Latest / Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights / Your Direct Booking Strategy Is Probably Wrong

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Your Direct Booking Strategy Is Probably Wrong · Host Planet: Airbnb, Holiday Let, and Vacation Rental Insights

• 0:00
  Many of the gurus use it as cheap attention.
• 0:02
  They're trying to touch on a pain point that many operators
• 0:05
  have, and it's really an emotional thing.
• 0:07
  It's unfair to a great extent the level of Flack that OTAs are
• 0:10
  getting. OTAs like Airbnb and booking.com
• 0:14
  can be your friend. And for some of you, direct
• 0:17
  bookings are not worth the hassle.
• 0:20
  That's David Anthony Scott, a short term rental and branding
• 0:24
  expert who says direct bookings are not for everyone.
• 0:27
  Because guess what? Direct bookings come price.
• 0:30
  This is the House Planet podcast powered by Housefully.
• 0:39
  David, thank you for joining us on the House Planet podcast.
• 0:42
  Let's start with a statement that will probably raise a few
• 0:46
  eyebrows. Direct bookings aren't worth the
• 0:49
  hassle. What's your take?
• 0:51
  That's an interesting statement. I think that it's not.
• 0:56
  It's not worth being hassled by. It would be a more appropriate
• 1:02
  statement in the sense that it should be a more natural process
• 1:06
  than a quick fix or a sort of a fad where people are trying to
• 1:10
  sell it to you as a solution to your overall problem.
• 1:15
  But it's an interesting way of putting it that definitely
• 1:18
  provokes questions. So what do you think of the kind
• 1:23
  of the drive for direct bookings right now and all the stuff we
• 1:28
  see online about you need to get your guest to book direct.
• 1:31
  You always have to get, you know, direct bookings, you know,
• 1:33
  whatever your situation in short term rentals, do you think
• 1:36
  people are kind of like they're exaggerating a bit by how
• 1:40
  important it is? Not really.
• 1:42
  I just think it's a reflection of the maturation level in the
• 1:44
  industry. A few years back, there was an
• 1:48
  obsession with optimization of listings.
• 1:51
  And it's just a natural progression where people started
• 1:54
  thing in this industry with a side hustle and then they go to
• 1:58
  level 2 where they start to automate their emails.
• 2:01
  And now they're going to Level 3 where they are doing other
• 2:07
  stuff. And then now they're looking at
• 2:09
  direct bookings as a way to get away from the OTA dependency,
• 2:13
  which is a phase, but it's not a panacea.
• 2:19
  Direct bookings is not the magic bullet to make your business
• 2:23
  profitable. It's just been sold as a pin, as
• 2:29
  a pinpoint to a level of the market, I would say the operator
• 2:37
  who's at a certain stage in the market.
• 2:41
  Now let's have a look at it in a bit more detail then, because
• 2:43
  obviously people always say, oh, you know, direct bookings are
• 2:47
  cheaper. Are they cheaper?
• 2:50
  And when people say this, what are the costs?
• 2:54
  Do you think that they're they might not necessarily be
• 2:57
  thinking about? Well, they're not always
• 2:59
  cheaper. If you look at the just the
• 3:01
  credit card processing fees for example, that's like 3%.
• 3:05
  If you look at the risk premium adjustment, you'd be looking at
• 3:09
  a further 4% for that. So that's already 7% before
• 3:13
  you've done anything. So I'm talking about just
• 3:15
  covering yourself in case of anything because you know, OTS
• 3:17
  usually cover you to some extent.
• 3:21
  And then the benchmark for attracting through advertising a
• 3:28
  booking would be maybe 5 to 7% of, of, of gross of gross
• 3:33
  revenue from the booking. So when you Add all the things
• 3:36
  up, you're, you're talking about 14% already right off the bat,
• 3:39
  right? So it's comparable to where
• 3:41
  Airbnb is already. And so it's not this whole thing
• 3:45
  or you're giving away 15% to Airbnb.
