the time of the day, device or operating system they’re using to access it.

 

People based marketing aims to show the right people, with the right add, at exactly the right time!

And the trick is exactly what the name says: tracking people instead of cookies.

 

How? Here’s how:
– You can access your Gmail account from your work pc,
– Your Gmail account is connected to your Facebook account so Facebook already knows that when you log in to your Gmail account, you’re YOU!
– You have Gmail App or Facebook App on your mobile, YOU again!

 

And you are a real person, with Facebook friends, groups you’re interested and conversations you are engaging on. Facebook stores all your response to topics, catalogs your interests and then builds mile long lists.

 

If you have your location active on you mobile, Facebook also knows where you live (what really comes handy for local business ads), probably where you eat (remember you post pictures of food you love into your Facebook page?) and many other details.

 

After that is just a question of decoding your life and the time of your day in micro-moments.

 

 

Why is people-based marketing so important for every one?

 

In 2 words: RELEVANCY and SEGMENTATION

– If you are a publisher, you’ll want to have the most relevant ads for your audience.
– If you are the audience (aka. consumer), you’ll want to see only the most relevant ads for you.
– If you are the marketer, you have nightmares with ad budget waist, poor targeting and even poorer results. Relevant ads, in the most relevant placements, to the most relevant audiences are a dream come true for marketers.

 

Sounds a bit creepy doesn’t it? It’s because it actually is! But that’s another ball game anyway…

 

Hope you’ve enjoyed it. Got comments or questions?
Just it the comment button bellow!

 

All the best,
Rui

The Dropbox Hack, proudly alive since 2012!

hacker-threat

“You don’t know the power of the Dark Side.”

(Darth Vader)

 

One of these days, I found myself listing the different threats that would end up in a website security being compromised. It’s a big list as you can imagine…

 

Being in the business for over a decade, I’ve had my fair share of close encounters with DDos, Brute Force attacks, malware and spammers.

 

On all of this, there is one reasoning that usually made me feel a little safer by the end of every day: the concept that a hacking would involve some kind of deceptive move, followed by some form of attack to try to:

 

  • Gain access to sensitive information such as your credit card details, user id and passwords, etc.
  • Run some type of program that will damage your files or terminal, just for the sake of it!
  • Take control of your terminal and use it for a wrong act of some kind, making it part of a botnet or zombie army if you will.

 

Those are the most common, not the only ones of course. Moreover, on my mind I was preset to believe that hackers would act only this way. The truth of the matter is different do.

 

Strategy is a big part of any competitive game, and the more competitive the industry, the better your strategy should be.

 

The web environment is THE zillion dollars game! And online strategy is of the utmost importance.

 

A lot of business nowadays depend directly or indirectly of its web presence. The bigger the company, the higher its chance of an important cut of revenue coming straight from its online presence. There resides the hacking strategy also:

 

Instead of running to attack using the newly found breach, in some cases, for a hacker or cracker, it pays to play strategically and wait.

 

strategy-play

Chess is war over the board. The object is to crush the opponents mind”
(Bobby Fischer)

 

How, step by step:

  • Plant a small exploit on a fairly decent software, preferably something that will solve a critical management problem on a fast growing industry/service vertical.
  • Wait for the software to be implemented in several hundreds or thousands of companies;
  • Monitor software patching to make sure the exploit stays active and healthy;
  • When the pot his big enough (being that data, privilege escalation or DOS attack), the exploit is activated;

 

In 2012 Dropbox (a cloud based storage service) was hacked. The breach exposed around 68M accounts, with user names & passwords now leaking online on a daily basis. This was 4 years ago, and there lays the problem… (we won’t bother discussing the security issues that lead to this, that’s for another day).

 

For roughly 4 years, that data was very probably traded in the black web, to other hackers, crackers and scripters. If it weren’t spotted, it would probably still be there live & kicking, being used and abused by whoever.

