Discounting is for Dummies – Part Two

PORTLAND, Oregon, 12 June 2018: Last week we decided that discounting is for dummies. Today, I’m going to share the second important takeaway: How hotels can boost direct bookings without discounting or adversely affecting their bottom lines.

So, let’s get started.

Close your eyes and think back to the last time that you were more than satisfied with a hospitality experience – be it at a restaurant or a hotel.

What made it such a positive experience for you? If you’re like most people, it’s because the establishment made you feel special, not like just another customer, or a number in a long line of bookings. They cared about you, personally, and wanted to show their appreciation for your business and, because of their attention to personal service, it stood out to you as a very positive, noteworthy experience.

That’s the feeling that guests want to have when they leave the hotel they’ve chosen for their trip.

In most cases, they’re not looking for the cheapest room, the most luxurious amenities or the hippest vibe; they want to be shown that they are a valued guest at your establishment – and the best way to do that is by offering additional value-adds if they book directly, to show them how much you appreciate their business and to lower your property’s cost of acquisition (by boosting direct bookings).

This isn’t a new strategy, by any means, but here’s the twist… Many properties offer value-adds, like airport transfers or free breakfasts, to encourage direct bookings; while these incentives do provide value to the guest and can often be enough for them to decide to book directly, it still means the property’s bottom line is suffering.

By offering airport transfer, the property still must pay for a bus or van to transport passengers to and from the airport and for fuel. By offering free breakfast, the property must still purchase the ingredients and pay the staff to cook and serve it to guests.

Luckily, it doesn’t have to be that way. I know that there is a happy middle ground, where hotels can incentivize guests to book directly without undermining their bottom line: by offering value-adds that cost the property nothing to implement, but which still have high perceived value to potential guests.

So, instead of offering a discount on the room, free airport transfer or a free breakfast, offer your guests a free room upgrade or complimentary early check-in or late check-out – both of which cost you zip, but which guests feel offer more value than a complimentary continental breakfast would.

Let’s look at those examples more closely…

Many hotels charge up to USD 25 for an early check-in or late check-out; by offering it as a free perk, most guests will be encouraged to book directly, just to get a few extra hours of sleep.

The same principle applies to a free room upgrade. All guests know that the bigger and more beautiful rooms, or the ones with a better view, have a much higher price-tag than the standard rooms, giving this perk huge perceived value for guests. Even though it costs you absolutely nothing (as the room is already sitting empty anyway), this value-add alone can make a significant impact on your direct booking conversion rates.

In terms of guest satisfaction, this shows us that perception really is reality. This type of value-added service will also make it more likely that the guest will book with your property on their next trip (more revenue!) – and it doesn’t undercut your profits.

Really, it just makes good business sense for all hotels to drive more direct bookings, without sacrificing their bottom line. By doing so, we’ll be able to send a strong message to our friends, the OTAs: “We love you guys, but we’re here to take back our share of the market – one no-cost incentive, at a time.”

Here’s a quick recap of the key takeaways so far:

  1. Discounting is a dumb strategy; don’t do it!
  2. Offer value-added services (to encourage direct bookings) that cost nothing for your property, but which have high perceived value to potential guests; they will feel appreciated and, as a result, are more likely to recommend your property to friends and give you a better rating, post-stay. It’s also a benefit for your property; you save money on OTA commissions and won’t need to give away the house to convert direct bookings.

About the Author
Mark Lewis-Brown, CEO and President of Vertical Booking USA, is a hotel industry veteran with more than 30 years of experience in the hospitality industry. At Vertical Booking, Mark is responsible for the commercial development of the company’s innovative CRS platform in North America

Mark Lewis-Brown, CEO and President of Vertical Booking USA

About Vertical Booking
Vertical Booking is a leading, global reservation technology provider with hotel clients in more than 108 countries worldwide, offering solutions translated into 29 different languages and usable in all currencies.

Vertical Bookings solutions eliminate manual reservations input, inventory tracking and are fully integrated using two-way XML connection, to ensure access to real-time reservation data.

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