From early Spring 2020, the Book Direct movement within the short-term rental industry has gained momentum. Angry reactions against many OTA policies, a desire for more control over business trajectory, a better understanding of the need for profitability and more meaningful relationships with customers has led many property managers to reconsider their distribution strategies and how they grow direct bookings. Back in 2019, Damian Sheridan launched the first Book Direct Show which is now a virtual educational event with over 50 sessions from expert speakers. In order to get a grasp on what the issues and opportunities are for property managers, we sat down with Damian to get his take on what’s both wrong and right with direct booking.
PillowTalk Media: Since Covid-19, many short-term rentals, hotel and other lodging property managers have started to look more seriously at growing their book direct business and lessen their reliance on the OTAs. In your view, what have been the biggest drivers for this increase in interest?
Damian Sheridan: Some OTAs have not covered themselves in glory recently. By demonstrably prioritising guests over property managers in March with a blanket override of cancellation policies and full refunds, many short-term rental ‘partners’ were left in financial turmoil and feel more alienated than ever before.
Three or four booking platforms have been generating some 70% of bookings in our industry in recent years. We accepted that! However, we are now at an unexpected crossroads where many property managers who have survived this dreadful pandemic are no longer willing to sit on their hands and wait for the same few companies to lead us forward. They are exploring new ways to generate revenue which are not completely reliant on other platforms.
PTM: One of the perceived issues for short-term rentals is the lack of standards and inconsistent professionalization across the industry. Part of the value proposition for a guest booking a property via an OTA is the trust and assurance of buying from a reputable and easily recognised brand such as Booking, Airbnb and Vrbo – most short-term rental businesses are small and don’t have the benefit of a recognisable brand assurance – how can property managers circumnavigate this?
DS: I believe entry level into the market has become far too easy. Over the last 5 years, this has resulted in a rather saturated market in many areas, especially urban. Many smaller owners/management companies simply didn’t need to address professionalisation because they knew the bookings would keep coming regardless. However, this is changing, as are guests’ expectations.
Branding and trust are two vital pieces of the direct booking puzzle.
We must ask ourselves why would anyone trust our website to part with their hard-earned money? There are many ways to encourage guests to trust you. These include secure websites, easy booking funnels, review aggregation and engagement, About Us profiles, video testimonials, property verification and accreditations which can all better serve your prospective client.
Branding is not just something for large multi-nationals. Everyone can and should strive to develop their own brand. This is to ensure we can be found if the guest is searching for a brand name away from an OTA and also to easily remember us after their stay. A brand isn’t just a logo. It’s about you and everything you represent.
PTM: The short-term rental industry is a particularly ‘young’ industry with many property managers over the last few years starting out in business. Many of these built their businesses on the back of the OTAs, particularly Airbnb. Times were good for a while there. Do you think there was perhaps just a naive lack of understanding to develop a more robust business, less reliant on a handful of small lead sources?
DS: This industry is definitely still in its infancy. A huge percentage of travellers have still never even considered staying in a short-term rental over a hotel. This is an exciting prospect in the years to come, but the numbers of property managers who are in a position to succeed will be diminished.
For those who started in our business in the last 10 years, I think it’s fair to say that bookings from OTAs were all many have ever known. It might be harsh to say it was naïve, but there was little sense of protecting a scaling rental business with a direct booking strategy in case of extraordinary circumstances like a pandemic.
We all knew that the OTAs spent billions on pay-per-click campaigns to get eyeballs to their platforms and subsequently on our listings. And we trusted that would go on. Few could have foreseen a universal demise over such a sudden period.
Companies who pro-actively invested time and money in content marketing, email marketing, SEO/SEM and social media engagement are going to be in a significantly better position to survive these difficult times.
PTM: It is clear that any business that doesn’t have a direct relationship with its customers is putting itself in a vulnerable position. Owning the guest data is vital to form this relationship. Please can you expand on why and how property managers can improve their business when they have more control over the relationship with their customers?
DS: Email marketing is one of the most effective and inexpensive communication tools at our disposal. Not only does it help get repeat bookers, but also promotes brand recognition, upselling extra services, affiliate partnership sales, updated Covid-19 procedures, etc.
The onus is on each and every property manager to collect guest data to liaise with our previous guests. Unless you are harnessing these details, the chances of repeat business are vastly diminished. There is no excuse for any guest to slip through the OTA net without you having the minimum of a name, email address and phone number. Incentivising guests to use an online form to opt-in with their data is a straight-forward way to get around restricted OTA communication.
These are some questions you can begin asking yourself about your guest data capture.
- Are you getting all of your guests’ data or just the lead booker?
- Why are they staying with you? Perhaps this is an annual event like a birthday or anniversary which they could return for. Are they working locally over long period?
- Do you record when they booked? Keep in contact with them the same time the following year.
- Have they come for an event? Keep them updated about the same future.
If you can get your guests to opt-in to SMS marketing this is an incredibly efficient way to speak to your existing database.
PTM: How important is understanding data and benchmarking for a book direct strategy? It’s not always just about numbers of bookings but its also important to look at the profit and lifetime cost vs value of a customer. How will a property manager really know that growing this side of the business is paying off in terms of ROI?
Data is like the blood flowing through your short-term rental business veins.
Everyone has heard of Google Analytics but it’s amazing how many property managers don’t use this free tool. It’s essential to gauge any correlations, milestones and conversions of any direct booking actions you undertake.
Wider industry data is also incredibly useful and under-utilised. Depending on your budget, AirDNA or Transparent should be on everyone’s radar to negotiate your position in relation to your local competition or international patterns.
Forget about celebrating high occupancy levels or revenue. Profitability is the name of the game and data is crucial in order to make the right decisions at the right time for your business.
PTM: Where does technology fit into a book direct strategy? For instance, is it worth investing in direct booking software? What about metasearch? What role can AI and machine learning play here – now and in the future? What tech should any property manager serious about growing its book direct business invest in?
DS: Of course, embracing technology is essential for any short-term rental business. Anyone reading this will probably be on a computer or smartphone. When we begin our short-term rental journey, we might use spreadsheets, social media and email. As we scale, we use a website CMS, property management software and channel manager. Perhaps then we explore dynamic pricing, CRMs, SEO, AI and personalisation. Technology and software are logically at the heart of everything we do, and this goes hand-in-hand with any serious book direct business.
Whilst this all exponentially improves efficiency, at the core of any direct booking strategy remains the necessity to build an on-going relationship with your guest. This still requires a personal touch and can’t be achieved merely through automation.
My recommendation is to explore new technology when the time is right for you. There is always going to be some new shiny software that can promise to do amazing things but scale up naturally and don’t forget to pick up the phone every now and again.
About Damian Sheridan
Damian Sheridan is the founder and director of the Book Direct Show – the only event dedicated to short-term rentals and actionable direct booking strategies. He is also an SEO (Search Engine Optimisation) consultant working with short-term rental property managers across Europe. You can contact Damian via SEOConnect www.seoconnect.co.uk