 

 

Why is this really bad?

By definition, people are lazy. This probably includes you and me too. We do not like to memorize new passwords every time we sign-up for a new web app, online news service, social network, etc. By the way, this is also valid for the originality and length of your passwords.

 

By having your user and password for one service, hackers can access other services you use; such has email accounts, social network accounts and much more. This way, they can gather your personal information that will render then a very interesting knowledge of your persona.

 

Paypall accounts, bank accounts, hosting services, website admin, nothing is truly safe after that. Not to mention that it is possible to infect one of the above services with a key logger or a spyware to gain further access and privileges.

 

 

What now?

Guessing back what other services you use that can also be compromised?

Best here is to go there and replace your old passwords for new stronger passwords. More on how to do it and how to remember them here.

Also, get a good security suite for your devices (don’t leave your phone out). Find good honest reviews here.

 

Hope this helps and please remember:

  • If you are an individual, keep your personal passwords BIG and hard to CRACK.
  • If you are a company, enforce safety proceedings on your staff.

 

Just my two cents.

If you have anything to comment, go ahead!

 

Regards,

Rui

Hotel loyalty rates and OTAs – Expedia promotes Red Lion Hello Rewards

According to Travelweekly, Expedia has been promoting to its customers the Red Lion Member Rates. Red Lion is a US / CA hotel chain with a little over 100 hotels.

 

Expedia Red Lion River Inn
Expedia featuring Red Lion Hotels Hello Rewards Program

 

Similar to many other hotel chains and independent hotels, Red Lion Hotels have their own member rates, named Hello Rewards and they offer loyal customers an exclusive “thank you package” with the following benefits amongst others:

  • a free night every 7 stays,
  • discounted rates,
  • express check-in and check-out;
  • late check-outs;
  • room upgrades;
  • member-only offers;

 

All of this is now available to Expedia and Hotels.com users, since July 2016 at least. Check out the screen shot below.

 

 

Is this an historical landmark we´re seeing?

 

For some time now, hoteliers are turning to loyalty rates to fight OTAs predominance in the online travel bookings landscape.

 

This is a commendable effort, but hardly a new approach!

 

In fact, the likes of Booking Genius rates (with a staggering 10% off) and Nectar Points from Expedia are being pushed for years has a (strong) selling point to OTAs users. They do even better not only offering “member only rates” but also asking hotels for “secret offers” and the pitch them publicly to indiscriminate users (see screen shot below).

 

secret offer on Booking.com
Publicly pitching a “secret deal” on Booking.com

 

The new thing here is that so far, OTAs and Hotels have been pulling in different directions and this seems to be the first time publicly open attempt of an OTA promoting a hotel member only rate to its customers.

 

 

Why? Does this make sense?

 

Hotels are worried at OTAs gaining more share of their online bookings pie and that is why most of them are trying as much as possible to increase their direct bookings online channels. Member only rates are a good way to force their customers to understand that “booking direct is better”.

 

OTAs are also worried at Hotels starting to recover their share. They need to keep on growing their share on online travel bookings. An example: the 2 giant OTA groups, Expedia and Priceline, are amongst NASDAQ biggest players on Cyclical Consumer Goods & Services sector. Priceline has a Market Cap of 69,63B.

 

Instead of entering a fratricide war against big hotel chains, it seems that Expedia Inc. is now looking at a more pleasant alternative: to collaborate with them!

 

This is a bold move because Expedia is helping Red Lion fuel its own loyal customer’s database, which on the long term can probably hurt Expedia by lowering its recurrent customers to those specific hotels.

 

On the other hand, OTAs strive on the customer’s idea that they “have all in the market” at the “best rates in the market”, and this is exactly what Expedia is aiming to offer its customers, the best rates in the market.

 

If this is going to work and get out of beta stage or not, we don’t know but we promise to keep an track on it and report it to you 🙂

 

Yours trully,

Rui

2 tips to Speed up DNS propagation in a server migration

This might be a little old for some, nevertheless I’m sure it will help some of you out there dealing with server migrations.

