I wonder know if you’ve noticed that Travel and tourism is back. We have finally returned to near pre-COVID levels and people are more than ever looking for experiences not things. There has never been a better time to drive direct bookings. Bookings from the OTA’s are nice but they are expensive
I know this digital marketing is often daunting. Many businesses have tried and not had success. Some operators are feel they are so busy just running the business they don’t have time for digital marketing.
The next step will be to identify gaps, isolate shortcuts and give you a roadmap to direct bookings!
This will include
- TARGET AUDIENCE CLARITY Let’s identify low-hanging fruit. This audience has changed so we’ll look at their behaviours when booking travel and tours.
- THE MARKET POTENTIAL How much business is actually avaialable for you.
- COMPETITIVE INSIGHTS What your competitors are doing and how to beat them
And, then, let’s pull it together to give you ROADMAP, ACTION PLAN and get those direct bookings rolloing in!
Introduction
This is not about tough times, global instability or even why you should digitise your business. We’ve all seen many of those posts. Also it seems that depending on where you are and what you are offering you might actually currently be getting good bookings already.
This is about a simple premise. Direct sales are good for your business. This is about why they are good and our framework for getting you more of these bookings.
“Direct bookings are the lifeblood of any tour operator’s revenue stream. By cutting out the middleman, we not only increase our profits, but we also gain valuable insights into our customers preferences and behaviors. It’s a win-win for both us and our customers.”
It’s simple. Hospitality businesses not getting the bulk of their sales through direct bookings have an opportunity to grow these sales and improve profits. They also have a chance to improve the customer experience and loyalty. Direct bookings are more profitable than bookings through an OTA. This document is about why they are more profitable and what you can do about increasing yours
Direct vs OTA.
OTA Profit
Sales through the OTA are expensive. Calculate the commission savings that your business can make by receiving direct bookings- instead of bookings through an OTA. The commission charged by an OTA can range from 10% to 30% of the total booking value. Depending on the OTA and the business negotiated
commission rate. For example, if an OTA charges a 20% commission and an operator receives a direct booking worth $500, the business would save $100 in commission fees.
Say an average tour operator could receive anywhere from 10 to 20 bookings per day. Assuming an average sale of $300 an operator might generate revenue of up to $6,000 per day. So if 60% of those booking are through an OTA at 20% Thats $720 per day or $21,600 per month in fees And it’s not about these costs! What do the costs of doing this yourself look like?
Acquisition Cost and Goals
- OTA costs are15-36% which includes OTA discounting and other layererd costs
- Direct 8 -12% which includes Adspend, Agency Fees, Booking Engine
Benefits of direct bookings vs OTA bookings:
- Direct: More profit and you build direct relationships with your customers. You have aownership of the customer.
- The OTA may often offer discounts on your products. You have no control over this pricing. Most of the time you have to pay your commission on the full price while only getting revenue for the discount. That is expensive. Also if the OTA is discounting your product it makes it difficult for you to get a direct sale. Once you have taken a booking through an OTA it can be hard if not impossible to ever get that customer to book directly with you.
Extra Revenue is the gold!
This is the heart of the direct bookings opportunity. What are the additional revenue opportunities that may be available for your tourism business that receive direct bookings? For example, tour operators
can offer upsell opportunities. Such as coupons for future purchases, loyalty incentives, additional food options, photo and video packages. By promoting these services and offering them only to direct bookers, operators can generate more revenue and increase their profits.
Customer Experience
Tour Operators can also enjoy increased brand exposure and customer loyalty when guests book directly. Direct bookings provide operators with a direct connection to their customers. This can help to build long-term relationships and encourage repeat business. This can lead to increased revenue and profits over time.
Loyalty Matters
Loyalty can have a significant impact on the revenue and profit of tour operators. Heres how loyalty can affect their financial performance:
- Repeat Business: Loyal customers are more likely to book multiple trips with the same tour operator. They trust the company’s services, have had positive experiences in the past, and are more inclined to choose them again for future trips. This repeat business leads to a steady revenue stream for tour operators.
- Higher Booking Frequency: Loyal customers tend to book more frequently compared to new customers. They may take advantage of exclusive offers, loyalty programs, or incentives provided by the tour operator.
- Increased booking frequency directly contributes to higher revenue and profits.
- Word-of-Mouth Referrals: Satisfied and loyal customers often recommend tour operators to their friends, family, and acquaintances. Positive word-of-mouth referrals can generate new customers at a lower acquisition cost compared to other marketing efforts. This can result in increased revenue and profits for the tour operator.
- Upselling and Cross-Selling Opportunities: Loyal customers are more
receptive to upselling and cross-selling offers. By understanding their
preferences and past behavior, tour operators can tailor personalized
recommendations and additional services to loyal customers, leading to
higher average transaction values and increased profits. - Cost Efficiency: Acquiring new customers typically involves higher marketing and advertising costs compared to retaining existing customers. Loyal customers require less marketing effort as they are already familiar with the brand and its offerings. By focusing on customer retention and loyalty, tour operators can save costs and allocate resources more efficiently, thereby improving profitability.
The problem – Are you ready to take direct bookings
The tour operators category is competitive. COVID accelerated a lot of change. This is particularity any business in the travel industry. For example: tour operators that were full of overseas travellers are now busy dealing with locals.
People have sophisticated appetites for digital services. There is nothing you can’t do online. Grandma can now organise a Zoom call. Airlines, aggregators and services like AirBNB have given the customer many options. We all have an ability to navigate complex journeys. Are youready?
How do you do this. Here is your blueprint
- Insight 1: Most clients miss out on the sales they should get. Too many people in travel and tourism don’t understand Google Business Profile,Meta search for Things to Do and Google maps. This gives an advantage to their competition. Every travel journey starts with search.
- Insight 2: OTAs and other aggregators take about 20% of the revenue. You have no control. You get what they want you to get. A simple change to their algorithm can mean your business misses a sale.
- Insight 3: When you get an OTA booking it’s not your customer it’s theirs. That means you are unlikely to ever see them again and if you do you pay the same cost for the booking. The OTAs have a sophisticated approach to holding on to their customers and this is always about them and not about you
The 3 part Playbook
- Defend: What are the areas you must defend? Your own brand is one. Google Business Profile and the Meta search provides extensive functionality for the travel industry and this feeds into Google maps. This is a popular way for travellers to find things to do. This is the cheapest and easiest customer because they are looking for exactly what you have. For example: get-on/get-off bus tour near me. According to a 2021 study by Google, 74% of travellers begin their travel booking process with a search engine. Additionally, the same study found that 68% of tour bookings are made online
- Attack: Take control of your marketing. Target and remarket the customers you want and need to meet your profit objectives. We know travel planning takes a long time and there is a lot of online activity. You need to make sure your brand is visible throughout this journey
- 0wn: You need to own the entire customer experience. Make the booking on your website the easiest experience. Building trust and rapport means you are likely to get the next sale. It might be old school but email marketing really works. but it works. You can optimise this pipeline of customers once you own the customer. We know it works because it’s how we make our customers successful.