The prolonged state of chaos wrought by the COVID-19 pandemic on people’s travel plans continues to weigh heavily on every travel brand in the world, and it is prompting the need for a wholesale rethink on past initiatives and current strategic directions.
One area in greatest need of reconsideration in this challenging climate is the intense focus that travel brands have put on driving direct bookings by turning off activity with online travel agencies and other indirect sales partners.
In a time of severe industry constriction such as this, every dollar going into the pocket of a travel brand is important, whether it’s booked directly or not. But rethinking your approach to indirect sales partners shouldn’t just be a short-term crisis initiative. Done right, a strong approach to indirect sales can aid in long-term acquisition efforts and ultimate brand sustainability, even in non-pandemic times.
Rethinking the Direct Sales Obsession
The travel brand shift to prioritizing direct bookings has been underway for years—and understandably so. Direct bookings allow travel brands to lower their cost of sales, foster greater loyalty among travelers and ultimately control more of the customer’s experience with the brand. In boom times, when occupancy rates are high, the drive toward direct bookings is a rational one. Travel brands lure customers toward direct bookings with offers of perks and lower rates for loyalty members, only reluctantly paying commissions to OTAs when they’re unable to fill vacancies on their own.
In the short term, of course, vacancies are the problem. People aren’t traveling—and in some cases can’t travel—the way they used to. The number of loyalty program members from which to draw direct bookings has dwindled, and travel brands must now cast their nets as far and wide as possible to secure whatever dollars they can from the market. OTAs and other indirect partners represent obvious net extensions for these brands, and they’ll be vital in helping travel companies survive during the pandemic. Furthermore, as these entities face challenges of their own during the pandemic, OTAs and brands alike have an interest in coming to the table to design special partnerships and promotions that will be mutually beneficial to all parties, including the customer, who still expects a smooth experience in anything-but-smooth times.
In the short term, travel brands should consider enhancing the strategic partnerships they have or seek to have with indirect channels to craft smart deals and promotions designed to attract the broadest array of customers possible. Indirect partnerships work best when you take a data-led approach to these relationships and focus heavily on measuring incrementality. This ensures travel brands can understand when partnerships are truly additive to their own sales.
While indirect sales can be particularly beneficial in tight economic times, marketers shouldn’t view these relationships as ones to be instantly turned off when prosperous times return. Cultivated correctly over the long term, these partnerships can provide better customer experiences, valuable audience insights and strong acquisition opportunities for the long haul.
The Long-Term Value of Indirect Sales
As much as travel brands might desire direct bookings, there’s an inescapable truth to indirect booking channels that applies equally in both strong and weak travel economies: Indirect channels are a natural part of many consumer journeys. If travel brands aren’t present within the channels that travelers turn to when researching and planning their trips, they’re going to miss out on opportunities to drive brand awareness and bookings.
By embracing indirect channels, brands open the door to deeper insights into traveler browsing, researching and booking behaviors, and these insights into the fuller customer journey are invaluable when it comes to refining cross-channel promotional strategies. Furthermore, they help travel brands better address customer expectations for seamless experiences that meet them wherever and whenever they want, online and off.
When we emerge from the pandemic and travel resumes more broadly, direct channels will undoubtedly again take priority within travel brands’ booking strategies. But they mustn’t lose the visibility and acquisition opportunities that come with indirect channels. Brands must continue to meet customers wherever they choose to begin their journeys, and OTAs and other partners are incredibly effective at bringing new customers to travel brands that wouldn’t have otherwise been on the customer’s radar. That said, to make indirect channels work for them, travel brands should stay on top of these relationships and set a high bar for success, ensuring these channels are delivering bookings they need and would not otherwise have gotten, rather than just another booking that would have come in regardless.
In the long-term, travel brands should embrace indirect channels as the necessary experience and acquisition tools they are and prioritize direct bookings when it comes to retention and loyalty efforts. Owning the relationship with the customer will always be important. But having trusted partners to make introductions is equally vital. This will always be a balancing act, and a brand’s marketing efforts should be flexible enough to steer the demand as appropriate.
Carlisle Connally is VP of marketing strategy at Koddi