Counting the Cost of Online Bookings

Most Accommodation operators are well aware that over 60% of bookings are online bookings and that this is growing every year. They are also aware that these online bookings can cost up to 20% or more of the online booking value in Online Travel Agency commissions. Expensive, but very necessary…

So how can the cost be managed? To start with, the picture is bigger than just the OTA commissions. They are just one cost of operating the business, however they are a very apparent and painful cost. If you can reduce the costs does that reduce the pain? One painkiller is integrating the Online Travel Agency to your Property Management System so that all of the manual work of making, modifying and even cancelling bookings is gone. The saving is time – if staff spend even 60 minutes a day manually entering bookings and managing online inventory, that’s over 9 weeks of their year and @ $7,500 in wages, not to mention the value of other productive work they could be doing for 9 weeks.

There’s a business maxim I found to be true that says “save costs and you save cents, increase revenue and you increase dollars”. So is there another benefit of integration between your Property Management System and your Online Travel Agency? In my opinion there is and it is of more value than saving costs. By publishing your availability in real time rather than managing it manually and conservatively to prevent overbooking, you are creating the opportunity for every possible booking.

The benefit looks like this:
Say your average room rate is $130.00/night and you pick up just one extra booking per night. Let’s say even just 5 bookings per week not 7. That’s $650 increase in booking revenue per week, or $33,800 per year! Not to mention that extra Guests typically spend on F & B and if you do your job well, they will probably come back again or refer you to others.

This is just a quick snapshot from my opinion. There are a lot of other benefits that increase revenue if the Online Travel Agency integration is fully featured. This might include the ability to publish packages and promotions that increase your occupancy, especially to your own website. Or the ability to publish rates, especially if these rates can be dynamically varied depending on seasonality, availability, special events, etc. The more control you have the better you can make you Online Travel Agency work for you and the integration with your Property Management System is the key to both saving costs and increasing Online Travel Agency revenues.

Saving costs, yes, increasing revenues - better still! If you need to improve what you’re getting out of your Property Management System and Online Travel Agency integration, contact us at Clarity Hospitality Software Solutions. We firmly believe have a smoother, more streamlined online booking process is a win-win for all sides.