 

The propagation of a DNS can take up to five days, this is because among other things, when you migrate a site to another server / host, during the first hours it can happen that they’re still accessing your old server / host.

 

 

1st tip to speed up DNS Propagation

A good way to speed up this process and speed up the DNS propagation is to run the following command (valid for Windows operating systems):

 

Start> Run> cmd> and type “ipconfig / flushdns” (without the quotes)

 

By running this command you are cleaning the DNS access in your operating system and this can accelerate the DNS propagation, but of course don’t forget that you are probably not the only one to access your website…

 

 

2nd tip to speed up DNS Propagation

Starting from the beginning: in fact for a well done server migration, it’s preferable to take the TTL (time to live) to lower values. This will tell the various machines that keep your DNS record to do so for less time, so the DNS will propagate faster.

 

Of course, this doesn’t mean that it will be adapted to 100% because there are many machines (DNS servers) that do not meet standards and keeps TTLs very high, but at least it will help J

 

There are other ways to solve these problems, but we will take it one brick at a time!

 

server connection time out
speed up your dns propagation

Hotel Digital Strategy in 2016 – Increase Direct Bookings

silhouettes-616913_960_720

 

This article’s objective is to help you define & set proven quick-wins for a well succeeded Hotel Digital Strategy aimed at increasing your direct bookings.

 

First, let’s just get 3 things straight:

  1. Your marketing budget makes little difference;
  2. It doesn’t really matter if you are the owner of a Big Hotel Chain with 1000s of rooms or you only manage a small 15 room Boutique Hotel;
  3. Makes no difference your current standing point on digital marketing;

 

Specifically hotel and in overall travel digital landscape is a hard and competitive one.

We´ve spoken before that a winning digital strategy from 2-3 years ago, if used now in 2016 exactly as it was before, will probably end in you losing money daily. The reason why is that global tourism and hospitality industry has underwent major chances with the increasing predominance and wide spread of mobile, social and overall worldwide IT advancements, and in fact it will keep on evolving tremendously on the forthcoming years.

 

Therefore, the goal here is to focus on 3 solid and up-to-date quick-wins:

| Fix your pricing;

| Enjoy the metasearch wave;

| Take advantage of mobile & social merge;

 

Flexible & Accurate Pricing

This is probably one of the most important details in your strategy. Online bookings thrive with high demand periods such has summer season in beach resort destinations, event dates, holidays and similar high demand / high conversion periods.

For your business to fully take advantage on that you need to ensure:

  • Public available rates are all accurate and on parity (this is not just for rates, but also applies to room categories, offers, payment options and cancellation policies);
  • You can quickly increase rates and also close lower margin channels.
  • The cheapest and more unrestricted available rate (public or otherwise) is always the one you offer your direct customer;
  • Your loyal customers are rewarded as such;

 

Questions for you (we) to answer:

How can we keep rates accurate and on parity at all (most of the) times?

Answer: Stop thinking old school. Especially with online distribution, all channels should have access to the same rates –give OTAs and OTOs gross rate. If you want to differentiate one channel from the other, set specific marketing contribution for targeted goals, define a rappel commitment attached to a revenue objective, or simply differentiate them with inventory access. Let them me bigger and more important based on their own merits aligning with your business strategical needs, not by pricing and contracting mistakes.

 

How can you quickly and fully increase and yield your rates if you keep on contracting static rates, with fixed safety allotments?

Answer: Unless we are talking about specific tour operators that sell (the best term here his PUSH) exclusive holiday packages, often including flights, transfers and destination management services, chances are you don´t lose a real amount of bookings and revenue by only contracting flexible rates.

 

How can you I keep the best rates to my direct business?

Answer: Save some room categories exclusively for your direct channels. Offer exclusive rates on your contact center (online is way more visible) and don’t forget to save a little extra for your loyal repeat customers.