• 3:48
  It's, it's just, isn't that right?
• 3:50
  It's, it's just much more complicated than that, as we're
• 3:52
  talking about now, the lifetime value of the guest, which is the
• 3:55
  most important thing. And people keep straying away
• 3:57
  from this, the argument and the about guest satisfaction and
• 4:02
  guest experience. And they're trying to look for
• 4:03
  these magic bullets and ways to scale up and make money and all
• 4:07
  that kind of thing and just keep moving away from the guests,
• 4:09
  which is where we should always be focusing in order to have a
• 4:12
  successful hospitality business and to have a lower guest
• 4:16
  acquisition cost in the end of the at the end of the day.
• 4:19
  And in relation to direct bookings, it's far from just
• 4:24
  building a website, right, You know, because if you work with
• 4:27
  APMS in particular, or maybe you, you could build a WordPress
• 4:31
  site or a Wix site pretty quickly, you could you're
• 4:34
  building a website is kind of the easy bit driving people to
• 4:37
  the website. That too could be very costly.
• 4:41
  Hugely, I mean just getting the traffic alone is it costs a lot
• 4:44
  if you now to advertise actually on Facebook or Google cost a lot
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  because everybody organic reach is very difficult to get now
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  because it's so saturated. And so the the these platforms
• 4:59
  are charging more to actually for you to to to get connect you
• 5:02
  with your ideal customer, your ideal guest.
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  So it's very expensive and there's a lot that goes into it
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  beyond just spending money on ads.
• 5:10
  You have to have good creative and you have to have good copy.
• 5:15
  You have to know the pain points.
• 5:16
  You have to create campaigns that are relevant and also to
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  have pages, landing pages that convert and also funnels that
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  connect the landing pages to sequences that help to nurture
• 5:30
  leads once they get into the system.
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  So just sending traffic blindly to a website is really a a very
• 5:38
  costly way of trying to attract guests and in most cases it's
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  really a waste of money. I often think of the time
• 5:47
  element as well, because a lot of people, they have a short
• 5:49
  term rental. If they just have one or two,
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  generally it's a side hustle, it's an investment, It's
• 5:54
  something that might be their pension in years to come.
• 5:57
  And if they're working a full time job, say it's, you know,
• 6:00
  quite a well paid 1, let's say they're a lawyer or a doctor or
• 6:03
  some kind of professional spending all this time trying to
• 6:07
  develop direct bookings might be time wasted if your usual hourly
• 6:11
  rate is is so high. So you might get a few more
• 6:15
  direct bookings in a a little bit of Commission, but maybe you
• 6:17
  should spend that time, you know, doing your normal job.
• 6:20
  Absolutely. I mean, we didn't even factor
• 6:22
  that in the time that you, I mean, it was probably the most
• 6:24
  costly thing of all your, your personal time.
• 6:27
  So yeah, I mean, the way that the, the direct booking
• 6:33
  supplement pill has been sold is sort of like, you know, just a,
• 6:38
  you know, you take it and you're good.
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  It's, it doesn't work. It's much more complicated than
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  that, but it's a very seductive proposition.
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  And how do you feel when people online criticize the OTAs, in
• 6:51
  particular Airbnb, over and over again?
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  Do you think it's just a cheap bit of attention or or do they
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  really mean it? Many of the gurus use it as
• 7:01
  cheap attention and they're, they're trying to touch on a
• 7:04
  pinpoint that many operators have.
• 7:07
  And it's really, you know, it's an emotional, it's an emotional
• 7:09
  thing. It's unfair to, to a great
• 7:12
  extent the, the level of Flack that OTAs are getting.
• 7:15
  Before OTAs, there was a system that was actually even harder
• 7:20
  for, well, it was impossible for an independent operator really
• 7:24
  to get into. You'd have to be at a large
• 7:25
  hotel in order to have a significant travel agency take,
• 7:30
  take you on and you'd have to fed them and take into your
• 7:32
  property and stuff like that. They'd completely ignore small
• 7:36
  operators. And so OT has actually allowed
• 7:39
  for this industry to actually even emerge.
