How Direct Bookings Help Your Bottom Line
As a tour or activity operator, you are no doubt familiar with online travel agencies (OTAs). Partnering with OTAs can help your business fill more availabilities and expand your audience. However, OTAs are not right for every business and in all instances, and in some cases you can better capture your full earning potential by shifting your business away from OTAs and toward direct bookings.
If you are interested in learning more about partnering with an OTA, we recommend reading our guide to determining if OTAs and third-party resellers are right for your business. On the flip side, this guide covers the benefits of direct bookings, important considerations to keep in mind, and how to strike the right balance between OTAs and direct bookings to fill your tours and activities.
Why Direct Bookings?
Benefits For Tour Operators And Customers
Direct online bookings offer significant value to both the business and the customer, allowing the tour operator time to plan ahead and bring in more revenue, and giving the customer a chance to interact with your website and get to know more about your business. Online bookings generally require customers to book ahead of time (about 15 days in advance), so you’ll have time to prepare for the experience.
By visiting your website rather than learning about your business on a third-party site, potential customers have a greater opportunity to understand what you do and who you are. Watching your videos and reading your Blog or About Us page personalizes your business and better incentivizes guests to make a booking as opposed to the brief information they would find about your business on an OTA.
The State Of OTAs In 2020
As the entire travel industry adapts to the changes brought on by the coronavirus pandemic, the state of OTAs is less certain, and direct online bookings offer additional benefits as it relates to operational stability and control. In response to the crisis, some OTAs have been unable to provide timely refunds and arrange re-booking, while others have experienced layoffs that may affect their ability to support their customers.
Your customers are much more likely to have a pleasant experience when they can easily rebook their tour or activity or get a faster refund directly from your business. With FareHarbor’s Refund Reserve, you can expedite refunds back to your customer, reduce your manual efforts, and ensure a more positive experience for your guests.
Shifting toward direct bookings also encourages people to buy locally. In response to the pandemic, consumers are paying more attention than ever before to supporting local businesses. The shop local trend has been gaining popularity for many years, particularly during the holidays, and the COVID-19 response has reinforced this trend. Online booking systems on your website take advantage of this trend.
Higher Profit Margins
One of the primary reasons to promote direct bookings is that these bookings usually offer the highest profit margin since OTA bookings follow a commission structure. You can incentivize people to book through your website by offering promotions or discounts. Offering a discount may seem counterintuitive to increasing your profit margins, but it is all relative. Consider this: if the amount of a discount offered directly through your website – say 5%-10% – is less than the commission an OTA would charge you for that same booking, you’re still coming out on top! The customer saves money and you make more money – it’s a win-win. Bonus: encouraging people to book in advance on your website is safer than booking in person during the pandemic, and a small discount incentive will help nudge those online bookings along.
Gain Valuable Business Insights
Tracking and understanding your bookings arms operators with valuable information about your customers and your website. The Dashboard analytics and reporting options available through FareHarbor provide an operational advantage – by focusing your efforts on direct bookings through FareHarbor, you can determine whether you need to make changes to your website, SEO strategy, or other aspects of your business to boost bookings.
Finding a Balance Between Direct Bookings & OTAs
Shifting toward a direct booking strategy doesn’t mean you have to give up OTAs altogether, especially if they’ve helped you fill availabilities and given you more time to run your business. For a successful partnership with third-party resellers, it’s all about finding a balance.
Pro tip: Third-party resellers should drive around 20 to 30% of your online revenue, while the rest should be come from direct bookings.
When it comes to striking a balance, don’t put all of your eggs in one OTA basket. Particularly during the pandemic, partnering with smaller, regional OTAs or the FareHarbor Distribution Network may be more beneficial than doing business with larger companies. As a rule of thumb, you should only open up more availabilities through OTAs if you are having trouble filling all of your time slots directly.
Pro tip: If you are experiencing lower volume due to COVID-19 your current booking numbers may not be an accurate representation of your business. Take a look at how full your tours or activities were before the pandemic and use that information to help guide your decision-making when considering whether to work with an OTA.
If the idea of working with a third-party reseller is appealing but you don’t want to fully commit, consider offering tour availability on Reserve with Google (RwG), a service that allows people to book a tour or activity right from the search engine.
Reserve With Google is free to use and the process to connect it to your FareHarbor Dashboard is simple. The ability to book with Google increases the trustworthiness of your business because Google is well-known and established – plus potential bookers can read reviews and see important business information before booking through your Google My Business profile. Don’t have a GMB profile yet? Set one up right now!
The decision to focus on direct bookings or partner with third-party resellers comes down to the individual needs of your business. When making this decision, make sure to research the OTA you’re considering partnering with and have a solid understanding of their policies and commission fees. You can better emphasize direct bookings by optimizing your website and Dashboard and offering discounts to incentivize bookers. Browse our websites guides to take advantage of your best selling tool — your online presence.