As we walk through understanding the benefits and advantages of direct bookings for hosts and their guests, it's first important to understand what a direct booking actually is. A direct booking is a booking or reservation that is made without the implication of a third-party Online Travel Agent (OTA) such as Booking.com, Airbnb, or VRBO. It’s a booking that a guest makes directly with a Vacation Rental host through a direct booking platform (like bookusdirect), via email, phone, or even Social Media! Yes, with the advent of social commerce, many hosts are turning to Social Media to generate direct bookings.
Direct bookings have many benefits altogether but right off the bat, they have a major economic advantage for both hosts and guests:
hosts save on booking commission fees that typically range between 15% to 30% according to Skift, a highly regarded travel news website
and guests enjoy the best possible rate for their stay as no extra fees or commissions are tied to the booking
Now, let’s dive right into the benefits and advantages of direct bookings for Vacation Rental homeowners and their guests.
Direct bookings help improve brand awareness
To understand how direct bookings can positively impact the brand awareness of Vacation Rental homes, it’s important to zero in on what happens when guests don't book directly. When booking through an OTA platform, guests are essentially connecting with that OTA platform and not the Vacation Rental itself. In fact, every time a guest books through an OTA platform it only strengthens his/her loyalty and awareness towards that platform as opposed to the property that he/she is booking. The guest is not so much booking a property in particular, but more a property that is listed among so many others. In this case, the only brand awareness that takes place is one that favors the OTA platform and not the host or his property.
On the flip side, when a guest books directly, the connection that is created is one that only includes the host and the guest. The guest is fully aware and conscious that he is booking that particular property and not any property listed on a platform. Guests who book directly are much more prone to advocating for the property they've booked, sharing it with their friends, following it on social media, and so ultimately increasing the brand awareness.
Vacation Rental homes with a strong brand awareness are more popular and sought after, have a strong social media following, more repeat guests, benefit from guest referrals, and so naturally tend to perform better with regards to their occupancy and the rate they can charge. As a source of inspiration, below are some Vacation Rental homes that have mastered the art of brand awareness and developed a very strong social media presence.
The Brandy Bus | Nairobi, Kenya
Oloshoibor House | Ngong Hills, Kenya
The A-Frame | Windy Ridge | Nairobi, Kenya
Mojave Desert Cabin | Joshua Tree, USA
Aruba Airstream | Paradera, Aruba
Tye River Cabin Co. | Washington, USA
Boho Aframe | California, USA
The Casa | Kangaroo Valley, Australia
Increased profits for hosts with direct bookings
As mentioned earlier, one major advantage for hosts with direct bookings is that they increase their profits and lower their cost of distribution by saving on commission fees. Booking fees charged by OTA typically range between 15% and 30%, but can in some cases go even higher. In the UK for example, commission fees are charged on the VAT inclusive amount and can reach as high as 36% (Skift). In addition, certain platforms like Booking.com charge hosts extra fees to obtain preferential placing on their platform and appear on the first page. Needless to dwell on the topic further, it's very clear to see the positive impact direct bookings can have in helping Vacation Rental hosts keep their hard-earned profits and pay fewer commissions.
Taking the above into consideration, let’s take a look at the economical benefits of direct bookings for Vacation Rentals assuming a yearly income of $10,000 and an average of 3 bookings per month, or 36 bookings per year.
Commissions & Fees
($10,000 * 20%)
*Direct Booking Model
($9 * 36)
Vacation Rental hosts who include direct bookings in their distribution strategy can earn up to 20% more profit per year. That’s a whopping $1,676 more per year than by simply relying on OTA platforms.
With direct bookings, guests enjoy the best rate (and don’t pay service fees)
The next advantage is somewhat less evident, to hosts at least. Yes! You would be surprised to know how many hosts we have spoken to who were not aware that their guests had to pay service fees on top of their room rate at checkout. This is slowly changing though, and hosts are becoming more aware of the practice. So, what are service fees and how do direct bookings benefit guests?
Service fees are the main source of revenue for platforms like VRBO and Airbnb and while using their platform appears to be free, it’s actually not. Airbnb and VRBO are close to free for hosts because guests pay the vast majority of the costs (service fees) related to using their service. Guests are usually not made aware of these service fees until they reach the final checkout page. So, while a Vacation Rental home might be listed at $200 per night, as the guest reaches the checkout page an extra 17% (the most common service fee percentage on Airbnb as per our research) is added to the total booking amount. Assuming a 5-night stay, that's an extra $170 the guest needs to chunk out. The screenshots below highlight in yellow how service fees are displayed on the checkout pages of Airbnb and VRBO.
Airbnb charges guests service fees that range from 12% to 18%
Here, the guest has to pay an additional $404 (17%) to book a 7-night stay that initially cost $2,376.
VRBO charges guests service fees that range from 8% to 12%
Here, the guest has to pay an additional $140 (12.3%) to book a 6-night stay that initially cost $1,135.
The major benefit for booking directly here is that service fees completely disappear for the guest, and they enjoy the best value by only having to pay for the room rate set by the host and nothing more!
Guests get a more personalized experience with direct bookings
When receiving a direct booking, and so saving on commission fees, hosts should go the extra mile and work to provide their guests with a more personalized experience. Now how do you provide a personalized experience and why is it beneficial?
