Hotels pay commission on every booking that comes through an online travel agent. Some of those guests would never have found the hotel otherwise, and the commission is a fair price for the introduction. But many had already visited the hotel's own website, had a question, could not get an answer, and went back to the travel site to book.
On those bookings, the commission is not paying for an introduction. It is paying for an answer the hotel could have given itself. This post works through a hypothetical example of the cost.
The worked example
A hypothetical independent hotel. The figures are illustrative.
| Item | Figure |
|---|---|
| Room nights per year | 12,000 |
| Share booked through travel agents | 50% |
| Travel agent room nights | 6,000 |
| Average room rate | $140 |
| Commission rate | 17% |
| Commission paid per year | about $143,000 |
| Share of travel agent guests who visited the hotel site first | 20% |
| Commission on those guests | about $28,600 |
If answering questions on the website converted even half of those guests to direct bookings, the hotel would keep around $14,000 a year.
Why guests leave the hotel website
Guests who visit a hotel's own site usually want something specific: parking details, breakfast, cancellation terms, whether a room suits their needs. When the answer is hard to find, the travel agent site, with its standard layout, feels easier. The common questions are covered in direct booking questions that send guests to the OTAs.
Group bookings matter even more
Commission on a group booking or event is far larger than on a single room. Answering group enquiries fast is covered in group and event enquiries hotels should answer first.
Reducing the cost
- Answer common questions on your website, clearly.
- State the benefits of booking direct.
- Make your booking engine easy to use on mobile.
- Answer questions instantly, including overnight.
SpideyChat for hotels answers guests' questions from your website at any hour and points them to your booking engine. You can compare plans against the commission figure above. For a wider look, see how hotels win direct bookings back from OTAs.
Travel agents still have a role
None of this means leaving travel agent sites. They bring guests who would never have found you, and for many hotels they are an important source of bookings. The point is narrower: guests who have already found your website should not have to leave it to get an answer. Converting those guests is the cheapest growth available, because the marketing cost of bringing them to your site has already been paid.
Loyalty after the first stay
Guests who booked through a travel agent the first time are easier to win directly on their next stay. Make sure they know the benefits of booking direct before they leave, and that your website answers their questions as well as the travel site did.
Running your own numbers
You need your annual room nights, the share booked through travel agents, your average rate and commission rate. Estimate what share of travel agent guests visited your site first, perhaps from analytics or guest feedback. The free ROI calculator can help.
A similar calculation elsewhere
The idea of paying for questions you could answer yourself applies in other industries too. Software companies supporting free users face a cost of answering that they could reduce, as described in freemium users asking questions you cannot afford to answer.