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  So and they are doing what they, I mean, obviously they are there
• 7:48
  are excesses where they are have been pushing their their power
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  and their advantage a bit too far in some cases.
• 7:57
  But overall they are a friend, not a foe.
• 8:00
  They're not. They're not.
• 8:03
  We shouldn't be vilifying them. Quick pause before we continue.
• 8:06
  This episode is powered by Housefully, a property
• 8:09
  management platform built for professional hosts and managers
• 8:13
  who want control, automation and a better guest experience.
• 8:17
  From powerful PMS tools to industry leading digital
• 8:20
  guidebooks, Housefully helps you streamline operations while
• 8:24
  delivering a more polished stay for guests, whether they book
• 8:27
  direct or via the OTAs. If you're keen to find out more,
• 8:31
  simply scan the QR code on screen if you're watching on
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  exclusive house Planet bonus with you.
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  It's $500 off on boarding for the PMS and 30% off digital
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  guidebooks for life. All right, back to the show, the
• 8:55
  OTAs then David, Airbnb and booking.com.
• 8:58
  I mean, they spend billions on marketing every year.
• 9:03
  So from your perspective, why is it unrealistic for individual
• 9:08
  hosts or even small property managers to even think about
• 9:12
  competing with that level of reach?
• 9:15
  Yeah, you cannot compete with them on what they do.
• 9:18
  They'll actually bid for your name and and show up high in the
• 9:22
  search rankings on Google for your property and you below it.
• 9:27
  But that's not where you should compete.
• 9:29
  You should compete where you understand your ideal guest on a
• 9:35
  on a more intimate level and advertise for the more the
• 9:40
  underlying things that the ideal guest is actually looking for in
• 9:43
  your area or of a property type such as yours.
• 9:49
  And that should be the under that should be where you're
• 9:51
  spending your advertising dollars.
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  You cannot get to the top of search in Google using generic
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  keywords. You have to use long tail
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  keywords, bid on long tail tail keywords, and have campaigns
• 10:06
  that are catered to your ideal guest.
• 10:11
  And you, you have to understand your guest intimately, their
• 10:14
  underlying needs, pain points, and that's where you can
• 10:17
  compete. And yeah, otherwise forget it.
• 10:23
  When we think of that frustration aimed at the OTAs
• 10:26
  right now, we've touched on it a little bit before.
• 10:29
  The fees, the rules, the lack of control.
• 10:32
  I guess do you think some of the hostility towards platforms is
• 10:36
  more emotional than commercial? Absolutely.
• 10:41
  I mean, it's, you know, going back to the same point about the
• 10:46
  evolution, you know, you looked at Facebook groups with posts a
• 10:53
  few years back. They are, you know, they're
• 10:54
  arguing about like this, that they are having a camera on the
• 10:57
  hot tub. The kind of conversation that
• 11:01
  we're having is a reflection of the stage that we're at with the
• 11:04
  maturity of the hosts and sophistication of
• 11:06
  professionalization. And as there the cadre of hosts
• 11:12
  become more professional in general, you find that that kind
• 11:14
  of argument recedes. So I think overall, it's just a
• 11:18
  reflection of our lack of sophistication as an industry as
• 11:22
  a whole. And I'm not saying that in a
• 11:24
  condescending light, because I think that we have a lot of
• 11:28
  fantastic people out there who are leading the charge and
• 11:33
  actually making a huge difference.
• 11:35
  But you know, we are still growing.
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• 12:57
  Let's balance this a little bit then.
