Direct Bookings Versus Online Travel Agencies
06.12.2023 - 04:18
/ skift.com
/ Dennis Schaal
/ Richard Clarke
Hope you’re having a good week so far. Hello from across the pond — I’m in London bringing you a European edition today. I was here to moderate a panel discussion at the Short Term Rentalz Summit yesterday and it was delightful.
The crowd was energetic and lively, the sessions were engaging and entertaining and the tea selection was enviable.
We heard from companies including KeyData, Beyond, Stripe, Awaze, Numa Group, HomeToGo, Lodgify, and AB Bernstein as well as short-term rental associations including Association of Serviced Apartment Providers and the Irish Self-Catering Federation.
Here are some noteworthy highlights from the summit:
“Ultimately, we’re all in the business to make profit, and we are not shy to say that. Our organization stands for businesses who want to succeed and profit from environmental, social and corporate governance,” said Ufi Ibrahim, CEO of the Energy and Environment Alliance.
“The lodging market is much bigger than most people appreciate, and short-term rentals is a small slice of that market. The total vacation rental market today is less than 10% of the global lodging market, and the reason is because emerging markets are much bigger in volume. Asia Pacific accounts for 54% of global lodging room nights in 2019 and in that market, but as we know vacation rentals hasn’t penetrated into that market much,” said Richard Clarke, managing director at AB Bernstein.
“There is, however, a mismatch in the overall lodging industry between demand and supply of hotel rooms. Hotel supply growth is slow, no one is building many new campsites or hostels. So the elastic supply to bridge this gap will come from the short-term rental market,” Clarke said.
The part of the conference I enjoyed the most was a debate on the cost effectiveness of generating direct bookings rather than through OTAs.
Opposing the notion was Janel Clark, program director at Hospa, an association for hospitality professionals. Clark’s argument was OTA commissions may be higher, but they’re good at conversions and the user experience, and have an integrated payment system. The cost of acquisition going through OTAs is lower, Clark said, and this acquisition cost includes the cost of the website, the booking engine, social media, paid search, and marketing.
“The final cost we need to consider is the cost of getting it wrong, and I am sorry to say this, most often people managing direct channels do not have the skillset or knowledge to make those smart decisions. And you may never know that you have lost out, if you get your pricing wrong,” Clark said.
Louis Andrews, director and president of Ovo Network, which manages ski chalets in the French Alps, as well as Carla Chicharro, head of marketing at proper