Direct Booking: A Priority in 2023?

Mark Simpson
2/20/2023

Short-term rental bookings may be surging this year, but hosts and property managers face headwinds from another direction: an increase in supply, the return of the gap night, and a cost of living crisis.

This all means 2023 will be the year hosts must fight hard to protect their margins—and this is where direct bookings come into play.

According to Key Data, vacations are shortening across the U.S. and U.K. as the cost of living crisis, high inflation, and recession force people to watch what they spend. Shorter stays mean more trips, more gap nights, and more lost revenue. A direct booking strategy allows hosts to maintain competitive pricing in a crowded sector, which will become increasingly important this year as hosts do all they can to close these gaps, extend stays, and compete for visibility.

Traveler choice has been increasing, with Airbnb recording a 15 percent year-on-year increase in active U.S. vacation rental listings in October. With many hosts having mortgages on their properties, a shift like this can have a dramatic impact on the yield and viability of short-term rentals. Having a direct booking strategy means hosts can be ready to attract those who value price over the convenience of giant online travel agents. The more business you attract direct, the more competitive you can be in a high-supply market.

As the “book direct” movement continues to take off, property managers with portfolios of all sizes are reducing their reliance on single-demand channels. Early adopters will be rewarded the most, while late-comers will face intense pressure to follow suit so they can compete on price.

The Book Direct Movement

This is the year that direct bookings will become a priority for micro-hosts. Hostfully’s latest report on hospitality trends in the vacation rental industry highlighted that while companies with larger portfolios generated the most direct bookings in 2022, there’s evidence that the movement is trickling down to property managers with smaller portfolios and even single-property hosts.

You’re not just a host; you’re a business owner. If your strategy relies solely on online travel agents (OTAs) like Airbnb to generate income, you’re restricting your revenue streams. Building a balanced distribution is key. While OTAs can provide greater access to global customers, they take a hefty chunk of your profit (15-25 percent), which is why having a direct booking strategy in your arsenal is crucial.

In a nutshell, direct bookings mean direct revenue. Optimizing a direct booking strategy gives property managers complete control over their cash flow and bookings while enabling them to increase profit margins—an incentive that smaller property managers are becoming increasingly drawn to.

Optimizing a Direct Booking Strategy in 2023

Here are four things to consider when developing your direct booking strategy this year:

1. Invest in Your Website

Not all direct booking websites are born equal. Quality websites cut through the noise. So many property managers come to me with a basic website wondering why they’re not converting lookers into bookers. The answer is simple: Either people can’t find your website, or you’re simply not giving them enough of a reason to stay.

In addition to having clear property images and listings, your direct booking website should be fast-loading and user-friendly. It should be optimized for search engines, targeting certain keywords to ensure your business is visible on Google and searchers can easily find your business. Most importantly, it should have an easy-to-use booking engine, where users can view availability and nightly rates at the click of a button.

Your website is really a space to build and communicate your offerings. It should be as easy to book a stay at your property through your website as it is using an OTA.

2. Create Offers and Promotions Exclusive to Your Website

Guests want to book their accommodation directly to save money—that’s the bottom line. OTAs like Airbnb are notorious for hitting guests with service and cleaning fees before checkout (despite promising to clamp down on this last year), so guests typically seek direct booking options to save on costs enforced by third-party booking platforms.

Give your guests a real reason to book direct. Tell them how much money they can save by using your website—post it on your social media channels and remind previous guests of the benefits of booking directly.

Your direct booking strategy should include offers and promotions exclusive to your website. Perhaps you offer later checkout, free upgrades, earlier check-in, more flexible policies, or better discounts on longer stays. Whatever exclusives you’re offering, shout them from the rooftop.

3. Build Your Reputation

Another way to boost your direct booking strategy is to establish trust with potential guests through online reviews and recommendations. On average, people read 17 reviews before booking a vacation.

There are plenty of ways to gently prompt guests to leave a review, and you mustn’t miss these opportunities. Whether it’s a quick post-check-out email reminding guests to leave a review or a “5 percent off on your next booking” incentive, focus firstly on building your online reputation. Once you have some positive reviews in place, the bookings should come easier.

Next, work on your referral strategy. It’s an integral part of any property manager’s overarching approach. Keep a list of guests who previously stayed at your accommodation and reach out when you have any special offers or discounts running. Ask them to recommend your business to a friend or family member for a small incentive or discount. So many property managers don’t even realize they have an invaluable tool kit right at their fingertips: previous guests.

4. Lean Into the Community

The book direct movement is no longer just for big property management companies or those with large portfolios. As owners with smaller portfolios or single-property hosts shift to make direct booking a priority, the number of available resources and online spaces is growing, and my advice is to utilize them. Facebook groups, online communities, and forums are a great place to start. Joining the Hospitality Community, for example, gives you immediate access to advice and support from property managers around the world.

The most common thing I find myself telling property owners is to view their property as a business. Would you start a business completely blind? No. Dip into what’s around you: books, online training, podcasts. The more you can absorb and learn, the better, and the wonderful thing about this industry is that people are willing to share. Whether it’s mistakes learned, tips and tricks, advice around regulations, or how to deal with a difficult guest, the resources available are invaluable.

Prioritize Direct Bookings in 2023

It’s wonderful to see direct and referral bookings becoming a priority in property managers’ booking strategies because it means the financial damage inflicted by OTA fees is becoming more fully appreciated. For property managers without a direct booking strategy, now is the time to refocus your efforts. As the market continues to saturate, property managers with the full range of distribution channels will be the ones who succeed. I believe we’ll see a large increase in direct booking efforts and property managers taking their profits into their own hands this year.

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