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Hey there, welcome back. We're Mike and Karen, your hosts for today's deep dive into the world of hotel management. We're continuing our exploration of Arun Kamaran's insightful blog series, 50 mistakes, why most hotels fail and how you can succeed. >> That's the one by Arun Kumar Ramen. And this time we're looking at well what he calls mistake number 36 in the series. >> And it zeros in on something that sounds maybe a bit simple, but uh Arun argues it can seriously impact your hotel's profits. And what's that mistake? It's not tracking your OTAA versus direct booking ratio, online travel agency versus your own direct bookings. >> Seems basic, doesn't it? But the article makes a really strong case that just ignoring this uh this one metric, it's like having a slow, silent leak in your revenue just dripping away, >> right? So for you, the hotel owner listening in, our goal here is to unpack why knowing where your bookings actually come from, why that's absolutely non-negotiable for, you know, being profitable >> and crucially what you can actually do about it. We'll be drawing directly from Aaron's insights on the practical steps. >> Okay, so let's kick off with the core problem just like the article lays it out. It talks about this trap, right? Where uh you see your rooms are full, occupancy looks great. >> Yeah, 80 90% occupancy. and you think, "Yes, we're doing great. Celebration time." But uh what's the hidden catch there? >> Well, the catch according to the article is you might be celebrating without really seeing the cost of getting those bookings. >> Ah, >> if say a big chunk of them are coming through otaasing.com, make my trip a go to those guys. Every single one has a pretty hefty commission tied to it. >> And the article calls this a silent leak. Why silent? Well, because the booking comes in, you see the revenue maybe, but you might not immediately feel that, you know, 15, 20, sometimes even 25%. >> Wow. 25 >> just vanishing. Yeah. >> Right off the top before it even really counts towards your actual profit. >> It's not like paying the electricity bill where you see the outgoing amount clearly. >> Exactly. It's a percentage just kind of siphoned off automatically. And if you're not actually tracking the source, you just don't grasp how much is flowing out that way. >> So, you end up maybe without even realizing it getting more and more dependent on them. >> Precisely. And that dependency, as Aron points out, it leads to a whole bunch of other hidden costs beyond just that initial commission. >> Okay? Like what else? What are we talking about here? >> Well, number one is obviously that direct financial hit. You're just kind of blindly paying out 15 25% on potentially a huge part of your income >> without really knowing if it's, you know, the best way you could be getting that business, >> right? Which leads to the next point. >> Yeah. >> Lack of insight into your own marketing. You might be spending money on your own website, maybe some social media ads, >> trying to get people to book direct. >> Exactly. >> But if you don't track where bookings are actually coming from, how do you know if that marketing spend is working? Are you getting more profitable direct bookings because of it or not? >> You're flying blind. Basically, marketing in the dark. >> Totally. And then there's the whole guest relationship aspect. When someone books via an OTAA who owns that customer data, usually the OTAA, >> right? They control the main communication channel, >> which means you lose out. They can't easily target them for, say, a special offer on their next stay or upsell them a dinner package directly before they arrive. >> You lose that chance to build loyalty to encourage them to come straight to you next time. >> You lose that repeat guest data, which as the article rightly says is gold. Direct repeat guests cost less to acquire and often spend more. Ignoring the ratio means you're kind of handing that future value over to the OTAA. >> And I guess over time, your own hotel brand gets weaker. People just remember booking on Make My Trip, not necessarily your hotel specifically. >> That's a big part of it. Your identity gets diluted, >> which leads to that uh pretty stark phrase the article uses, becoming slaves to >> OTAAS. >> You get so hooked on the volume they send, you feel like you can't reduce your reliance, even while they keep taking their cut, shrinking your margins. So, you're busy, maybe even fully booked, but not actually making the profit you should be. >> It's like running faster and faster on a treadmill, but not really getting anywhere further financially. >> Okay. So, how big a deal is this really in like actual money terms? The article gives some examples, right, from India specifically. >> Yes. This is where it really uh hits home. There's a story about a resort, I think it was in Kodak Canal, >> okay, >> and they were happy, you know, business seemed good. They had a solid 80% occupancy rate, >> which sounds great on paper. Anyone would think that's success. >> Absolutely. But then they actually started tracking where these bookings came from and uh the result was pretty alarming. >> What did they find? >> A huge staggering 90%. 90. 90% of their bookings were coming purely through OTAAS. >> 90. Wow. That's almost complete dependency. >> It really is. And the cost, the article calculates that in just 60 days, so two months. >> Yeah. >> This resort lost over three lakh rupees. >> 300,000. M >> just on commissions paid out to otaas. >> Three lakh rupees gone in two months before they even paid staff or utilities or anything. Just commission. >> Three lakhs. That's what roughly 3,500 maybe $4,000 just walking out the door every couple of months. Money that could have gone straight to their bottom line or upgrades or anything else. >> That really paints a picture of that silent leak, doesn't it? High occupancy hiding a massive financial drain. >> It does. But the article also gives a counter example which is much more encouraging. Another hotel, same area. >> And what did they do differently? >> They started tracking and crucially they started acting on that information. They worked to shift the balance. >> And what kind of ratio did they achieve? >> They got it to a much healthier place. Only 45% from OTAAS and a really strong 55% coming directly. >> Okay, so majority direct. That's a big shift from 90% OTAA. >> Huge shift. And think about the impact. The article mentions they spent about €10,000 euro on some targeted marketing to boost those direct bookings. >> 10,000 rupees, okay, a modest spend. >> But because they successfully shifted that ratio away from OTAAS, they saved, wait for it, €60,000 on commissions during the same period. >> Wow. So spend 10K, save 60K, that's a