 

Tour Operator Static Rates | Quick tip

Even when offline rate publishing is needed (catalogs and brochures), you can still print a “starting from $XX”.

 

Bottom line is:

By choosing to have only or on majority flexible pricing 3rd part contracting, your business will be able to yield rates and take serious advantage of high demand dates.

 

 

Enjoy the Metasearch (big) Wave

TripAdvisor, Google, Trivago and Skyscanner are the biggest players on the sector and all report huge increases. In this article, Trivago (hotel metasearch platform) is very clear about this and in a very simply displays what we all consider to be a shift in travel consumer behavior. It maybe because user considers them unbiased or it can have something to do with the crushing amount of marketing dollars they spent, but be it has it may, metasearch’s are heavly used and here to stay.

 

Use of Metasearch by online travelers (people that book travel online) in 2014:

  • 35% of British travelers;
  • 38% of French travelers;
  • 42% of German travelers;

 

This Google Trends graph says it all:

metasearch trends 2010-2016

That said and proven, how can you leverage this power for your direct bookings?

Rest assured that OTAs are already there and have been there for a while now. The good news is that you can also be present directly and in a comfortable and cost controlled manner.

Netaffinity, Seekda, BookAssist and other partners can easily help you singly connect to all major metasearch platforms without the need of establishing a direct contract with each one. And some, like Seekda, can even help you effectively manage your “metasearch budget”.

Others like Siteminder our SynXis, can still connect you but you will need to have direct contracts with the metasearch(s) of your choice.

And don’t forget Google Hotel Ads (different from AdWords), because we have a feeling it will grow quickly.

 

 

Take Advantage of Social & Mobile Merge

Have noticed that your customers – actually the World – are getting more and more accustomed to search & book on mobile?

The Connected Traveler is now both a reality and a growing trend. Even after bookings, you can start impacting your audience on social platforms, BUT them again, nothing new here!

For ages, marketing managers have made efforts on approaching customers where they were the most, and now, your customers (and prospects) are the most on Facebook, Instagram, Snapchat and others. And as a result of having big audiences, these platforms have became experts in providing business the tools to market to them.

 

Take Facebook has an example:

Those simple 2010 Facebook Ads are long gone. Facebook has recently launched its new Facebook for Business and on it, we easily noticed a distinguished industry: Travel, highlighting how to approach those Travel related customers and providing success stories with Secret Escapes or Hotel Tonight.

If you take a minute to think about it, this merge makes perfect sense!

Facebook knows our customers in-depth. Were they live, what they do on a daily basis, what time they post or consume content, what type of content they interact with….

It’s overwhelming and powerful to know that much about someone or something. And it´s not just Facebook!

Several companies keep track on our behaviors and collect meaningful and actionable data that can later be used to promote products and services – tourism and hospitality included.

Not only can you re-market to a preexisting customer database, but you can also create and manage look-a-likes, meaning prospect databases that are similar to your best buying and most engaged customers.

 

If this interests you, here are 3 Tools you should check:

 

That’s all folks! Hope you can benefit and if in doubt just drop me an email.

 

Post Scriptum

This article was especially written for those of you looking to:

  • Increase your hotel direct bookings effectiveness;
  • Increase your hotel digital awareness and relevance;
  • Step up your already existing online direct strategy;
  • Shift your marketing focus from offline to online driven strategies;

 

Digital Marketing Mistakes..Big Time!

Searching the web for the last 10 years, I´ve come across some big digital advertising mistakes (I´ve done a few also, but enough about me…).

Oddly enough, some of my best findings didn’t belong to beginners, inexperienced or wannabee webmasters or and high-school students. No sir!

Actually, some of the biggest mistakes I´ve found where “made” by very knowledge people in the online business, but somehow, something was forgotten…

Take for example the Luxury Travel Website Mr.&Mrs.Smith (don´t mistake with Brad Pitt and Angelina Jolie 2005 movie).

