Hotel Performance Metrics: Tracking Direct Bookings
Metrics are an important part of any business. They provide us with valuable performance information allowing us to identify where we can make the easiest and most impactful improvements. As the old saying goes “If you can’t measure it, you can’t improve it”, or simply, what gets measured, gets done.
However, there is so much data available now, how do you know which metrics are most important in driving business decisions? Hoteliers are no strangers to performance metrics. They are important component of day-to-day business, making it possible to keep track of revenue streams and understand the performance of a hotel. Hoteliers boast a robust range of KPIs from room sales, to marketing, online performance, guest satisfaction, competitive benchmarking etc. that help them to analyse market performance and create the suitable market strategies. Hoteliers know that improving their performance can become their advantage and with metrics improvements can be identified and made.
One area hoteliers continually strive to improve is their margins by capturing more direct bookings whenever possible. In an OTA-dominated online hotel market, (and where commissions are quite high!) every property longs for more direct bookings. And while more and more hotels have introduced metrics to track OTA bookings versus direct – the metrics are not comparable and do not tell the full story.
Direct bookings are key to bringing in bookings with profits; they boast the lowest cost of acquisition and are better for a hotel’s bottom line. Kalibri Labs research has shown that bookings via a hotel’s website are more profitable by 9% than those on OTAs – and this figure increases to almost 18% when you factor in ancillary spend. Similarly when it comes to reporting on OTA bookings more often than not there is a disparity when it comes to the amount lost to commissions. According to Triptease, on average, upscale US hotels retain 93.2% of guest paid revenue when that guest books on their website. They only retain 82.7% when that guest came through an OTA. And then, guests who book direct are much more likely to spend on extras such as room upgrades and dining offers – so the net revenue retained by the hotel rises even higher.
So when it comes to tracking the total value of direct bookings, the team over at Triptease believe one metric you should consider adding to your reporting arsenal is DiBPAR; Direct Booking Revenue per Available Room. They believe hoteliers need to know the true worth of the direct bookers they’re trying so hard to attract – and DiBPAR might just be the way to work it out.
Request a demo of our mobile hotel PMS and see how your hotel can start increasing direct bookings.