• 12:59
  In what scenarios do you think direct bookings make total sense
• 13:03
  and and what does a realistic direct booking strategy actually
• 13:07
  look like? Well, first of all, pick the low
• 13:09
  hanging fruit. I mean, your your repeat guests
• 13:12
  are you're a lot. You're the guests that love what
• 13:14
  you offer and have given you good reviews and you know,
• 13:19
  typically come back to your area.
• 13:22
  Those are the people you should be targeting first, making sure
• 13:25
  that you develop a direct relationship with them through
• 13:28
  obtaining their e-mail, nurturing, nurturing a, a
• 13:34
  relationship with them basically, and then getting them
• 13:36
  to book directly with you. And by the way, I mean, you can,
• 13:40
  you can start a direct booking system by with a, with a
• 13:43
  telephone number. You know, it's not, it's not
• 13:46
  science, not rocket science. It's just about developing a
• 13:48
  relationship. I was worked in hotels for, for
• 13:52
  a few years and top hotels and many bookings were taken by
• 13:55
  e-mail because some guests just prefer taking e-mail, doing
• 13:58
  e-mail. And so it doesn't have to be
• 14:00
  this high fluted sort of system where you know, you're, you're
• 14:04
  you're trying to check with the latest guru about how to do
• 14:07
  something like that. Just question about building a
• 14:09
  relationship and getting people to book directly with you.
• 14:11
  But just have your booking engine set up.
• 14:14
  Don't bother. Don't you don't have to get a
• 14:16
  fancy website with like lots of video and stuff like that.
• 14:20
  Typical. A typical booking engine is
• 14:22
  structured to get you booked because it follows the format
• 14:26
  that typically Airbnb would follow anywhere any of those
• 14:30
  online travel agencies would follow where you give them the
• 14:32
  information as quickly as possible so they can make a
• 14:34
  decision as quickly as possible. Your website is there to market
• 14:37
  your property, not necessarily to get you booked.
• 14:40
  So first thing is to understand distinction of your booking
• 14:43
  engine on your website. Your website's for marketing the
• 14:45
  booking engine is for getting helping a person to to quickly
• 14:50
  identify what they need and to book with you.
• 14:52
  So that's the best place to start.
• 14:55
  And then just try to run campaigns based on intent and
• 15:01
  understand your calendar and the demand that you will, your
• 15:06
  calendar will will, will attract.
• 15:08
  So you know your summer season, who's coming in summer, who's
• 15:12
  coming here there? How do you reverse engineer
• 15:15
  everything so that you can promote to the right guests at
• 15:17
  the right time? Who is worth being promoted to
• 15:21
  as a direct Booker and who is not?
• 15:23
  You know on what OTA channels should I use to get the other
• 15:28
  segments in? If somebody approached you and
• 15:31
  said, David, I've got a couple of properties and I'm sick of
• 15:35
  paying all these OTA fees and I've seen this option here to
• 15:39
  get a direct booking website and it's going to cost me 567000
• 15:42
  dollars, what would your advice to them be?
• 15:46
  You don't need a expensive website.
• 15:50
  Just start with the booking engine that this the property
• 15:53
  management system provides for you, which is usually included
• 15:58
  in the property management system fee.
• 16:00
  They're typically designed, as I said, to to to for people who
• 16:05
  want to take action. And so you get, you do that and
• 16:10
  you're good to go. I mean, although you, you get
• 16:13
  the, you get the data after that and then you build from the data
• 16:17
  that you have. Don't build a website 1st and
• 16:20
  then try to get the data, get the data 1st and then build a
• 16:23
  website around the data that you have.
• 16:25
  Otherwise you've wasted the money because the first thing
• 16:28
  that the website's supposed to do is to be able to speak to
• 16:31
  your ideal audience. And if you're just going to
• 16:33
  build a website to look pretty, because a lot of people want a
• 16:35
  pretty website for their own ego reasons.
• 16:37
  And if it doesn't convert this, no, it doesn't.