Just let me start by saying that the above website is undoubtedly a very well established and interesting online brand & business on a very demanding market as we all know online travel to be.

Now, that I´ve made that very clear, let the fun stuff begin:

Here we are on Mr.&Mrs. Smith official website…

mr mrs smith website screen with G Ads

 

Now, notice the banner on top. It says “UP ALL NIGHT”, followed by “BOOK NOW” and a Mr.&Mrs. Smith logo. On a first glimpse I thought:

  • Maybe it´s just an internal banner!

But wait…take a look again at the website bar down below.

I´ve hoovered my mouse over the banner and it says that the banner is being provided via DoubleClick (Google agency specialized in display ads), and it´s in fact a paid ad.

 

THE QUESTION HERE IS:

Why on earth would you pay for your own ad to appear on your own website?

 

This makes little to no sense, for me at least.

Mr.&Mrs.Smith:

  • If this is important content and you need to show it to your website audience, just create your own website banner and display it there. Please don´t pay Google to display your own advertising in your own website.

 

Is there any logical explanation for this Advertising mistake?

Actually…yes! Chances are, they are paying an external company to run Display campaigns and by mistake, they´ve neglected to remove Mr.&Mrs.Smith own website from placements…ups!

 

What is even more disturbing is that by some reason, they´ve failed to notice this…yet! I´m sure that since they do ORM (online reputation management) they´ll pick up this post in no time and act on it.

Or won’t? Well, let’s wait & see!

 

Let’s look at another wonderful example of a Digital Marketing Big Mistake:

 

URL Redirect Mistakes

This is a less common mistake because of its visibility. You don´t need to be digitally savvy to get this one quickly and solve it in 10 secs. Nevertheless, it happens and once in a while you´ll get to see wonderful examples such as the below:

When accessed, http://www.everhotels.com was supposed to show exactly the same as http://everhotels.com but it doesn’t because they´ve forgotten to do a 301 redirect!

http://www.everhotels.com (at least we know they like Parallels. I for myself, I’m more a Oracle VirtualBox  fan).

301 redirect mistakes

http://everhotels.com

everhotels.com without www

 

 

301 REDIR TIP

Do you have a similar problem or better yet, don’t want to have it? Here is how to solve or prevent it:

  • Open your .htaccess file (it´s normally in your public_html folder);
  • At the beginning wright:

RewriteEngine On

RewriteCond %{HTTP_HOST} ^yourwebsite.com [NC]

RewriteRule ^(.*)$ http://www.yourwebsite.com/$1 [L,R=301]

This one sets you Canonical URL (preferred domain) to www.yourwebsite.com

 

GOOGLE SEARCH CONSOLE 301 URL REDIR TIP

Don´t forget to set in Google’s Search Console (as of May 2015 ex-Webmaster Tools) the way you would like Google to index and present your preferred domain in search results. For any doubts on that just see here.

 

There’s lots of other common digital marketing mistakes, I´m sure you´ve came across a few. If you want to share, be my guest!

 

PS1 – Everhotels missing 301 was found on the 9th April 2016.

PS2 – In no way I intend to arm Mr&Mrs Smith or EverHotels reputation. This is only a good example that if you´re not careful enough in today´s digital landscape, you´ll end up doing big mistakes.

 

 

5 Big Digital Marketing Strategies in 2016

My quote for 2016
My quote for 2016!!!

If you were asked to name one volatile always evolving market, online digital market would probably be top of mind. Whether we´re talking search, social, pay-per-click, mobile, apps or email marketing, there is always something happening every time!

To help you focus on what really matters in 2016, I´ve come up with a digital marketing short list you just need to check!

