Hotels’ strategic objectives regarding direct bookings at four- and five-star hotels in the Cape Town metropole

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.