Paying a chunk of your OTA platform’s revenue may seem a lot to many property managers and hosts. Direct bookings seem like a better alternative when you add up all the money spent on paying the service fee. However, there are several direct booking costs to consider before you choose to go down that road and leave OTAs behind altogether. In this blog, we will dig deeper into OTA vs direct booking and which is a better alternative for your business.
How Do Guests Book Their Stays?
Before deciding, knowing where your guests are coming from is essential.
- In 2023, 51% of travelers booked with OTAs, compared to 37% who booked directly with airlines, 23% who booked directly with hotels, and 13% who used vacation rental brands like Airbnb.
- In a scenario where prices are identical on hotel websites and OTAs, 70% of respondents in 2022 said they would book via an OTA.
- In 2021, direct bookings represented a 63% share of online gross bookings.
This means OTAs still dominate, but direct bookings are growing.
OTA vs Direct Booking: Pros and Cons
| Feature | OTA Bookings | Direct Bookings |
|---|---|---|
| Cost | 15-30% commission per booking | Upfront website & marketing costs |
| Visibility | High (millions of users) | Requires SEO, ads, and social media |
| Guest Trust | High (brand recognition) | Need reviews & a professional site |
| Control Over Bookings | Limited (OTA rules apply) | Full control (your policies) |
| Payment Handling | OTAs manage payments | You handle transactions (Stripe, PayPal, etc.) |
| Repeat Bookings | Harder to retain guests | Easier (collect emails for promotions) |
| Best For | New hosts, quick bookings | Established hosts, long-term growth |
What are some common direct booking costs to consider?
Let’s explore the various expenses you should consider when aiming to boost direct bookings for your vacation rental or short-term rental.
Website Development and Maintenance
A user-friendly, visually appealing direct booking website is essential for attracting direct bookings. To get more bookings from your website, you need to:
- Invest in professional web design and development ($5,000-$20,000)
- Ensure mobile responsiveness (68% of online traffic for travel websites comes from mobile devices)
- Implement regular maintenance ($100-$500 monthly)
For example, The StateView Hotel saw a remarkable 3340% increase in direct bookings after a website redesign.
Search Engine Optimization (SEO)
Effective SEO drives organic traffic and boosts visibility of your direct booking website and social media page. A comprehensive strategy can cost $1,000-$5,000 per month, but the returns can be significant:
- Focus on local SEO for your specific locations
- Create content around long-tail keywords (e.g., “pet-friendly cabins with hot tubs in Big Bear”)
- Optimize for Google Travel Vacation Rental listings
Remember, SEO is a marathon, not a sprint. Consistency and adaptation are key to long-term success.
Online Booking System
A seamless booking process is critical for converting visitors into guests:
- Integration costs: $500-$2,000
- Monthly subscription fees: $50-$300
- Payment processing fees: 2-3% per transaction
Consider platforms like Hospitable, which offers direct booking functionality with AI-powered guest vetting and chargeback protection.
Professional Photography and Videography
The first step of vacation rental marketing is getting high-quality pictures of your rental. They are essential for showcasing your properties to potential guests. Here are some costs you should keep in mind for them:
- Professional photo shoots: $375-$800 per property
- Virtual tours or 360-degree videos: $1,000-$5,000
- Drone footage: $500-$1,500
Content Creation
Engaging content establishes your authority and attracts potential guests:
- Blog posts: $100-$300 per article
- Destination guides: $500-$2,000
- Guest reviews and case studies
Create content that addresses common guest questions and highlights local attractions to improve your SEO and attract more direct bookings.
Social Media Marketing and PPC Advertising
An effective online presence can significantly boost visibility:
- Social media management: $500-$2,000 per month
- PPC campaigns: $1,000-$10,000 per month
A targeted Instagram campaign showcasing unique amenities and local experiences could significantly boost direct bookings for your vacation rental.
Email Marketing
Nurture leads and encourage repeat bookings:
- Email marketing software: $20-$1,000 per month.
- Focus on personalized campaigns and special offers for past guests
Email marketing can be an efficient way to promote special offers and encourage repeat bookings through your website.
Guest Services and Amenities
Exceptional experiences drive positive reviews and repeat bookings:
- Welcome packages: $20-$100 per guest
- Unique local experiences: $50-$500 per guest
Consider partnering with local tour operators to offer exclusive experiences, which can significantly increase your direct booking rate.
By strategically investing in these areas, you can create a compelling direct booking experience that rivals or surpasses OTA offerings. Remember, while OTAs like Airbnb charge up to 14.2% in guest service fees, and Vrbo charges in total fees, direct bookings allow you to keep more of your revenue.
As Todd Parker, a successful short-term rental host, demonstrates, generating over $100,000 in direct bookings is achievable with the right strategy. Focusing on these key areas can reduce your reliance on OTAs, build stronger guest relationships, and ultimately increase your profitability.
OTA vs Direct Booking: Which Booking Strategy is Best for You?
Stick with OTAs if…
- You’re new to rentals and need quick bookings.
- You don’t want to handle marketing.
- Your property is in a high-demand tourist area.
Go for Direct Bookings if…
- You’re losing too much in commissions.
- You want long-term guest relationships.
- You’re ready to invest in marketing & branding.
Conclusion
Deciding between OTA vs direct booking via your website involves weighing advantages against costs. While OTA bookings provide exposure and trust, they come with commissions and limited control. Direct bookings offer higher revenue and engagement but require website development, SEO, and marketing investments. Careful consideration of these expenses aligned with your property’s uniqueness and long-term goals can help maximize direct bookings, enhancing your vacation rental’s profitability.
Frequently Asked Questions
Are direct bookings worth it?
Yes, direct bookings are typically worth it for short-term rental hosts and property management companies. Despite initial investments, they offer more control, brand-building opportunities, and increased revenue by bypassing third-party commissions, making them a valuable strategy for property success.
How to choose the right booking source?
Choosing the right booking source for your short-term rental depends on your goals, property type, target audience, budget, competition, long-term strategy, and flexibility. Assess these factors to determine whether direct bookings, online travel agencies (OTAs), or a combination of both aligns best with your specific circumstances and objectives.
What are the advantages of direct bookings for short-term rental hosts?
Direct bookings provide short-term rental hosts and property management companies with higher revenue due to reduced commissions, greater control over the booking process, and the chance to build their brand identity and foster guest loyalty. This approach also reduces dependence on third-party platforms. This allows hosts to cultivate stronger guest relationships and access valuable guest data for targeted marketing. It ultimately enhances profitability and property success.