Cut Commission Fees: How Hotels, B&Bs, Restaurants and Guest Houses Can Increase Revenue & Profits
Hotels, B&Bs, Guest Houses, Motels, Bars, Restaurants and Wine Bars Can Increase Profits in Many Ways. In This Article I’m Going to Look at Saving Money When Guests Make Reservations or Bookings.
Making a profit is getting harder all the time. The number of hotels, B&Bs, rest:gmail.com aurants and related establishments are high and that means a lot of competition. Since the 2008 recession numbers have climbed and being profitable has been getting harder. In recent months we have however seen a lot of restaurant chains go to the wall or had to restructure. Byron, Jamie’s Italian, Strada are just a few High St names you’ll have seen in the news. And hotels have suffered similar woes. In most cases they blame high overheads as being a root cause of their problems. Fortunately we have some solutions to this. It is possible to cut some of the more insidious costs and survive and thrive.
In the last few years the way people book accommodation and meals has changed. More and more people are going online to book. In the main they use OTAs (Online Travel Agencies) such as TripAdvisor, Hotels.com, Booking.com, OpenTable, TopTable etc. The OTAs offer many benefits but there is a downside. They charge a substantial commission fees. Commonly this can range from 10-20% depending on the OTA with a few being even higher. Some of the bigger hotel chains have managed to negotiate better rates and some have stopped using OTAs completely. But for most people they remain a valuable source of traffic and bookings.
So How Can Hotels, B&Bs, Restaurants and Guest Houses Increase Revenue & Profits (And Cut Commission Fees)?
We don’t advocate not using OTAs. We advocate controlling the OTAs you use and getting more direct bookings on your own website.
Think about it. When an OTA takes 15% of the fee you charge for a hotel room that doesn’t reduce your profit by 15%. It hits you far harder.
Let’s make life quite simple with an example suing round figures. They are not typical, yours will be different, but they illustrate the point. If your room is sold at £100 and your costs are, say, £50 then your profit is £50. But where the OTA takes 5% of the £100 ie £15, your profit is reduced to £35. That’s a huge reduction form £50.
And if the OTA encourage you to drop your prices their percentage will eat even deeper into your profit.
Worse still, some OTAs will not refund you their commission fee if the customer cancels. So you could have a room that isn’t sold AND a commission fee to pay. That’s not the way to run a profitable business.
So let’s look at the two scenarios covered here. Firstly how to reduce OTA commission fees and secondly how to prevent the non return of commission fees when a customer cancels.
How to Reduce OTA Commission Fees
Clearly you need to negotiate the best rate possible from the outset. But however good that is going to be you still need to totally cut out the commision fee whenever possible. In other words take the booking on your own website and not the OTA sites.
There are several ways to encourage people on the OTA sites to visit your site and book direct. The OTAs try to prevent the customers from doing this and then often overcharge according to Which. For example most of them block any web addresses you try yo send to the prospective customer. So you have to be clever and ensure your online offer is compelling.
The issues you need to overcome is that although the OTA shows the name of your place the link goes to their booking system. That makes sense for them after all they are in business. More and more customers know that OTAs offer the best prices. Indeed they often insist that you don’t offer a better rate on anything you have with them. So the trick is to make your online offer more attractive. It might be that you offer a cream tea on arrival, or a free glass/bottle of wine with dinner.
The next trick is to ensure your site is easy to find by the astute travellers that will look for in-house deals. Look for most hotelsorrestaurant by name and location and the first page of Google is strewn with OTAs. So you need to ensure you optimise your website to compete with the OTAs. This isn’t easy. But there are ways to do this and we’ve discovered a number of methods that are close to foolproof (through online there are never any guarantees).
One thing to avoid is to lump all the hotels in a group in one website. Google hates this and it makes it much harder to get individual hotels indexed by the search engines and found. Web designers often take this design route though as it is easy for them (but not customers) and low cost for them (but not hotel owners).
We have a few tricks up our sleeve here though and can advise improvements to your booking systems.
How to Prevent The Non Return of Commission Fees From OTAs
This one is very simple to answer. Don’t take bookings via OTAS.
OK, so that was a glib answer and we know that using OTAs sometimes makes sense. But if you can’t negotiate that clause out of your contract with the OTAs you can ensure that more and more bookings are direct bookings via your own website. That way no commision is paid and no issue exists.
Clearly getting more and more reservations coming direct is most of the answer.
But there is an issue that often hits busy establishments. That is double booking. It is more common where you have several OTA accounts. You have to manually turn the room availability on and off and if two bookings come in at the same time. Of course you need to keep a careful eye on bookings as they come in, but you also have to sleep and rooms can be sold several times whilst you sleep!
Our solution to this is our Take Control system. It’s a piece of software that sits on your website and allows you to Take Control of all your OTA accounts and your website. Better still, if you get a booking on your site or via an OTA it can automatically remove that room or table from all the other sites. Magic!
If you want the flexibility of being able to see all your bookings on one dashboard, even on your mobile, and being able to drive more traffic to your own website contact us now. We are available via email at firstname.lastname@example.org or StefanDrew@gmail.com or by phone on 01404 45922