How to take advantage of OTAs and CRM to increase your direct sales?

How to take advantage of OTAs and CRM to increase your direct sales?

How to take advantage of OTAs and CRM to increase your direct sales?

There was a time before the advent of the internet when the only way to book a hotel or a tourist activity was to book on the spot, to book by phone after doing some research, to go through the local tourist office or a travel agency. Today, these have evolved into so-called OTAs (online travel agencies: Booking, Hotels.com, Viator, Musement, Get Your Guide, Expedia etc.). In recent years, they have become increasingly important.

Indeed, according to a study commissioned by the well-known travel booking site Booking.com and conducted by EY Parthenon in 2021According to the European Commission, the market share of OTAs for bookings in medium and small sized accommodation in Europe is 40%! But what does this percentage mean? What impact does it have on direct sales? What are the benefits of using CDP ? How can you improve your knowledge of your potential customers when a large proportion of them go through an intermediary at the expense of direct sales? This is what we will discuss in this article.

  • OTAs are becoming increasingly important...
  • ... and boost direct sales
  • Pandemic shakes up booking habits
  • How to increase direct sales through CDP
  • The final word

OTAs are becoming increasingly important...

As we quickly touched on above, the internet has revolutionised the tourism industry. It is now possible to book a hotel room in Mexico or a boat trip in Thailand with a few clicks. The large OTAs have become aggregators of sorts, making it easier to find and plan trips. Accessibility and diversity of offers are the strength of OTAs, and they meet identified standards that reassure customers. As a result, they have become the dominant channel generating 40% of accommodation bookings in Europe. By comparison, direct physical sales represent 23% and direct online sales 19%. The current trend illustrates the power of OTAs as well as the decline of physical channels (OTAs +7.1%, direct online sales +4%, direct physical sales -2.6% between 2016-19)
Breakdown of accommodation sales by channel
Breakdown of accommodation sales in Europe by marketing channel
Evolution of accommodation sales volumes in Europe by marketing channel

Thanks to the significant traffic generated on their online platforms, OTAs are more easily able to target potential customers outside the traditional catchment areas of destinations and activities (around 70% of customers go through OTAs). This is particularly true for international customers who are attracted and trusted by the reputation of OTAs recognised abroad (Booking, Expedia, etc.). As a result, many destinations and leisure activities entrust a significant part of their marketing to these new travel kings. The model is simple, the referencing on the reservation platform is done in exchange for a commission to be paid for each sale made. However, the accommodations remain autonomous in their choice of available capacity and price. This leaves them in control of the distribution of their offer on the different channels.

... and boost direct sales

OTAs are making leisure and travel easier and more accessible, and in doing so, are driving the industry. A study by Oxford Economics estimates that they generate about 5% more sales in the total market. This proportion is even higher for small and medium-sized players (between +20 and +30%). This creates an inertia effect which has an impact on the volume of sales from other channels. Thanks to their marketing power (billboard effect), some players even consider that the commission charged on each sale corresponds to the visibility provided.

The infinite choice of destinations and activities generates a lot of traffic and the platforms can be compared to search engines in the world of tourism bookings. Some visitors use OTAs as comparison sites during their research and then book directly. This is less straightforward than using online platforms, but booking directly has its advantages such as access to lower prices and more flexible refund conditions. The classic approach of tourists is to identify a destination and then make a list of accommodation and activities that interest them. Comments and ratings left by recent visitors help to sort out the list and once the choice is made, a quick search will find a direct contact with the accommodation or activity. OTAs do not earn commission on these additional sales, but it is the listing on their platform that drives them. The Oxford Economics study indicates that these booking behaviours represent 18% of the total market. OTAs are therefore responsible for 58% of bookings (40% through their platforms and 18% through direct sales). If you do the maths, adding "incremental bookings" lowers the commission rate paid by independents from 17% to 13%.

