The Billboard effect: How to harness the power of OTAs

A billboard is a large advertisement, often seen at a roadside, which conveys a simple overview of a product or service which will attract the attention of the maximum number of people in the shortest possible time. The ‘Billboard Effect' is a term coined specifically for the hospitality industry in a 2009 Cornell University (USA) study. Using data from Expedia, the study concluded that when a would-be guest gains information about a hotel from its OTA listing, but then books the room through a channel controlled by the hotel, ‘the incremental reservations from listing on Expedia (not including the reservations actually made at Expedia) are 7.5% to 26%.’ In other words, prospective guests search for their hotel of choice through OTAs, but then often switch to directly contacting a hotel once they are close to making their decision about where to stay. This is what we call a  billboard effect. Let’s take a look at how hotels can leverage this for increased engagement with guests, and improved profitability.

The benefits of the Billboard effect

Most Online Travel Agents have a huge reach which is far beyond what individual hotels or smaller chains could ever hope for. It’s as if the OTAs have a billboard on every highway, in every country across the world. Guests will go there first to check out what’s available in their chosen destination, and for their planned itinerary. Once on an OTA site, there are filters available such as price, facilities, and location which rapidly narrow down the vast choice. A relatively quick sweep of an OTA site can soon produce a shortlist, and from knowing nothing about your hotel, the guest now knows the name and reputation of the hotel, and some of the most important parameters of your offering. In fact 65% of OTA viewers will at this stage start to check out the websites of their shortlisted hotels, and according to a further Cornell University study from 2017, of guests who will make a direct booking, 30% start their research through an OTA. 

The evidence is compelling: Many guests trust the OTAs for their initial search, but then switch to direct contact with their shortlisted hotels, and stay with that direct connection. It’s the job of hoteliers and management to then keep the guest connected to the hotel website, and to make their booking directly.

The OTAs’ reach is mitigated by their costs

It’s clear that hotels can benefit hugely from the billboard effect, reaching guests that might otherwise never discover their existence. The downside is that such widespread market awareness doesn’t come free. OTAs charge hotels commission on bookings, either as a standing charge, or as a percentage of the booking costs, with these charges ranging from 10% to 30%, depending on multiple factors. That’s a lot of revenue to give away, so it’s far better to be seen on the OTA billboard, but then handle the whole guest transaction within the hotel’s own website. In the early days of the OTAs, this simply wasn’t possible for most hotels, however there are now many sophisticated tools that enable hotels to operate every bit as smoothly as the OTAs. Rather than a continuous drip-drip of revenues going to the OTAs, direct booking to the hotel is now easy for guests, and super-functional for hotels.

• The primary advantage of being listed on OTA sites is the vast increase in visibility of a property.
  
  
• Handled correctly, when converted into direct bookings, this visibility boosts the bottom line of hotels, cutting out OTA charges, and opening the way for special offers directly to the guest. 

OTAs are not one site fits all

It would therefore seem logical that a hotel should list on as many OTA sites as possible to provide greater visibility. This is not necessarily the right viewpoint. Broadly speaking there are three types of OTA: 

• The giant global brands with huge reach (but correspondingly high commissions)
• More regional OTAs which deal with a specific country, or even an area of that country, which is great if that’s your hotel’s fit
• Smaller specialised OTAs which cater to more niche markets 

If you can find an OTA in this category which is tailored to the guest profiles you wish to encourage, then it’s well worth cultivating a relationship. It’s important to recognise that your profile and the OTA’s profile match - an OTA that is a niche ‘island getaway’ site won’t be so useful if your hotel is predicated on city breaks!

The message, as in all marketing activities, is to know your audience. The OTAs are not one size fits all, and neither is your business. The better you understand who your primary audience is, the better you will be able to appeal to their needs, and this includes selecting which OTA channels best support your goals. 

So is it good to ‘cover all the bases’ by registering with as many OTAs as possible? No: be selective and match the profiles of OTAs with your own business strategy.

Persuading guests to view, then stay on your website

When registering with any OTA, it’s up to you to provide clear, attractive details of your hotel in a concise way, which matches the style and guidelines of that particular OTA site. Different OTAs have different requirements and formatting, so you can’t simply provide standard details to all of them. Having satisfied the needs of the OTA, you are now set on driving potential guests to your own website, and when they arrive, keeping them there. Here are some actions to ensure guests ‘stick’ with you:

