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Hotels’ strategic objectives regarding direct bookings at four- and five-star hotels in the Cape Town metropole
Author(s)
Heuvel, David
Date Issued
2022
Type
Thesis
Publisher
Cape Peninsula University of Technology
Abstract
Hotels are incurring substantial costs from online travel agents (OTAs) in the form of
commission paid for receiving bookings via online channels. A shift in online bookings from
OTA to direct booking methods has the potential to substantially increase hotels profitability.
The study reports on four- and five-star hotels in the Cape Town Metropole’s attempt to win
back direct booking guests, hotel initiatives that increase direct bookings, predominant
channels for hotels receiving bookings, as well as an understanding of potential challenges to
receiving direct bookings. The purpose of this study is to highlight the significance of direct
bookings on a hotel’s profitably and relationship with guests, where hotels with a
disproportionate booking mix consider the implications of shifting a percentage of bookings
from OTA to direct channels, and its effect on the hotel’s financial performance. This was a
quantitative study which consisted of close-ended questions, with minimal open-ended
questions, and made use of a descriptive as well as a cross-sectional design, as well as a
pragmatic paradigm. Data was collected using an online questionnaire created with Google
Forms and analysed using SPSS. Open-ended questions were analysis to determine trends
in responses. The questionnaire was emailed to four- and five star Cape Town hotels senior
managers, which were selected using purposive sampling techniques. The entire population
of four- and five-star hotels in the Cape Town Metropole was considered, comprising 64 hotels
originally, which was later revised to 54 hotels due to the Covid-19 pandemic. A pilot study
was conducted to verify comprehension of questions and ensure the data addressed the
research objectives. The data was presented in graph and table format. All ethical
considerations were adhered to during this study. Results indicate that 94,7% of hotels are
attempting to increase direct bookings, of which 60% receive direct bookings at a minimal rate
of less than 40%. Respondents have initiatives in place to encourage direct bookings with 84%
achieving rate parity or offering better rates on their hotel website, however the majority of
bookings are received from OTA channels. Respondents further indicated that OTA
convenience and the hotels’ inadequate direct booking technology appear to be the
predominant contributing factors to the increase in OTA bookings despite hoteliers’ efforts to
win back direct booking guests. While hotels are attempting to promote direct bookings, their
current level remains relatively low due to ineffective hotel booking technology and the guests’
preference for OTA convenience. The hotels’ senior management are keen to encourage more
guests to book directly, however, they do not seem to have the needed technology. Therefore,
the development of a user-friendly direct booking system via the hotels’ website together with
direct booking incentives for the guest will be crucial.
commission paid for receiving bookings via online channels. A shift in online bookings from
OTA to direct booking methods has the potential to substantially increase hotels profitability.
The study reports on four- and five-star hotels in the Cape Town Metropole’s attempt to win
back direct booking guests, hotel initiatives that increase direct bookings, predominant
channels for hotels receiving bookings, as well as an understanding of potential challenges to
receiving direct bookings. The purpose of this study is to highlight the significance of direct
bookings on a hotel’s profitably and relationship with guests, where hotels with a
disproportionate booking mix consider the implications of shifting a percentage of bookings
from OTA to direct channels, and its effect on the hotel’s financial performance. This was a
quantitative study which consisted of close-ended questions, with minimal open-ended
questions, and made use of a descriptive as well as a cross-sectional design, as well as a
pragmatic paradigm. Data was collected using an online questionnaire created with Google
Forms and analysed using SPSS. Open-ended questions were analysis to determine trends
in responses. The questionnaire was emailed to four- and five star Cape Town hotels senior
managers, which were selected using purposive sampling techniques. The entire population
of four- and five-star hotels in the Cape Town Metropole was considered, comprising 64 hotels
originally, which was later revised to 54 hotels due to the Covid-19 pandemic. A pilot study
was conducted to verify comprehension of questions and ensure the data addressed the
research objectives. The data was presented in graph and table format. All ethical
considerations were adhered to during this study. Results indicate that 94,7% of hotels are
attempting to increase direct bookings, of which 60% receive direct bookings at a minimal rate
of less than 40%. Respondents have initiatives in place to encourage direct bookings with 84%
achieving rate parity or offering better rates on their hotel website, however the majority of
bookings are received from OTA channels. Respondents further indicated that OTA
convenience and the hotels’ inadequate direct booking technology appear to be the
predominant contributing factors to the increase in OTA bookings despite hoteliers’ efforts to
win back direct booking guests. While hotels are attempting to promote direct bookings, their
current level remains relatively low due to ineffective hotel booking technology and the guests’
preference for OTA convenience. The hotels’ senior management are keen to encourage more
guests to book directly, however, they do not seem to have the needed technology. Therefore,
the development of a user-friendly direct booking system via the hotels’ website together with
direct booking incentives for the guest will be crucial.
Additional information
Thesis (MTech (Tourism and Hospitality Management))--Cape Peninsula University of Technology, 2022
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