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Hotels go direct to guests,save on agent commissions

SINGAPORE — Hotels in Singapore are stepping up efforts to book guests directly and cut down on commissions paid to online travel agents (OTA) even as the agents remain vital to the hospitality business.

SINGAPORE — Hotels in Singapore are stepping up efforts to book guests directly and cut down on commissions paid to online travel agents (OTA) even as the agents remain vital to the hospitality business.

Besides paring costs, direct bookings enable the hospitality chains to establish a stronger relationship with customers, as they personalise services aimed at client satisfaction and retention.

Traveller’s reviews on the websites of OTAs often have more impact than the hotels’ advertisements, but these agents charge commissions sometimes as high as 20 per cent. Some hotels also have special contracted rates for OTAs, who then re-sell the rooms at much higher rates.

“With the OTA’s ability to scale up much faster across markets, hotels soon realised the squeeze-and-win strategy of the several booking agents.

“While the hotel rooms were being booked cheap, the guests would have paid higher rates, and accordingly, had superior service standard expectations. OTAs were making a killing on both sides,” said Mr Akshay Kulkarni, director at CBRE Hotels Asia-Pacific.

This mismatch widened the rift between hotels and the OTAs, prompting major chains to take control over their reservations, he added.

“Hotels are now working harder at reclaiming distribution channels and investing additional resources to drive more bookings on owned channels,” said Ms Charis Choi, director of sales & marketing at Grand Hyatt Singapore.

Direct bookings make hotel operations more efficient by increasing the overall speed of completing a booking and reducing the risk of transaction failures, she added.

Mr Patrick Fiat, general manager of Royal Plaza on Scotts, said: “The hotel forges direct and long-term relationships with guests. Guest profiles are created and built, so hotel staff can create emotional connections and personalised experiences that begin from the point of booking to the point of departure.”

Booking direct, according to the hotel chains, also allows the guest to have complete control over their reservations as they are able to modify travel plans at their convenience. Most hotels now offer direct booking with incentives such as free cancellations as well as web check-in and express checkouts.

Hospitality majors like Grand Hyatt offer schemes such as the “Best Rate Guarantee”. Under this scheme, if guests find a lower published rate on another site, the hotel will not only match it but will give 20 per cent off the entire stay. Royal Plaza on Scotts incentivises direct bookings with subscriber discounts as well as add-on benefits and loyalty points.

Despite the push to attract more direct bookings, hotels acknowledge that OTAs remain key to their business models.

“Because today, we can’t advertise ourselves to prosperity. Because if we say we give good service and our hotel is nice, if that’s the advertising message, that is applicable to every competitor. There is no competitor that doesn’t provide good service, and everybody has a parity product, more or less,” said Far East Hospitality chief executive Arthur Kiong.

“So how important is TripAdvisor in our business? It is everything. It is a reflection of what the market wants. People believe more in reviews and in third-party opinions rather than what the establishments say about themselves,” he added.

Meanwhile, the OTAs say they offer more than just travellers’ reviews of the hotels, as they push back with strategies to make up for the loss in revenue with hotels going direct.

“Reviews are certainly one area that are extremely impactful for hotels, but there are many others such as providing rich content including images and detailed hotel descriptions. We are constantly innovating and evolving our product, as we know users want more and more information beyond just price,” said Mr Paul Whiteway, commercial director-Asia at Skyscanner.

The OTAs are now introducing new products such as instant booking, where the consumer can make a direct booking while on the OTA site without being redirected to the hotel or airlines websites. While Tripadvisor has this facility for hotels, Skyscanner has introduced it for airline bookings.

Mr Brian Schmidt, global vice-president for sales at TripAdvisor said: “The reviews are the reason why travellers come back to us as they find us to be unbiased. This was a big change for hotels. It helps hotels understand and manage consumer expectations and what is being said about their properties.

“We have also seen growth in advertising on TripAdvisor. We don’t see anything wrong in the book direct campaigns of hotels. We actually enable it and we are fully aligned with that.”

As hotels and OTAs strive to provide a top quality user experience, the clear winner is the consumer who stands to get the best deal as he or she plans trips, compares prices and quality of offerings before booking the accommodation.

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