Hoteliers rely on the first quarter of the year as a barometer for what the year will bring in terms of reservations. This happens because Q1 is responsible in average for 40% of all nights sold throughout the year. In any interaction with an hotel, specially in Europe, you’ll ear people say how booking.com is a selling machine gun. When you look at the numbers, you can see why they are soo happy. Booking is most of the times the biggest selling channel. All good, right?

Well, not really. When to you take a deeper look into the numbers, specially in a retrospective way, after checkouts, the scenario changes quite a bit. We’ve run the numbers for 2017 to try to have a clear view of what was booked and what actually was fulfilled and for most of you, this will come as a surprise.

As you can see on chart 1, Booking.com cancelation ratio averages 42% yearly and increases with time and could reach the 75% for advance bookings with a pace bigger than 6 months. So high? why? Well, there are a lot of factors involved but most times, due to the well promoted free cancellation, people just want to secure some rates and then they will make their final decision and cancel.

When booking directly, the behaviour is quite different. Because the direct channel has a bigger emotional involvement, it is a more maturated decision, the cancelation for direct drops to a pale 13%.

But cancellations are just one part of it. The average value of a reservation is also important. Again, although in general all people start their searches for hotels on OTA’s, the segments that book on them and the ones that book direct are different. This staggering difference in average daily rate between the two as shown in the next chat:

booking.com customers are looking for the cheapest prices. In average a reservation from your website is worth 15% more than one from booking.com but if we zoom in to the high season, the difference can reach to 60%. Bare in mind that this comparison is being made with sold prices. If you deduct the OTA commissions, the difference will increase.

Conclusion

So, let’s do the math:

For each 10 reservations from Booking.com, you’ll only get on average 5,8 reservations at, let’s say 100€. That’s 580€. If you take the commission at 18% that will lead you to 475,6€

For each 10 direct reservations you’ll get 8,7 reservations that represent (8,7x(100€x1,13)) = 983€.

This means that one direct reservation could be worth 2,06 times a booking.com reservation.

Hotels need to understand the importance and relevance of their reservations. Most of them feel they are helpless when it comes to OTAs in general as they are responsible for keeping the occupancy levels high. Take a better look at your numbers as you can see that bookings and occupancy are two completely different things. Besides the value that is shown by the numbers, Direct reservations have a wider impact on the hotel brand. People connect with the hotel brand, they are more willing to make reviews and the total value of the stay is higher.

Just think what you could achieve if you grab on 10% of what you spend in commissions and apply it on optimising your direct channels.