 

For those guys who are not keen on reading, here´s a 15 sec summary:

1.      Mobile is your n.1 screen

2.      Facebook goes business mode

3.      You´re only as good as your content

4.      Know & personalize as much as possible

5.      Video is key

 

Let’s get started now:

 

1. Mobile is your n.1 screen

We already wrote here that mobile searches have surpassed desktop in last October 2015 and this will only increase and fast.

Now that more than 50% of online searches are conducted on a mobile device, there´s no way you can ignore it. If your website isn´t mobile friendly (obviously being responsive helps but is not enough), stop everything else right now and do it immediately!

Mobile has forever changed the way we look at our customers and business. It created an entire new world of opportunities to which Google calls Micro-Moments. There are hundreds of micro-moments you can leverage differently if you just know how.

Not sure about your website mobile performance?

Check it with these free tools:

 

2. Facebook goes business mode

Facebook pretty much killed organic reach (free traffic) for Facebook pages with algorithm changes in Jan 2014 and later on April by deciding to stop Sponsored Stories. Those changes reduced page update visibility in profiles and at the time, although we all knew it would hurt business, many of us didn´t catch what was really behind:

A Google style massive monetization scheme aimed at business and brands alike!

Since Facebook launched its new retargeting mode last October 2015, with greater and enhanced retargeting options and without forcing business to do it through Facebook Ad Exchange, we´ve seen a huge increase on business using this option to reach out for customers that recently visited their company websites.

Retargeting options include demographics and devices (mobile only is a great choice to some businesses) and custom audiences now have the option of been refined by gender, geography, age and marital status.

How does Facebook retargeting works? This is simple done by adding a Facebook conversion pixel very similar to Google AdWords tracking code.

Are you curious enough? Go and try it and then share it here with us!

Check it here: https://www.facebook.com/business

 

3. You´re only as good as your content

We keep on believing exceptional original content is one of the single most important signals to build in digital marketing. This isn´t featured in number 1 because we´ve all been saying it for the last 4-5 years.

Are you able to produce original and differentiated content?

Is it appealing and useful?

Is it easily shareable?

When you produce this kind of content you attract interest and if you do it long enough, in a continuous manner, you´ll probably end up being an authority on what you write.

 

Look a Hubspot example: they´ve built a company out of the idea that sales harassment days are over. They´ve branded a widely known notion of “Inbound Marketing” and helped to start a digital revolution.

If you type “Content Marketing Strategy” or “Inbound Marketing” in a search engine, odds are you will likely find them very quickly.

How does this translates in to your business?

Imagine you own a glass door manufacturing business and that you sell directly.

Sometimes your customers are looking for what you do, not for you specifically because maybe they just don´t know you.

They can go to YouTube or to Google Images and simply write “glass door cabinet”.

They expect to find something useful and for you to be present at that conversation you need to create appealing content that can first position you company correctly, and that secondly passes the idea that you are an expert on what you do: glass doors!

You can do that with pictures, how-to articles, videos, infographics, and several other content types.

Got the picture?

 

4. Know & personalize as much as possible

Personalizing your message is key in 2016 but that´s only possible if you have actionable insights about your customers. Be sure to harvest key data from your customers were ever they may be.

There are 3 very simple things you can do:

  • Use AdWords Remarketing code on your website to get knowledge from your customers.
  • Use Facebook Retargeting code so you can later reengage with them throughout Facebook real estate.
  • Install good CRO (conversion rate optimization) software tools like Hotjar and Optimizely to understand your users paths inside your website, run experiences and personalize.

 

5. Video is Key

Stream video is taking marketing by storm. Video is not a soon-to-fade marketing trend. It´s an actual marketing tool that can powerfully leverage your online efforts and increase your reach and conversions.

