There is no need to emphasize much about the importance of Direct Bookings for hotels, as this is a common knowledge to every hotelier and revenue manager.
We have discussed at length about ways to increase direct bookings in our earlier blogs – Hotels, Let’s go direct and How to increase hotel direct bookings?
In this blog, we will share how you should utilize your Closed User Group (CUG) consumers to get more direct bookings and a healthy bottom-line.
To begin, let us talk a bit about what qualifies a guest as a CUG member of a hotel. Consumers who become members by their will and actively opt in for the CUG program, receive a member profile that is accessed by a login id and password. To assist consumers and to make it easier for them to access CUG rates, some hotels select to publish their preferred rates directly in the search results of their hotel website.
Moreover, of course, the guest should have made a minimum of one un-discounted booking prior to becoming a closed user group member.
Hotels very often use CUG clause as an exception to Rate Parity Clause with OTAs, to the conditions that the hotel cannot undercut rates given to the OTA directly on their brand websites.
Apart from this, Hotels and OTAs also have Guests Loyalty Programs to take a relief from Parity Clause and offer better rates to their loyal customers. Nevertheless, this is more of a customer retention scheme, where the consumer is able to gain some benefit over a period of time by being loyal to a hotel brand.
What benefits do hotels get from Closed User Group guests –
- CUG scheme is not just publicizing cheaper rates; it is more focused to encourage benefits of customer loyalty to consumers and save as much OTA commission by an increase in direct bookings.
- CUG membership has an edge over loyalty programs since they give instant gratification and benefit, unlike loyalty programs where customers wait years down the line to avail a small benefit.
- Improve on customer retention to save money paid as OTA commission by having more direct room bookings.
- Hotels add up contacts to their database with CUG schemes, as it requires details of the consumer to avail this benefit.
- You can offer more personalized services with the information that the customer fills in the customer information form.
- It further increases the probability of up selling and cross – selling other services of the hotel like Spa, restaurant, club, etc.
CUG selling is a strategic inventory distribution decision since Customer Life Time Value is what is more important to hotels than a just one-time sale. The whole profitability of such consumers can only be calculated over a period of time by Customer Life Cycle Value and Customer Acquisition Cost.
One important aspect to keep in mind when you are focusing on direct bookings is that hotels should pay special attention to make the booking experience on the hotel website and overall browsing experience absolutely user-friendly and seamless for the online users. CUG members should also be able to make their bookings in a few clicks if we want them to actively use CUG member program for their hotel bookings.
If negotiation or any changes in rate parity regulation give hotels free reign to control pricing by channel, let us keep our fingers crossed to see what position CUGs will have in the distribution mix in future. Considering that hotels are keeping closed user groups prices more open, we can expect a more transparent market for consumers in future.