How to disintermediate from OTAs: 4 basic strategies

The word "disintermediation" in the hotel and lodging industry refers to the strategy of reducing (or eliminating) the dependence on intermediaries to sell rooms.

The goal is to increase direct bookings, that is, reservations that are made through the website or other channels controlled directly by the hotel, and stop paying commissions on every reservation generated.

And here lies the issue. While commissions are charged by any intermediary (tour operators, travel agents, GDS, corporate contracts, etc.), those charged by OTAs such as Booking.com and Expedia take the lion's share, reaching between 15 percent and 30 percent of the revenue for each booking.

Are the fees charged by OTAs exaggerated? This has been an open question for years, and there is no one-size-fits-all answer. If you want to delve deeper to draw your own conclusions, we suggest this article, where you will find a list of the services offered by OTAs in exchange for commissions and a comparison with the costs a hotelier incurs for direct bookings.

What is certain is that OTAs have revolutionized the way travel is booked, offering enormous visibility to accommodations and making it easier for customers to find them. That is why completely disengaging from OTAs to achieve total disintermediation could prove to be a shortsighted choice, especially for small- to medium-sized hotels.

The goal should therefore be smart disintermediation, allowing hosts to capitalize on the visibility offered by large online portals to bring more and more customers to their direct channels and work on their retention.

So, disintermediation means breaking free, at least in part, from the tight conditions imposed by OTAs. But what are the actual benefits of disintermediation? Here are the 3 most important ones.

The immediate (and most desired) benefit of increasing direct bookings is to drastically reduce the commissions paid to OTAs, increasing the profit margin per booking.

To quantify this, we can take the example of a hotel that, in a month, receives 100 bookings of 3 nights, with an average price of €100 per night, for a total revenue of €30,000.

If 50% of these bookings are through OTAs with a 20% commission, the hotel will pay €3,000 per month in commissions.

By increasing direct bookings to 70%, commissions would be reduced to €1,200 per month, saving €1,800 per month.

But that's not all: by establishing a direct relationship with the customer, that hotel could create hotel packages tailored to the guest and adopt upselling and cross-selling strategies, resulting in a further increase in the value of the stay.

A lodging establishment that disintermediates exerts greater control over both its sales methods and its guests' stay experience. Here's how:

Rates and offers

The hotel has total freedom to set customized rates and promotions, without the restrictions imposed by OTAs. It can create special offers and customized packages to attract different types of customers.

Presentation of the facility

The hotel is not obliged to include photos and descriptions in a preset, one-size-fits-all scheme. It can decide how to present itself to users in the best possible way, consistent with its style and giving greater or lesser weight to the various features of the facility according to its needs.

Retention

Acquiring a direct customer gives the hotel the opportunity to build a closer relationship based on trust. This means improving what is called the "Life Time Value" of the guest, i.e., how much revenue that individual person will generate throughout their lifetime as a customer of that accommodation.

Through disintermediation, a hospitality establishment gains greater operational autonomy with regard to a number of activities that are critical to its long-term success.

Personalized marketing and branding

Disintermediation opens the door to highly customized marketing and branding strategies. Accommodations have the freedom to devise both online and offline campaigns targeting specific market segments. This ability is based on an in-depth knowledge of their customers, allowing them to build a distinctive and recognizable brand.

Direct communication

Direct contact with customers is one of the cornerstones of disintermediation. This proximity fosters the personalization of the entire stay, from booking to check out, allowing valuable immediate feedback to be gathered. It also facilitates customer loyalty and incentivizes direct sales of additional stays and services, creating a virtuous circle.

Data and reviews

Having full control over reservation data, sales statistics, customer contacts, and reviews left by guests enables optimized management of the facility. This direct control not only improves the ability to proactively respond to market needs, but also to refine strategies based on real, tangible information.

How can you disintermediate from OTAs to achieve all the benefits just listed? There is no single magic bullet, but a set of strategies to be implemented in synergy.

Below you will find the basic strategies that are indispensable to start disintermediating!

Let's start with the assumption that, nowadays, anyone can create a website. There are all types of solutions for all budgets, from the simplest and "homemade" to the most complex and designed by web design professionals.

If your goal is disintermediation, you cannot settle for a mediocre website.

Here are the minimum features you should budget for:

Simple and responsive

Your website should be easy and pleasant to use for all types of users, even those with little online experience.

