We’ve written a lot in the past about Direct Bookings and why they’re important for vacation rental managers. But many of you are still wondering just exactly what is the difference between Direct Bookings and Channel Bookings? And which is better for rental managers? The truth is, there is a big difference between Direct and Channel Bookings that property managers need to know in order to run an effective business.
What are Direct Bookings?
Simply put, a Direct Booking is when a guest books a short term rental property directly with you, the host. They might have visited your personal website, or made an arrangement with you over the phone. The key point is, the booking didn’t come through a sales channel or OTA.
What are Channel Bookings?
Channel Bookings are in many ways the opposite of Direct Bookings. This means that the guest made their booking through another platform or sales channel, such as Airbnb, Booking.com or Expedia. It’s not necessarily about where they first discovered your property, but just the site on which the booking and transaction was completed.
Why are Direct Bookings important?
Growing Direct Bookings is a common business goal for many property managers. There are several reasons for this, but the crucial one is that if the booking is made directly with you, you don’t need to pay commission to a sales channel. In some cases, this commission can be as high as 18%, so being able to eliminate this is extremely beneficial for rental hosts.
Additionally, Direct Bookings permit the host more control over aspects of the booking such as cancellation and refund policies, customised pricing offers or additional extras which may not be supported by all sales channels.
Direct Bookings can make it easier to up-sell your guests on additional extras like breakfast packages or airport transfers – something not all sales channels support.
Why are Channel Bookings important?
Sales Channels perform an important role in securing bookings, largely because without them, guests may never discover your properties in the first place. The largest channels receive millions of visitors each year, and the majority of online bookings nowadays take place through one of these sites. Guests visit these platforms for their convenience since they have access to thousands of different properties in one place. Additionally, guests feel a high level of trust in reputable brands that they recognise, which helps when they may be spending large sums of money on a booking.
So which is better?
“Better” is a subjective term, but there are a few key things to consider when comparing Direct and Channel Bookings. Firstly, without a previously established relationship, guests are most likely to discover your properties via a channel. That means that you should ensure you are listing your properties on as many channels as possible in order to reach the highest number of potential customers. Failing to advertise your properties on high profile channels means that you are unlikely to receive bookings in the first place.
The inevitable downside of receiving Channel Bookings is that you must pay commission to these channels, which can seriously cut into your revenue. You’re also bound by the policies and rules of the channel, so you may not get as much control over things like refunds or opportunities to upsell additional extras.
Direct Bookings don’t involve channel commission, so your revenue per booking is significantly higher. That being said, if you’re advertising your properties directly, you may need to consider the costs associated with marketing to guests. Remember, you’re competing with well-established brands so you need to ensure that your website is professional and trustworthy, especially if you plan on collecting online payments.
How do I get Direct Bookings?
Establishing yourself as a Direct Booking platform can be a bit of a challenge when you first start, but the potential rewards are worth it. You need to ensure that potential customers are able to see your properties, or you won’t receive any bookings. That means:
- Building up a good social media presence and sharing links to your properties
- Maintaining a mailing list of potential guests so you can send emails
- Ensuring that you have a professional website which is optimised for search engines
- Making sure your website is mobile-friendly
Additionally, you may need to incentivise guests to book with you rather than with a channel they may recognise more. You may wish to slightly lower your prices for Direct Bookings, or create a Promo Code to offer a discount or free extra such as airport transfer when guests book directly.
A professional website to display your properties is an absolute must if you want to receive Direct Bookings. Guests need to be able to make bookings and online payments securely – contact forms and phone bookings are a thing of the past for many guests.
Do I need both Direct and Channel Bookings?
A healthy balance of Direct and Channel Bookings is essential for a successful vacation rental business. An increasing number of property managers are working to reduce their reliance on larger sales channels due to fears that they are becoming too powerful, too competitive or are consuming too much revenue. But very few rental businesses would be able to thrive with absolutely no channel bookings. Only the very largest brands attract enough guests to gain much profit without the additional reach and security provided by listing properties on recognised channels.
A strategy employed by many property managers is to use sales channels primarily as a marketing tool in order to reach a wide number of travellers. This enables them to receive a steady stream of bookings and fill up their calendars without spending too much time or effort on marketing. Of course, there are still things you can do to increase your listing performance on sales channels.
Direct Bookings are instead specifically promoted towards a more targeted subset of guests, who may be more inclined to book directly due to a higher level of interest, or perhaps a pre-existing relationship. For example, you could email your previous happy guests with an offer to book one of your properties again – but this time, to do so via your website instead of a sales channel. Or you could cultivate a social media presence, and direct your followers to your property booking pages.
Securing Direct Bookings by reaching out to high potential guests enables you to reduce your reliance on sales channels and increase your share of the revenue per booking. There are multiple tools available for you to do this. With Your.Rentals you can create and send personalised booking offers, install a booking widget on your existing website, share your listings on social media or even order a custom built website for your rental business. Find out more about Direct Booking in Your.Rentals here. By developing a Direct Booking strategy in combination with a targeted use of relevant channels, you can achieve a healthy mix of occupancy and revenue for your rental properties.