net gain of 50,000 rupees. >> Exactly. A 50,000 rupee gain just from getting visibility and taking control. It makes that equation in the article seem spot-on. >> Which equation is that? >> The one goes tracking equals clarity. Clarity equals control. >> And control equals profit. Simple but powerful. >> Yeah. It shows it's not just theory. It's a direct line from looking at the numbers to making more money. >> Okay. So, the problem's clear. The potential impact is huge. What does Arune actually recommend doing? What are the steps for, you know, someone listening right now? >> Thankfully, it's not just doom and gloom. The article lays out a very clear, practical four-step process. >> All right, let's break it down. Step one. >> Step one is the absolute foundation. Start tracking diligently for every single booking that comes in. >> And what details do you need to track? >> The article specifies four key things. The source, you know, was a booking.com, Make My Trip, your own website, a phone call, WhatsApp, maybe a walk-in. >> Okay. Source. What else? >> The date the booking was made, the revenue from that specific booking, and this is critical, the commission paid. if it came via an OTAA. >> Got it. Source, date, revenue, commission, four things. And you don't need some super complex system to start. >> Nope. Arun makes that clear. Ideally, your PMS, your property management system should handle this. But if it doesn't or you don't have one, an Excel spreadsheet works just fine to begin with. >> So, no excuses really. Just start logging the info. >> Just start. That's step one. Collect the data. >> Okay. Step two. After you've got some data collected, >> step two is analyze. Calculate your ratio. Do it regularly, maybe monthly to start. >> How do you do that calculation? >> Simple math, really. Look at your total bookings for the month. Count how many came from OTAAS. Count how many came direct. Then work out the percentages. >> Like that example in the article, 60 total bookings. 36 OTAA, 24 direct. >> Yep. So 36 divided by 60 is 6, which is 60% OTAA. And 24ID 60 is 4. So 40% direct. That's your ratio. 60/40. >> Right. So now you know your starting point, your baseline. >> Exactly. You can't improve what you don't measure. This gives you that measure. >> Makes sense. Okay. Step three. >> Step three is set a target, a realistic one. Don't try to, you know, cut off OTAAS completely overnight. >> Probably not wise or even possible for many, >> right? The article suggests aiming for a gradual improvement. Maybe target a 5% or 10% reduction in that OTAA percentage each quarter. >> So, if you're at 60% OTAA now, aim for maybe 55% or 50% in the next 3 months. Slow and steady. Precisely manageable progress. It's a strategic shift over time. >> Okay. Track, analyze, target. What's the final step? Step four. >> Step four is act. This is the proactive bit. Actively strengthen your own direct booking channels. >> Right. This is how you actually make the shift happen. What kind of actions does the article suggest? >> Several practical ideas. First, take a hard look at your own hotel website. Is it easy to use? Does the booking engine work well, especially on mobile? >> Is it fast? Does it look good? Does it actually sell your property effectively? all of that. Make booking direct appealing and simple. Then uh actively promote other direct channels like your WhatsApp number if you use one for bookings. >> Good point. WhatsApp is huge in India for business. >> Definitely make that number visible everywhere, website, social media, maybe even on your front desk signage. Make it easy for people to reach you directly. >> And what about giving people a little nudge and incentive to book direct? >> Yeah, that's crucial too. Offer small perks for direct bookers, not necessarily big discounts because that eats margin, too. >> So, things like >> maybe guaranteed early check-in or late checkout if you can manage it. A free welcome drink, a small room upgrade if available. Maybe a little local snack or souvenir in the room. >> Little things that cost you much less than that 15 25% commission, but make the guests feel appreciated for booking direct. >> Exactly. The win-win creates goodwill and saves you money. So those four steps, track, analyze, target, act, that's the road map. >> And if you follow that road map, the article talks about this big opportunity that gets unlocked. What's the ultimate payoff? >> Well, first and foremost, obviously, increased profit margins. Less commission paid out means more money stays with you. It's that simple. >> Which then lets you be smarter with your marketing, right? Because now you actually know what drives direct bookings. >> Absolutely. You can invest your marketing budget where it actually delivers profitable results, not just spray and prey. >> And you get to build real relationships with your guests. >> Yes. Because you own that direct communication channel. You have their data. You can encourage repeat visits, offer personalized deals, build genuine loyalty, >> things the OTAAS just can't or won't do for your specific hotel, >> right? And all this leads to, you know, less dependency on those OTAAS. You gain back control over your pricing, your inventory, your guest experience. >> You're less vulnerable to their algorithm changes or commission hikes. >> Exactly. It all adds up to a more sustainable, more resilient business. You're building a stronger foundation for the long term based on your own efforts. >> So, as we kind of wrap up this deep dive, pulling from Arun Kamuran's article in the 50 mistakes series, the message for you, the hotel owner listening seems really clear. >> Mhm. Don't just look at occupancy rates and assume everything's fine. >> Yeah. The focus really needs to shift, doesn't it? It's not just about high occupancy. It's about profitable occupancy. >> That's the key takeaway. >> And tracking where your bookings come from. That OTAA versus direct ratio. It's not just some optional nice to have metric. It's uh fundamental to knowing the financial health of your business. >> It really is the difference between just being busy and actually being profitable and in control. >> It puts the power back in your hands. gives you the clarity to make informed decisions to shift towards growth that actually benefits your bottom line, >> allows you to build a stronger, more independent future for your hotel. >> And you know, thinking back to that code icon example, >> when you see that tracking, just this one simple ratio could uncover hundreds of thousands lacks in lost revenue just slipping away silently. >> It does make you wonder, doesn't it? It fixing this one may be overlooked. Blind spot can make such a massive difference. What other seemingly small things might be holding your hotel back from its true potential?