Conversion speaks louder than cost

27/06/16

For the last 20 years Pmweb has been creating solutions to provide the hoteliers input to take the leading role in direct sells and guest relationship, since it is the essence of our virtuous cycle of direct digital distribution. A few days ago we showed that the concept of rate parity is changing: now it is necessary to think about price under the guest’s point of view, offering them a rate shaped to their profile as a consumer. We are talking about individual pricing. And of course, it doesn’t come free of cost. But those who only see cost do not see conversion.

Revenue x Profit

Intermediated bookings mean revenue while direct bookings mean profit. The cost of an apartment is the same regardless of the guest’s method of reservation. Direct booking is the beginning of the contact experience with the brand, it’s pleasant for the traveler and also makes them clients of the hotel – instead of OTA’s. And what is the cost of direct booking? Let’s see.

distribuição-direta-digital

Among so many prices charged and products delivered, which would be the appropriate fee? Or rather, how much do the intermediaries charge?

They charge big, that’s a fact. We know of thir importance and scope that operators and online agencies have on the market – and we are not against them. In addition to the revenue they bring, intermediaries have a good range for contact base expansion. After the base acquisition, make sure that from the second purchase on the reservation is made directly in your own sales channel.

On average, OTA’s cost three times more than reservation via direct booking engine. Let’s take the 5% fee per booking that Pmweb charges with the Let’s Book, our new platform of direct bookings. What your hotel pays  for a guest to an OTA is the same as three different people booking on your site. A hotel that is totally dependent on such a high commission is bounded to work for others.

Thus, the appropriate fee is one that will bring the best ROI.

Let us leave aside the cost and think about conversion

Your hotel website, more than an online showcase, is a conversion funnel. A number of N users enter X of them leave as guests. The cost of attracting someone to your page is the same for both an engine that charges a 5% fee as for an engine that charges R$ 9. So what’s the difference? The conversion rate and the experience. The same acquisition cost brings different profits and ROIs when the conversion rate is higher.

Let’s Book is the solution to work on the singular offer focused on the level of the customer-hotel relationship. It is the first booking engine in the market that allows individual pricing. This technique develops loyalty and inaugurates the era of breach of rate parity, combating excessive dependence on OTA’s.

We saw in our previous article on rate parity that networks like Marriott, Grand Wynn Las Vegas and others are creating member rates in which the program participant is treated as a partner, a member of a community, ensuring them a number of benefits and most importantly the lower price. The lesson here is: acknowledge the guest and sale for the price you want to sell.

Cost x value

The difference between cost and value in a reservation can be perceived in many points we raised: the experience of contact with the brand; the getting the hotel service and the traveler closer before he even stays on the property; the ability to continue the conversation after check-out. And this is only possible if hotels take the leading role in their distribution, focusing on direct channels. The 5% fee on direct booking comes back to you, unlike a guest who had a bad experience.

So, does your brand sees cost or sees conversion?

 

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