• A clean clear website: Great images, excellent and simple copywriting that gets your message across in a short time and tells the guest what your core offering is.
• A strong reputation: Hotels live on their great reputation, and what your hotel stands for is crucial. Is your reputation built on ‘luxury’, ‘family values’, ‘history’, or a host of other qualities? And here’s a crucial point: It’s not what you say that establishes your reputation, it’s what guests say.
• Curate your reviews: Your reputation is maintained and enhanced by establishing a real dialogue with guests and encouraging reviews on social media, your own website, and on the OTA sites. This is an ongoing process which must be continuously refreshed. Actively look for what guests are saying about your hotel and use ‘positive’ reviews to bolster your reputation. And if there are occasional ‘negative’ comments, deal with them in a direct and professional way.
• Offer attractive rates: With the potential guest engaged by your great website, good reputation and excellent reviews, now comes the crucial point where you really do not want them to return to the OTA site to make their booking. Do this by making special offers and deals (which can be done automatically using modern software solutions). These can be a room upgrade, a meal offer, or discounts on some special activity. There is always something that can be done to make booking directly more attractive than having the guest return to the OTA. And remember, if they do go back to the OTA, you’ll be paying a hefty commission, so why not offer a proportion of that as a discount to the guest for direct booking?

The personal approach

Personalisation has become a big trend in the hospitality industry in recent years, and no guest wants a ‘cookie cutter’ experience. The more personally tailored your offering is, the better. This can begin automatically from first contact with the guests where a chatbot can be available in the language chosen by the guest, to answer FAQs, and guide them towards booking. A chatbot can also prompt upgrades and upsells, and will steer the guest towards payment, through safe and secure direct payment channels.

After the reservation is made, automated processes send out confirmation emails (or other messaging), which re-assure the guest that all is well, and allow them to correct any information they may have inadvertently mis-entered.

Leveraging the Billboard effect

The benefits of the billboard effect should be clear: A third party (an OTA) does the ‘heavy lifting’ in terms of spreading the word far and wide about your hotel. You then complete the process by ensuring that guests book directly through your website. Many advantages accrue by using the OTA ecosystem and leveraging the billboard effect:

• Vastly increased exposure and a greater ‘footprint’ where your hotel can be easily found from anywhere in the world through OTA websites.
• Increased credibility and trust derived from association with OTAs and reviews within their ecosystem, helping to increase the appreciation of your hotel’s reputation on social media.
• The avoidance of often high OTA fees or commissions, which therefore helps boost the bottom line of your hotel.
• Better access and clearer understanding of the data around bookings, and knowing your customer. Frequently, OTAs preserve a large amount of guest information in their own systems. When such information is available though your website, in your own modern Property Management System, a wealth of data is available which will tell you more about guest needs and wants, and how to better manage your revenue streams.
• This data mining shows not just spending patterns but also what guests spend on, and which deals and offers are most effective. Studying the data means a constant refining of what you offer to guests, and enables you to do more of what works well.

We help you leverage the Billboard effect

For over eleven years we have been helping hotels operate more efficiently and at greater profitability with our cloud-based Property Management System, and a complete suite of added applications. We are SabeeApp and we’re dedicated to helping hotels of all sizes, worldwide to become more efficient and successful. Our software enables hotels of any size to achieve the same levels of efficiency and responsiveness as the OTAs have enjoyed for several decades. Now that tide has well and truly turned, as everything that can be achieved through Online Travel Agent channels can be accomplished with SabeeApp, within your own organisation:

• Direct engagement with the guest through your own website, linked to services such as a multilingual chatbot, creating the ability to answer numerous FAQs.
• The ability to book directly with the system, allowing the guest to enter all vital information (therefore avoiding issues of incorrectly entered data on the part of hotel staff).
• The ability to receive direct payment through a secure payment gateway (avoiding OTA fees or commission.
• The opportunity to operate Dynamic Pricing strategies, similar to that offered by the OTAs, making your response to market forces swift and accurate.
• Upsells, offers and deals can be tailored to increase profitability.
• Our software means that the data about guest needs and wants is available to you rather than being kept in the OTA systems. Understanding what drives guest behaviour gives added value to your offering.

Succeeding with the hybrid approach 

While the OTA ecosystem revolutionised how hotels attract guests and conduct business, creating growth and establishing trust, the landscape has evolved significantly over the past decade. Today, hotels have access to tons of solutions and opportunities that empower them to attract guests and drive direct bookings through their own websites. It’s crucial for hotels to leverage these advancements to maximize their profitability and foster direct relationships with their guests.

There’s still one massive advantage to the OTA system however: The billboard effect, and by utilising it hotels can enhance their visibility, build credibility, and increase direct bookings, leading to higher profitability and enhanced customer relations. This hybrid approach must be the way forward - to establish a relationship with selected OTAs to leverage the billboard effect, while employing seamless software solutions to do everything that was once only the province of the OTAs. SabeeApp can help with that, and you can arrange a free no-obligation demo with us right now.