The online travel industry has been growing at a rapid pace over the last decade. According to Statista, the market for online hotel bookings worldwide is forecast to be worth over $1.2 trillion by 2022. With the increasing preference for booking accommodations through digital platforms, starting an online hotel booking business can be an extremely lucrative venture.
In this comprehensive guide, we will walk you through the key steps and best practices to launch your own successful hotel booking website or app.
The pandemic has led to a significant shift in how people research and book hotels. A study by Deloitte found that 61% of travelers feel more comfortable booking hotels online via websites and apps compared to before the pandemic. The convenience, ease of comparison and ability to read reviews before booking are some of the factors driving this change.
Building an online hotel booking platform comes with numerous advantages. An online booking platform allows you to expand your reach beyond just local customers. You can target a national or even international audience, significantly growing your potential customer base. Automating bookings, inventory management and payments through an online platform improves efficiency and reduces manual work compared to offline bookings and reservations. Data analytics tools give you valuable insights into customer demographics, purchasing behavior, preferences and booking patterns. These can inform your business strategies and marketing efforts. Apart from hotel bookings, you can also generate revenue through commissions, advertisements, premium subscriptions and more.
In this guide, we will cover conducting market research, choosing a business model, building your hotel booking platform, onboarding hotels and properties, marketing strategies, and tracking performance. By the end of this guide, you will have a clear understanding of what it takes to build a profitable online hotel booking business.
Market Research: Analyze Your Target Audience and Competition
Thorough market research should be the starting point for conceptualizing your hotel booking website. Gathering key insights into your target demographic as well as analyzing existing platforms and competitors is crucial.
Understand Your Target Audience
Your platform’s success will depend significantly on how well you are able to cater to your target audience. Assess your potential customers’ profile based on demographics such as age, income, location etc. Business travelers have different needs compared to families or backpackers. Look at booking habits including frequency of travel, planning horizons, length of stay and accommodation preferences. Consider purchase motivations like convenience, price, amenities, reviews etc. Examine online behavior such as devices used, purchasing patterns and tech-savviness. Identify key booking frustrations faced by customers that your platform can solve.
Conduct Competitor Analysis
Research established platforms like Booking.com and Expedia as well as any niche competitors. Look at their core features and identify what features seem most popular. Examine the user experience and assess how intuitive and convenient their booking process is. You can get ideas on how to improve your own platform. Study their business model including revenue streams, commission rates, subscription plans etc. This will help guide your own monetization strategy. Determine if competitors have any unique offerings that set them apart, as it may reveal potential gaps you can fill. Pay attention to customer feedback including pain points and complaints that present opportunities for you to improve upon.
This analysis will give you an understanding of what works well in the industry and how you can differentiate your own booking platform.
Choosing a Business Model for Your Hotel Booking Platform
When starting an online hotel booking business, you can choose from a variety of business models. Your target audience, long-term goals and level of investment will determine the right model.
A marketplace model involves bringing together hotels and travelers on a single platform. As the intermediary, you can charge a commission on every booking made. For example, Booking.com charges 10-15% commission to hotels. The advantages of this model are no overhead costs of owning inventory and the ability to scale exponentially. You also gain wider market reach to attract more hotels and travelers. The downsides are high competition from established players and commission rates get compressed over time. There is also the risk of customer leakage to hotels’ own websites.
In a merchant model, you purchase hotel room inventory in bulk at wholesale rates and sell it to consumers at higher retail prices. The difference is your profit margin. This requires significant upfront capital. The benefits are the ability to maximize profit margins and full control over inventory and pricing. The disadvantages are that it requires substantial upfront capital and the risk of unsold inventory leading to losses. You also have limited inventory due to affiliating with select hotels.
With affiliate marketing, you direct bookings to hotel and travel websites and earn a commission when visitors book through your platform. The benefits are very low overhead costs and no need to handle bookings or inventory. You can potentially work with thousands of hotels. The downsides are lower commission rates, little brand recognition since users book via external websites and limited ability to build loyalty.
Additional Monetization Avenues
Apart from the core business model, additional revenue streams can be advertising and sponsored listings, premium subscriptions for hotels to increase visibility, referral fees from partner businesses like rental cars or flights and service fees for changes, cancellations or additional amenities.
The right business model depends on your budget, target audience, long-term vision and appetite for risk. A combination of different models can also be highly effective.
Building Your Hotel Booking Website or App
Once your business model is finalized, the next step is to build a user-friendly and fully-functional booking platform.
Choose the Right Tech Stack
The foundation of your booking platform is the technology it is built on. Some options to consider are custom coding languages like Ruby, PHP, Java or Python for complete flexibility and control; WordPress and WooCommerce plugins for easier development using existing templates; SaaS platforms like Sharetribe, lodgify or Beeketing that have pre-built features; and no-code tools like Webflow or Bubble that use drag-and-drop interfaces.
Each comes with its own pros and cons regarding complexity, scalability, cost and time.