Responsive means that your website should adapt to whatever device is used for browsing, from desktop computers to smartphones and tablets. This point may seem trivial to you, but remember that one of the reasons users choose OTAs is precisely because they are so easy to use.

Informative

Your website cannot be limited to a page with a few photos and a few descriptive lines. This is your space, and your main goal should be to enrich it with all the relevant information for the customer and to organize it in the best possible way so that it is easy to navigate. Give as much focus as you need to photos, and be sure to write accurate descriptions of the rooms, services offered, and rates. Finally, don't forget to devote space to top reviews from your guests.

Optimized for search engines

Your website should also be optimized for search engines according to the principles Search Engine Optimization (SEO). This will help it appear among the top search results, making it as visible as possible to potential customers looking for accommodation at your destination.

In addition to these basic aspects, a website designed with the goal of disintermediation in mind should include:

• A booking engine that allows users to book rooms and additional services quickly and easily.
• A secure payment system (usually linked to the booking engine, but not always) that ensures privacy and security of sensitive customer data.
• A blog with interesting articles about the destination, activities offered by the hotel, and relevant events in your area.
• A section dedicated to special offers and packages, always up-to-date and full of options.
• The possibility to subscribe to a newsletter to stay up-to-date with blog articles and hotel offers.

The choice of booking engine is key to encouraging and increasing direct bookings.

Think about the booking process offered by OTAs for a moment: how many steps do guests have to go through? How much time does it take? In both cases, the answer is "the bare minimum."

Which is why to incentivize the user to complete the booking directly on your website, it is essential to make the whole process as smooth as possible. In particular, pay attention to the following features:

Accessibility and ease of use

The booking engine must present an intuitive interface that allows easy navigation for anyone. A simplified booking procedure reduces the risk of abandonment during the process.

Inviolable data security

Protection of customers' personal and financial data is imperative. A booking engine complies with regulations on security practices to ensure that all transactions and sensitive information is handled with the utmost confidentiality and security. Currently, the European PSD2 directive is in effect, mandating Strong Customer Authentication (SCA) for all online transactions.

Versatility 

The booking engine must offer a full range of options, allowing customers to book not only rooms but also any additional services such as meals, spa treatments, transfers, and other experiences, thus enriching the overall offering.

Seamless integration with the website

The user experience offered by the booking engine must be consistent with the rest of the hotel's website. This implies a seamless visual and functional integration that facilitates the transition from the exploration phase to the booking phase, reinforcing brand identity and customer satisfaction.

Email marketing is a key pillar for amplifying a hotel's visibility, maintaining a constant dialogue with customers and increasing loyalty, which is proving to be decisive in the disintermediation process. To maximize the effectiveness of this tool, you need to design a communication campaign that integrates different types of messages, each with a specific objective:

Regular newsletters

These are regular communications to keep guests updated on the latest news, from special offers to upcoming events. They serve to increase engagement and strengthen the bond with the accommodation.

Personalized emails

These are targeted communications created based on individual preferences and booking history. This tailored approach not only improves customer satisfaction, but also increases the likelihood of conversion of proposed offers.

Post-stay communication

These are follow-up emails to thank guests after their stay, solicit feedback and reviews, and entice them to book again. This step closes the guest experience loop in a positive way and opens the door to future bookings.

The timeliness and quality of responses to customer emails (whether requesting quotes or general information) are crucial factors in converting each contact into a reservation.

Here are steps to optimize the handling of emails and quote requests:

→ Set maximum response times

Set a goal to respond within 24 hours or, if possible, within three hours for urgent requests.

→ Assign a manager

Identify a team member dedicated to handling emails and quote requests.

→ Leverage technology

Implement software to efficiently organize and track quote requests.

→ Personalize each response

Provide complete, accurate and relevant information to customer questions.

→ Offer different options

Always propose viable alternatives to the customer when dates are unavailable or rates are not within budget.

Disintermediating from OTAs is a challenging, but critical goal for any lodging establishment that wants to cap commissions and significantly increase its revenue.

In this article we looked at the basic strategies that are essential to get started. If you have already put them into practice, or if you want to take as comprehensive an approach as possible right away, we have prepared a guide with advanced strategies for disintermediating from OTAs with maximum effectiveness. Download it now!