“The cost of acquisition should become one of the main benchmarks for the health of your hotel’s distribution and revenue management practices. Is the direct channel cheaper than the OTAs?
We tracked the cost of direct online distribution over the course of 20 years across our 5,000+ primarily independent hotel clients. You know what? The average cost has stayed consistently in the range of 4.25% – 4.5%, including website cost amortized over 36 months, website maintenance, hosting, analytics, digital marketing (Content Marketing, SEO, metasearch, online media, social media, email marketing, CRM marketing, omnichannel marketing campaigns, etc.), consulting fees. Compare this to OTA commissions of 18%-25% plus increased visibility commission add-ons, OTA loyalty member discounts, etc.
The caveat? You have to invest adequately in digital marketing and technology and maintain a very comprehensive, year-round digital strategy, not just embark on occasional, one-off initiatives. Your digital marketing strategy has to aim to engage, acquire and retain travel consumers throughout the Digital Customer Journey and its five phases: Dreaming, Planning, Booking, Experiencing and Retention/Sharing.
In my view, the cost of acquisition in the direct online channel is only a small part of the equation. “Ownership” of the customer and their first-party data, and increasing repeat business are equally important. The hotels “own” their direct online customers – first-party data, preferences, pre-, during and post-engagements and communications, which enable them to market efficiently in this era of increased privacy regulations, and significantly increase repeat business via CRM and guest appreciation programs, marketing automation, drip campaigns, etc.”
