Using the Revenue Trifecta to Increase Bookings

Michelle Marquis
5/20/2024

Direct bookings are essential, but can you solve your revenue shortfall by focusing mainly on them? Maybe, but probably not. Direct bookings must be part of an overall strategy, but they should not be the strategy. 

Demand is down, and inventory is up—we all know that. So, what are you going to do about it?

Assuming that bookings are a pie and everyone gets their fair share is crazy. However, if you approach it differently, you will see a bigger slice of that revenue pie.

There are three primary ways to increase revenue; optimizing each is key to achieving the highest revenue possible. I call these three levers “The Revenue Trifecta”:

1. More Demand
2. Higher Conversion
3. Higher Booking Value

I know a 300+unit property manager in a competitive market who set lofty goals last year, and this company is today 17.88% ahead of where they were the same time last year. They are cutting themselves a larger slice of that delicious revenue pie, much to the dismay of their competitors.

How did they do it?  They looked at every source of revenue and optimized each revenue stream. Let’s dig deeper into the three levers:

1. More Demand

Billboard – The billboard effect occurs when you list on a distribution platform and brand your company. This gives you a lift on direct bookings. One data point said that many visitors to an online travel agency book directly with you after seeing your brand on their website. So, distribution is part of a direct booking strategy.

Targeted emails – You probably have an email database of thousands of emails. There is a two-step process for email marketing: 1) Do what you can to increase your database. You can do this by capturing emails from prospective guests via technology like SendSquared, Pulse, or NAVIS (Revinate). You can also do this with shopping cart abandonment tools. 2) Make sure you are nurturing your email database with targeted messaging and calls to action with a book direct messaging. 

2. Higher Conversion

In our industry, a great website converts at about 2%. That means 98% of website visitors are not booking with you. That is a whole lot of missed opportunities. It also means that if your site converts at less than 1%, you must consider a new digital marketing company. Here are a few quick suggestions:

Mobile friendly vs. mobile first – Your biggest competitors—Vrbo, Airbnb, and other OTAs—are some of the most accessible places for mobile users to search and book. One of the largest OTAs gets over 72% of its bookings from its mobile-first website, while Airbnb receives 55% from its app.

Easy to book – How many clicks does it take to compare and book a unit—on mobile or desktop? Reduce the friction to book online. Simplifying your site’s booking path will reduce friction and improve online bookings.

Increase voice conversions – One phone booking takes approximately four phone “leads” to book. This is effectively a 25% conversion. Below is a math problem to determine how much revenue you can capture by increasing call conversion.

Total Voice Bookings per Year x 4 = Total Lead Volume

Total Lead Volume x 1% = Total New Bookings

Total New Bookings x Average Deal Value = Total New Revenue Possibility

This means you would see total new revenue potential for every 1% increase in call conversion. So, when I consult, my goal is a lift of five percentage points. Plug your numbers in and do the math on your revenue opportunity. 

Outbound – Making outbound follow-up calls can capture 10% of your inbound conversion revenue—or $100,000 for every million in inbound bookings. Stated another way, for every dollar you capture in offline phone bookings, you can capture another 10% from calling people back who did not book the first time.

These two offline conversion strategies generate $300,000 in new revenue for every $1 million in offline bookings. 

You are already investing in reservations staff, but are you optimizing their everyday work? Transforming reservation calls into sales calls will make all the difference.

3. Higher Booking Value

With demand down and inventory up, the industry will struggle to increase rates. I suggest working on conversion as outlined above. This is not the year to focus on increasing rates, but that does not mean you should not focus on higher rates over a high-demand period in high-demand inventory.

Expectations of direct bookings vs. all bookings – Can 7% Airbnb and 93% direct be a good revenue distribution? Many property managers brag about these sorts of results. If you are at this allocation of bookings and not 100% sold out, you are leaving money on the table and doing your owners a disservice. 

The discipline of revenue management includes how all revenue fits into your overall strategy. Where you get bookings, how many, and at what rate is part of a larger strategy.  So, don’t let the hype of “I have 93% of my business direct” lead you to wonder if you are doing something wrong.  Look at all areas of your revenue plan and squeeze every drop out of all segments. 

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