Guests tend to enjoy their experience a lot more when they feel pampered and receive a personalized treatment. This increases the odds of them coming back, referring the property to their friends, and posting content about their stay on Social Media. All of these greatly benefit the homeowner.
Providing a personalized experience starts with communication. While OTA platforms purposely prevent hosts from accessing their guest's contact information to keep the relationship and data to themselves, with direct bookings, on the contrary, hosts get full access to their guest's data such as email addresses and phone numbers. An easy way to start here is to use emails to personalize the guest’s experience before, during, and after the stay.
Using bookusdirect’s automated email tool, hosts are able to prepare sets of personalized emails that can be scheduled and automatically sent out to guests from the time they book to the time they checkout. Imagine how delighted a guest would be to receive a timely personalized email with additional information about their host, the property, and a list of awesome things to do in the area.
Below is an email sequence example that can help create a more personalized experience:
Email 1 | Sent after the booking is confirmed
This first email is sent to thank the guest for booking directly, introduce the host and property further, and share a link to the property’s social media accounts. It also informs the guest of an upcoming email that will include all the information related to his/her arrival.
Email 2 | Sent a few days before arrival
This second email is focused on details about the property. Think check-in time and process, the essentials that are provided (soap, cooking oil, linens, Netflix), information about how to reach, the weather forecast, Wifi password, closest place to get groceries, and a list of activities and restaurants to check out.
Email 3 | Sent a day after check-in
Here the aim is to make sure that everything is going fine, that the guest is not facing any issues, and to inquire if something can be done to make the stay more comfortable and enjoyable?
Email 4 | Sent on the check-out day or shortly after
The goal here is mainly to thank the guest, confirm he/she had a nice experience, include a link to leave a review, and encourage the guest to visit again.
Naturally, hosts can tailor email sequences to their liking and make them as relevant as possible to their property. While providing a personalized experience starts with communication, it can also be enhanced with added perks for guests such as freebies, rewards, and special offers, which we cover in the next few points.
Guests enjoy rewards and freebies when booking directly
Connecting with guests through direct bookings allows Vacation Rental hosts to create a rapport with their guests. They get to engage with them directly, learn more about who they are, why they're coming to town and most importantly reward them for booking directly. Similar to offering a more personalized experience, offering rewards to guests who book directly help Vacation Rental hosts receive more repeat booking, increase referrals, and improve their overall ratings and occupancy. Some of the easiest and most economical ways to reward guests involve offering a free airport pickup, a complimentary refreshment on arrival, or even a gourmet breakfast basket. When comparing the cost of these rewards to the exorbitant commission fees it’s evident to see how on top of being cheaper, rewards enhance the guest experience and help drive the overall performance of Vacation Rentals. Below is a list of the most popular and impactful guest rewards that can help homeowners develop and perfect their direct booking strategy.
Free airport pickup
Free bottle of wine or refreshment on arrival
Free gourmet breakfast basket
Free local produce/snacks
Free early check-in and/or late check-out
Discounts and vouchers to discover some of the local delicacies (done in partnership with local businesses)
A more flexible cancellation policy
Direct bookings allow hosts to be more competitive (by using discounts and offers)
Why would Vacation Rental homeowners give discounts to their guests when they already have to pay expensive commissions for OTA-generated bookings? Absolutely! This would only make them worse off. On the flip side, by making use of discounts and offers alongside a direct booking strategy, hosts can improve their performance and boost occupancy during low season. Let's take a look at 4 different use cases where hosts can use offers and discounts to drive their occupancy:
The time-based offer This is a great way to create a sense of urgency and drive bookings in a particularly short time frame. Example: 20% off the next 5 direct bookings between now and [end date]
The low season offer Some Vacation Rentals are particularly affected by low season and a great way to remedy this is by highlighting a low season discount. Example: 20% off all direct bookings made between [start date] and [end date]
The last-minute cancellation discount From time to time, hosts, unfortunately, need to face a last-minute cancellation. Using Social Media platforms here to highlight a special last-minute discount is a great way to avoid remaining empty and replace the last-minute cancellation with a new last-minute booking. Example: Last-minute discount alert! Book now for 3 nights from [start date] to [end date] and enjoy a special rate of $100 per night instead of the usual $150
The long-term offers It's no doubt that with the effects of the pandemic guests have been on the lookout for Vacation Rentals they could stay at for a longer time and work from all the while enjoying a change of scenery. Driving these long-term stays can be done with the use of weekly or monthly offer. Example: Get 15% discount when booking for 7 nights or more!
With bookusdirect's Marketing Hub, Vacation Rental hosts have access to a suite of marketing tools that allow them to create custom discounts, set redemption timeframes, and manage how guests can apply them.
Direct bookings create the ideal environment to sell add ons
When a guest gets to save as much as 18% in service fees thanks to a direct booking, he/she is much more prone to be willing to purchase add-ons at checkout. Add-on sales are a great way for hosts to make extra income and to wow their guests with extra services. The most notable add-ons include offering a breakfast menu for a few extra dollars per night, a basket of fresh and local fruits, or local guided tours and activities.
Direct bookings are a great way for both hosts and guests to enjoy greater value and extra benefits. In addition to saving on commissions, hosts get to increase their brand awareness, reach higher occupancy rates, sell add-ons, and have more guest referrals to name a few. Guests also benefit from direct bookings. By booking directly they get to save on service fees, enjoy more personalized experiences, rewards, and special offers.