Proportion of accommodation sales influenced by OTAs

Pandemic shakes up booking habits

Despite these "benefits" brought by OTAs, one could fear an evolution where it would become impossible to exist without going through them. However, the last 2 years have changed things a bit. Indeed, the pandemic has reshuffled the deck. Uncertainty about health measures has pushed tourists to travel locally and through direct booking channels. The study "Changing Traveller Report 2021SiteMinder's "Changing Traveller Report 2021" indicates that 40% of French travellers plan to book their next trip directly and only 20% via OTAs. This is a 10 point drop from 2020 for OTAs. Several factors explain this trend:

  • Travellers need reassurance and security, and they shun intermediaries: going through a direct channel allows easy and transparent access to key information such as opening conditions, gauges in place, specialised customer service, etc. It also allows direct interaction with the organiser if after-sales service is required. It also allows for direct interaction with the organiser in the event of a service need.
  • By choosing local destinations, going through an OTA makes less sense for the tourist: simpler bookings, known players, local transport, no language or currency barriers...
  • OTAs have drastically reduced their marketing expenses: the visibility of their offers is therefore lower.
  • The tourism and leisure sector has greatly improved its digital offers and digital equipement: online sales, showcase websites, etc.

How to increase direct sales through CDP

Now is the time to capitalise on this trend. Reducing your dependence on resellers and distributors such as OTAs is a challenge, but it is possible to increase your own sales by improving your digital expertise and enhancing the value of direct sales for your customers.

The first step is to have a well-referenced website (SEO) with a good user experience (UX) and a well-filled Google My Business page. This will make it easy for your prospects to find you, and fuel your customer acquisition.

The next step is to create a relationship with your prospects and customers. To do this, you can invest in a CRM (customer relationship management) tool, which will allow you to collect and organise all the data you have on your contacts. Thanks to CRM, you will have a centralised view of each customer: their location, nationality, personal information (surname, first name, sex, age, etc.) but also their preferences, type of customer, behaviour and purchases.
Thanks to this data, it becomes easy to propose to your customers a dialogue and a personalised offer, adapted to their needs.

How can you collect all this information? Simply connect your CRM to all the contact points with your prospects/customers: newsletter registration, request for information, quotation, reservation, comment on a digital guestbook, participation in contests, conversation with a bot or an agent, etc.

Once this information is centralised on a platform CRM, it is time for segmentation! Depending on your business objectives, you can use what you know about your contacts to send them targeted communications. For example, highlight your off-peak periods to prospects without children, or push a more premium offer to your comfort-conscious visitors.

To summarise, a CRM allows you to:

  • Take back full control of your data and your relationship with your customers and prospects
  • Better understand your contacts and tailor communications and experiences accordingly.
  • Implement higher-level personalisation strategies to increase likelihood of purchase and customer loyalty
  • Strengthen your brand reputation, clarify your value proposition and streamline the customer experience

The final word

The complementarity between direct sales and OTAs remains a fine balance.
OTAs make leisure and travel accessible and grow the market. Thanks to them, your destination benefits from a better visibility among targets that are difficult to reach. On the other hand, it is better to gather the visitor data once they have been won over in order to gain independence and remain in control of your offers and communications. To keep some room for manoeuvre, take the turn of digital communication by personalising your communications: control your data!

At Arenametrix, we promote commercial and marketing disintermediation.
We want to give back to the tourism and leisure industry the sovereignty of their data. To achieve this, we have built a tool that is fully adapted to your needs and interfaced with a large number of different data sources. Our team of experts is also dedicated to helping you with your acquisition and loyalty strategy.

Sophia Baladi

Sophia Baladi

Would you like to carry out a data & CDP diagnosis of your organisation? Take advantage of 30 minutes of free consulting by reserving your slot.

Visual Solene crop

Solène Jimenez

Would you like to carry out a data & CDP diagnosis of your organisation? Take advantage of 30 minutes of free consulting by reserving your slot.

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