• 16:39
  You're wasting the money. If you were advising a host
• 16:44
  who's starting out, then would you recommend this hybrid
• 16:48
  approach? OTAs for demand, Direct for
• 16:51
  loyalty? And what does doing it properly
• 16:54
  look like from day one? Yeah, I'd start with OTAs for
• 16:59
  demand and direct for loyalty because you don't have any
• 17:01
  traffic yet. If you have traffic, which you
• 17:05
  know, if you have a good presence on social media and
• 17:09
  maybe strong blog or something source of traffic, then you
• 17:13
  know, you can invest a little bit more in a direct strategy
• 17:17
  with. But the to start with, just go
• 17:22
  for loyalty and that will pay for itself.
• 17:25
  The it's a way to start and that that should pay for itself.
• 17:29
  And then once you understand your guess and you keep going,
• 17:32
  you just put layers on top of that.
• 17:36
  Before we get to the final question, then just tell us a
• 17:38
  little bit about your journey in STR.
• 17:41
  And I know you're in Sweden right now where it's -6 so how
• 17:45
  on earth did you end up where it's -6?
• 17:47
  I thought Yorkshire was cold. I know, yeah.
• 17:50
  I actually, I was running a hostel in Jamaica in the 2011
• 17:58
  right to 2020 and migrated to the States in 2016, was running
• 18:04
  it from there and I was starting to get into SDRS as well.
• 18:09
  And I sold the hostel prior to COVID and then I was renting.
• 18:13
  I was leasing 2 hotels which was part of the same hostel group.
• 18:19
  But because of COVID, I just gave up the lease.
• 18:21
  There was nothing going on and I wanted to I started to consult
• 18:25
  for hotels because I developed my own way of running boutique
• 18:31
  properties and I'd done learned the branding from before, like
• 18:35
  from a marketing agency I started.
• 18:39
  But anyway, long on the short of it is that I ended up falling in
• 18:43
  love with a Swedish woman who's known my wife and I moved here
• 18:49
  in 2018 and I've been travelling in between here and the States
• 18:55
  since then and started a family and everything.
• 18:57
  So it's been a wonderful journey.
• 18:59
  I love this country. I love my Jamaica too, but I
• 19:02
  also love this country. And yeah, I just loved helping
• 19:06
  people make money with rentals or hospitality.
• 19:10
  I love the industry, I'm passionate about it and I just
• 19:14
  want to see it advance. And tell us about STR Booster.
• 19:19
  And I think you've written a book about this space as well.
• 19:23
  Yeah, actually I decided to write a book was about kind of
• 19:26
  about my, my, the lessons I've learned from my journey.
• 19:29
  And it's really about how brand psychology and, you know, help
• 19:36
  to drive direct bookings. STR Booster was designed to help
• 19:41
  short term rentals improve their earnings by giving them the
• 19:47
  tools and the frameworks that can really drive growth.
• 19:53
  So currently we have a all in one software solution which is
• 19:57
  designed to take the complexity out of marketing and to give
• 20:02
  hosts the freedom to scale while saving time that will afford
• 20:10
  them the focus to on the guest and bring building their brand.
• 20:16
  Superb. And we'll put the links to STR
• 20:19
  Booster in the show notes, of course.
• 20:21
  David, final question that if people take one thing from this
• 20:24
  episode, what should it be? Know your guest.
• 20:28
  Know your ideal guest. Have an ideal guest avatar.
• 20:32
  Understand the calendar and reverse engineer how you're
• 20:36
  going to get booked. Apply your distribution
• 20:42
  framework or method the methodology including direct
• 20:44
  bookings accordingly. Superb, David, it's been a real
• 20:48
  pleasure. Thanks for joining us on the
• 20:50
  Host Planet podcast. My pleasure, James, thank you
• 20:53
  for having me. All right, we'd love to hear
• 20:54
  from you. If you're watching on YouTube,
• 20:56
  drop a comment and tell us what's your best direct booking
• 21:00
  tip or your biggest OTA frustration.
• 21:04
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