Here are some statistics about video in 2015:

  • Online video accounts for more than 50% of all mobile traffic (1),
  • Videos on a landing page can increase conversions by 80% or more (2),
  • Almost one-third of all people on the internet are on YouTube (1 billion users), and they generate billions of views daily (3),
  • Watch time in YouTube has increased by +60% y/y in 2015,
  • 90% of users say that seeing a video about a product is helpful in their decision process,
  • Google reported that for TrueView (YouTube video ad format) campaigns completers (people that saw the ad at least for 30 sec) ad increase results in consideration (+45%), favorability (+14%) and purchase intent (+19%) (4),

Note: If you´re interested in up-to-date YouTube stats you can check Socialblade or Statista for more global stats.

Its undisputable that video (along with mobile) is changing the way we marketeers interact with our audiences.

 

 

This is of course my own opinion on the 5 best marketing strategies for 2016 but its true that it all depends on what you already have implemented on your business and your industry overall competitiveness, so I´m sure its always possible to squeeze in a few more strategies in. If you feel something is missing be sure to send me your opinion.

Direct vs Indirect Bookings – Yes or No and Why

direct vs intermediary bookings

In the travel industry, every time someone speaks about booking directly, you´re in for a good argument!

I have been in dozens of travel fairs, conferences and meetings and nothing fires up the room the most…

If you´re a hotel owner or manager, chances are you´re very pro direct bookings. On the other hand if you work for an intermediary, travel agency or tour operator, direct bookings are your worst enemy. After all, if 100% of the travel related bookings were direct, you´d be out of job, right?

In this argument, “we” from the travel industry business very often forget about the 3rd part in this equation: the customer!

 

Customer´s opinion on Direct vs Indirect Bookings

From a customer´s point of view, there´s no difference between booking directly or via 3rd parties. The difference lays somewhere else and can basically be summarized in 3 points:

  • Is it cheaper?
  • Is it safer?
  • Is it easier?

Let’s explain that a bit further:

Is it cheaper?

  • Is this the best deal I can find?
  • Are these the best conditions I can find? Refundable rates are way better than non-refundable rates on account of flexibility, and a rate including a free upgrade is always better than a normal rate even if price is the same between them.
  • Are there taxes, hidden fees or other non-accounted expenses I need to worry about?

 

Is it safer?

  • Will I get tons of spam after submitting my personal information?
  • What about credit card details? Is my credit card safe with them?
  • Are they established and well known or shady, obscure, without references?

 

Is it easier?

  • Is the information accessible in my native language?
  • Do they present rates in my local coin?
  • Can I easily access information to decide what/why to book?
  • Is it easy to book in just a few steps?
  • If something happens, will I have a hard time solving my problem(s)?

 

Being able to acceptably satisfying the answers above is what really matters to the end customer. Knowing if they´re booking directly your hotel, tour, cruise or holiday package isn’t the customer primal concern!

 

Why should you care from where your customer comes from?

The 3rd party side is self-explanatory: if people book everything directly you´re out of business! From the business owners the perspective is actually not very different.

The true is that more often than it should, indirect bookings threaten your business.

If you don´t take the appropriate time and effort to manage your finances and pay close attention to your bottom line, very often your CAC or Customer Acquisition Cost (commissions payed to an intermediary are exactly that) will rise very fast.

Take for example the hotel industry:

In Europe, where independent hotels have the majority of the market, it´s not uncommon to see intermediaries asking for as much has 30-35% on your gross sales.

This means that for every customer they send to your hotel or accommodation unit, they´ll charge you 30 to 35%! Basically they´re using a customer acquisition model to charge you for customers they thrown at your door.

 

Hotel industry has one of the highest customer acquisition costs across all regulated industries Worldwide

And in America – although hotel chains have a much higher market quota, 20-25% commissions are very usual. In fact, until recently, Expedia, a very well know Online Travel Agency, was known as “Mr. Quarter” in a clear allusion to they´re breathtaking 25% commission cost on gross rates.

Take that into account and the fact that lots of hotels have operating costs of 40-50% before EBITDA (Earnings Before Interests, Taxes, Depreciation and Amortization), and those 20 to 35% on commissions can hit you exactly where it hurts the most, on your bottom line / net earnings!

