by Seth BUTERA June 18, 2021
We always talk in terms of share or weight of sales and less so in terms of absolute values, even if some channels have been registering record absolute figures over the last few weeks of strong recovery.
The most affected channels are traditional tour operators and travel agents, which are heavily impacted despite operating in the leisure segment
On the other hand, online channels are generally responding much better. An unprecedented shift of share from offline to online for many.
Few would dispute that, in the long term (two years onwards), much will return to normal in terms of both segmentation and source markets.
But it also seems clear, however, much of this turnaround is here to stay, even if it doesn’t please everyone.
It’s hard to believe that travel agency or tour operator sales will return to their pre-COVID levels or that corporate sales will recover in the same format and with the figures they had just two years ago. So many things have changed for good.
Why is this happening? Was this intentional on the part of hotels or is it a consequence of the situation?
Why direct sales perform better than the rest
Many reasons have led to this situation and each hotel will be able to identify with some but maybe not all of these reasons.
1. Customers are looking for accurate hotel information.
Given the situation of such uncertainty, customers are making an effort to look for information at its source, and what better way to do this than on the hotel’s website.
We don’t trust what an online travel agency says because it might not be updated and we don’t trust the latest review on TripAdvisor because it’s probably no longer valid.
The hotels that have gained the most from this change are those that have taken great care of their direct website and telephone channel in terms of communicating COVID protocols, opening dates of the hotel or common areas, as well as identifying which services are available and which are not. An effort that has been rewarded.
2. More domestic and even local customers.
3. Greater agility of online channels to reactivate quickly.
Opening an extranet takes a matter of minutes, while reactivating a tour operator, travel agency or even wholesaler always takes much longer, especially for short-term sales.
Reactivating flight operations requires sustained demand over time, something that has not happened until very recently and is still very timid. Staff returning from temporary lay-offs or investments in marketing to stimulate demand are actions that also take time.
For this reason, customers were often only able to book hotels online and, for the most dynamic hotels, moving to direct sales was not a difficult challenge.
4. Internet as an escape route from continuous confinement.
We’ve spent months locked up at home, with very few outings. The internet and mobile devices, in particular, have been our travel companions for long periods.
For many months, the only way to book a trip was online. This has helped many to lose the fear of booking and buying online.
5. Lack of group, MICE and corporate segments.
As we noted earlier, for many hotels there are key segments that are still experiencing tough times.
This means that all those resources that are normally reserved have been made available for leisure and online as a lifeline. An unintended consequence for other hotels, however, is that they are now competing with these hotels based on price.
6. Loyalty has its rewards.
Those hotels that had identified and nurtured loyal customers were able to lean on them to start their recovery and generate those first few bookings without the need to turn to OTAs.
What could be a better way to return to normality for many customers than to go to a hotel they already know? This again demonstrates the strategic importance of loyalty.
7. Bad experiences with intermediation during the pandemic.
Although there are many different stories out there, it is rare to find someone who has not had serious difficulties managing a non-refundable airline ticket or hotel reservation.
Many hotels disappeared and never responded, but those who turned to their customers and their direct sales made a lot of headway for the reactivation of the sale.
8. Better conditions on websites than OTAs.
Although many hotels, including almost all major hotel companies, already offered better conditions on their direct channel than online travel agencies.
Those that are maintaining this strategy, combined with an increase in visits to their websites, has had a multiplier effect, achieving great results for direct sales.
Although direct sales had been gaining ground every year, the pandemic has created a before and after for many and, instead of being just another channel, direct sales has become a strategic asset that should be cared for and promoted.
Of course, many of the variables that have led to this growth will gradually change and return to normality.
To think that this will last forever is naive. But it would also be naive to assume that everything will return to the way it was before.
Many of the changes that have occurred over the last 16 months will no longer be circumstantial but structural, offering a great opportunity for hotels to consolidate and further enhance their direct channel strategy.
Remember that direct is not a goal in itself and no hotel can survive on direct sales alone.
What is important for any hotel is to maximize profitability and create a sustainable model without having to depend on an intermediary.
In the search for this balance, it is clear that direct selling has, and will have an even more fundamental role from now on.