Plan the Key Features
To provide a smooth booking experience, your platform needs to incorporate certain core features. These include an intuitive search function with parameters like location, dates, number of guests, amenities etc; sorting and filtering options by price, star rating, area, availability etc; detailed property listings with photos, description, pricing and real-time availability; reviews and ratings to help users make informed decisions; secure payment integration with gateways like Stripe; a reservations system to manage bookings and send confirmations; user accounts to track bookings and offer personalized experience; an admin dashboard with tools to manage inventory, rates and monitor bookings; multi-lingual support for wider international reach; and a mobile app versions for iOS and Android.
Focus on User Experience Design
Convenience and ease of use should be at the core of your platform. Some UX best practices include intuitive navigation and categorization of features; a seamless and minimal booking process; mobile responsiveness; predictive search and personalized recommendations; a familiar layout similar to popular OTAs; and fast page load times. Good UX design minimizes friction, boosts conversions and enhances user satisfaction.
Getting Hotels and Properties Onboard Your Platform
Driving adoption among hotels and acquiring inventory should happen in parallel with developing your booking platform.
Initially target local independent hotels and boutique properties in your city. Starting local allows you to connect in-person with hotel owners, offer hands-on customer support, and slowly scale up operations. Independent hotels also tend to rely more on third-party channels for distribution than big chains.
Offer Incentives to Early Partners
Providing incentives encourages early hotels to work with an unknown platform. Some options are discounted or no-fee subscriptions for the first 3-6 months; higher commission split compared to more established OTAs; and complementary advertising or sponsored listings for initial period.
Solve Key Hotel Pain Points
Hotels are more likely to join if you can effectively address some of their major concerns like seamless integration for real-time availability to avoid overbookings; quick settlements of payments instead of delayed transfers; and detailed analytics into customer demographics and booking patterns.
Simple Onboarding Process
Make it extremely easy for hotels to create profiles, upload photos, enter rates and manage bookings through an intuitive dashboard. If the onboarding process is complex, hotels will drop off.
Expand your Reach
Once you have built traction with small properties, approach larger chains, resorts and 5-star hotels. As your customer base grows, you will be able to offer greater value.
Effective Marketing and Growth Strategies
Gaining visibility among both hotels and travelers should be an important priority.
SEO to Drive Direct Bookings
Optimizing your website for SEO helps you attract direct bookings instead of relying only on third-party sites. You can optimize pages and content for keywords like “hotels in Chicago” or “Florida resorts”; publish area-specific blogs, guides and local attractions; and get high quality backlinks from relevant sites which boosts rankings and credibility. Appearing on the first page of Google for your target keywords will be a huge acquisition channel.
Paid platforms like Google Ads, social media ads and banner ads allow you to test different keywords and messaging; drive targeted traffic by location, audience and intent; and offer promotions and discounts to incentivize first booking. Remarketing helps bring back visitors who left without booking.
Email and Social Media Marketing
Build your email list by offering discounts or exclusive deals to subscribers. Share curated content and personalized recommendations via email nurturing. Similarly, continuously engage your audience through social media platforms by participating in relevant conversations, running contests and sharing visual content.
Pursue strategic partnerships with complementary businesses like airlines, rental cars or excursion providers to cross-sell additional products and services; influencers and bloggers in the travel space who can promote your brand to their niche audiences; and loyalty programs to acquire members and offer special benefits. Partnerships expand your reach and provide credibility.
Encourage existing happy customers to refer friends and family to book with special rewards. This helps amplify word-of-mouth marketing.
Tracking Performance and Key Metrics
Analyzing key metrics and user data is crucial for monitoring growth and optimizing operations.
Quantitative Metrics to Track
You should track metrics like the number of unique visitors and repeat booking percentage which indicates brand loyalty; conversion rates from visit to booking which reveals sales funnel effectiveness; booking value including average order value and total bookings; cancellations and no-shows which highlight potential UX issues; and peak booking times/seasons to gain insight into demand patterns.
Look at qualitative feedback like user reviews to identify recurring complaints and positives; feedback forms to proactively collect insights into user experience; app store ratings to monitor frequent pain points or bugs; and customer service queries where common questions indicate gaps in navigation or information.
Optimize Over Time
Use performance data and feedback to continuously refine your platform. Double down on what works well while addressing any shortcomings.
Conclusion: Key Takeaways for Your Hotel Booking Business
Here are the key highlights from this guide on starting a successful online hotel booking business:
Conduct thorough market research into your audience, competitors and industry trends before getting started. Choose a business model that aligns with your capabilities, investment appetite and long-term vision. Combining models can also work very well. The tech stack for your booking platform should balance ease of use with sophisticated features and scalability. Focus obsessively on user experience – convenience and personalization are extremely important. Build partnerships with hotels through incentives, competitive commissions and seamless integrations. Implement diverse digital marketing strategies spanning SEO, email marketing, social media and online advertising. Continuously track key metrics and user feedback to refine your offering and business performance.
By following this playbook and learning from best practices in the industry, your chances of success with an online hotel booking business will be very high. The travel industry presents enormous opportunities and an online platform allows tapping into that immense potential.
I hope this detailed guide provided you comprehensive insights into starting your own hotel booking website or mobile app. Let me know if you have any other questions!