 

This sets the tone to answer the above question: Why should you care from where your customer comes from?

Answer: You should care because of its effect on your business. The more you pay to acquire a customer, the less your net earnings. The less your net earnings, the harder for you to pay better salaries, to improve your product / service quality and last but not least, your shareholders.

 

What about tomorrow?

Stop and think for a second. Can you say the customer is yours when:

  • He/she pays to another entity and not you?
  • He/she is enrolled is someone else’s loyalty program?
  • You don´t even have they´re complete personal information making it very hard to reach them directly?

Even grimmer than the sky rocket customer acquisition costs, is the possibility of entirely losing the contact with “your” customer.

A customer acquisition cost isn’t supposed to be a fixed charge every time a customer walks in your door. It´s exactly the opposite! When you acquire a customer and ponder on customer acquisition costs you should always consider it´s lifetime value.

 

Let’s run some numbers here:

Imagine that your direct marketing campaigns have a CAC of 20% every time they first pull a customer for. And just to simplify things, lets suppose that the average customer spending is 100€ every time he stays with you. And the average life time of your customer is 2 years (on purpose way below average), on which he repeats his stays three times a year.

This means that for the first time he stays with you, you´ll have 20€ of CAC (100€ * 20%). It´s unarguably high, but wait because it gets better.

Since on average your costumer life time is 2 years, and he repeats his stay three times a year, his simple lifetime customer value for your business his 580€ (table 1). Even if you attribute and additional average 6% of cost per booking due to operational costs (website costs, call center costs, etc…), you´re looking to a customer that is worth 544€ net out of 600€ gross values (table 2). The same customer via a 3rd party would cost you 20€ per booking, accounting for 120€ in commission, and a net worth of 480€ by the end of its lifetime value (table 3).

Table 1 – Simple Customer Lifetime Value

Direct Bookings– Simple Customer Lifetime Value 

Table 2 – Customer Lifetime Value with Operation Costs included

Direct Bookings – Customer Lifetime Value with Operation Costs included

Table 3 – Customer Lifetime Value via 3rd parties with 20% commission

Indirect Bookings – Customer Lifetime Value via 3rd parties with 20% commission

 

This very simple exercise means that on this example, per customer (and using a very scarce average customer lifetime in years), you´d get an extra +13,3% (+64€) if he booked directly with you and not via an OTA.

If you were to multiply this by 1.000 customers, it would be worth an extra +64.000€…well, you get the idea!

No wonder hotel chains such has Hilton Worldwide setup digital campaigns enticing the customer to book online directly with them and stop wandering around clicking in other websites (it´s fair to assume they´re aiming Expedia and Priceline group):

 

But the scariest part about this is that there is no way to calculate lifetime value with a 3rd party!

Remember that the customer is not directly engaged with you on the booking process. He / She is engaged with the travel agent or the tour operator and they can easily present them with different hotel choices at their will or interest.

 

Why should this also matter for the customer?

On a cold analysis, this normally wouldn’t matter for the end customer. They normally seek the best rates (searching rates online is easier then ever with Trivago, Kayak, TripAdvisor and others), and as long as they have confidence and easy access to book, it´s the business (in this example the Hotel) problem…right? NO!!!

If a business or industry is not profitable, guess what normally happens to rates? Sometimes they tend to go up and make up for the losses. Other times, business keep low rates but make up by laying off employees and/or delivering bad service and product…which eventually always reflects negatively on the end customer.

Even from a customer´s perspective, its better to have a healthy thriving industry.

 

Does this mean that there is no space for intermediate or indirect bookings?

No, there is. Most of the times 3rd parties thrive from the lack of experts on the business side. This is especially true and visible with the online business and is always evolving marketing approaches, but we´ll tackle that on another article. In the meantime you can read this article about increasing online sales.

 

Cheers,

Rui

 

Updated 18.02.2016