This month the CEOs from Priceline and Expedia attempted to dissuade hoteliers from efforts to drive direct bookings and in specific circumstances they may have a point; newly-opened hotels, for example, can get to break-even more quickly by focussing on OTA-led distribution in year one.
Direct relationships
Hospitality is a people business. Inserting third-parties between two humans is rarely the best way to improve communications or understanding. 18 months ago Booking.com announced that it would no longer pass guest details and email addresses to hotels. That kind of relationship-blocker reduces a hotel’s ability to know, understand and serve their customers.
Loyalty
It is far cheaper to encourage a repeat visit than it is to find a new customer. Loyalty is vital for hotels. The basic requirement for a post-stay relationship are guest contact details. These are far easier to gather during a direct booking than on-property. Furthermore, it is possible to supercharge a loyalty programme by adding additional guest information. This can be on-site behaviour gathered thanks to a direct booking.
Commissions
With hotels paying 15-25% of top-line revenue in commissions, high fees are sucking cash out of the industry. The costs hurt and reduce the amount hotels can invest on service improvements. This is usually the most-cited reason for hotel’s obsession with direct bookings. Personally I think some of the longer-term strategic issues above are even more important.
Source: http://www.4hoteliers.com/features/article/10090
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