Why the Bottom of the Funnel Should Come First in Hotel Direct Booking Strategy

Every hotelier knows the uneasy math of online travel agencies. OTAs bring visibility a property could rarely buy on its own, which is genuinely valuable for niche or resource-constrained hotels. But that visibility comes at a cost that compounds in ways many operators underestimate. The OTA collects a commission, frequently undercuts the property’s own rate by a few dollars to win the click, and once the booking closes, owns the guest record, the email address, and the relationship that could have fueled a loyalty program or a return stay.

A direct booking isn’t just cheaper than an OTA booking, it’s worth more over time. The hotel keeps the data, the opt-in, and the chance to market directly to that guest again. An OTA booking, by contrast, is a rented guest — the hotel pays for access once and then loses the thread.

None of this makes OTAs the enemy. They’re better understood as a channel with a specific job: discovery, especially for smaller properties without big marketing budgets. The task isn’t to eliminate that channel, but rather, to make sure that when a guest reaches the actual moment of decision, the hotel has a real chance to win the booking directly instead of ceding it by default. That moment is where most direct-booking strategies should start, and where many mistakenly don’t.

Start at the bottom of the funnel, not the top

It’s tempting to think about hotel marketing the way consumer brands do: build awareness first, then nurture, then convert. But for direct bookings, that sequence runs backward. The highest-leverage advertising dollar a hotel can spend is the one that shows up at the exact moment a traveler is comparing rates, whether it’s on Google Hotel Ads, TripAdvisor, Trivago, or similar metasearch platforms, and places the property’s direct rate next to the OTA’s.

This is the cheapest type of campaign to run from a creative standpoint. There’s no copy to write and no imagery to produce; the rate and the property name carry the entire ad. It’s also the easiest to measure: a hotel can see, almost in real time, what it spent and what it generated in return.

But metasearch only works under one non-negotiable condition: rate parity. If the OTA is showing a lower price than the hotel’s own site, the metasearch ad is fighting a battle it cannot win, no matter the budget behind it. Rate competitiveness isn’t a marketing tactic that supports the strategy, it’s the foundation the entire strategy sits on. Hotels that skip this step and jump straight to flashier advertising are usually buying impressions, not bookings.

Add efficiency before adding scale

Once metasearch is established and rates are competitive, the next lever is retargeting, or re-engaging people who already visited the hotel’s website or booking engine but didn’t convert. This is a warm audience by definition because they’ve already shown intent. Retargeting tends to make every other dollar a hotel spends work harder, because it recaptures interest during the consideration window rather than starting from zero.

This tier requires a modestly more creative investment – in decent property photography and short ad copy for example – but the lift is still manageable for most independent hotels. This is also where AI is changing the operating model in a meaningful way. Persona-based copy generation, refreshed on a regular cadence based on who’s actually booking and how that shifts seasonally, is becoming standard practice rather than a luxury reserved for large chains. The technology doesn’t replace strategy, but it compresses the time and cost of execution that used to require a dedicated content team.

Each stage multiplies the results of the last, with full-stack properties seeing up to 242% more net sales. That’s the efficiency layer doing its job, making the bookings a hotel was already chasing easier to close.

Only then, build awareness at scale

The top of the funnel, with campaigns like Google’s Performance Max for travel, which reaches travelers earlier, at the discovery and research stage rather than at the point of booking, is genuinely powerful. It draws on a hotel’s first-party reservation data to train the algorithm on what an ideal guest looks like, then deploys that targeting across YouTube, display, Gmail, and search simultaneously. For independent properties that could never produce that kind of reach on their own, it’s a meaningful equalizer.

It’s also the most demanding tier, creatively. These campaigns typically call for a dozen or more headlines, several description variations, multiple image assets, and ideally video, which remains the biggest gap for most independent hotels, which simply don’t have usable footage of their own properties.

More importantly, awareness-stage advertising only pays off when the foundation beneath it is solid. Sending a wave of new prospective guests to a hotel that doesn’t have rate parity, decent photography, or a retargeting program in place is asking that budget to do work it was never positioned to do. The funnel works in both directions: awareness fills the top, but conversion infrastructure at the bottom determines how much of that awareness actually turns into revenue.

The operational basics still decide the outcome

It’s worth saying plainly: none of the three tiers above will outperform bad fundamentals. Rate parity is non-negotiable. Photography matters more than most owner-operators assume. A phone snapshot of an unmade bed or a cluttered corner costs more in lost conversions than most hotels realize. And understanding who actually stays at the property, and how that mix changes across the season, is what makes everything from ad copy to creative targeting effective rather than generic.

Spending the most money doesn’t automatically yield the strongest results. Successful hoteliers implement an incremental strategy built in the right order: competitive rates first, efficiency second, and scale third, while treating the unglamorous operational details as prerequisites rather than afterthoughts.

OTAs aren’t going away, and they shouldn’t have to. But properties that win the direct booking, and the lifetime guest relationship that comes with it, are those that show up prepared at the moment it matters most.

Ben Lloyd is Program Director of Digital Marketing Products at Cloudbeds, where he leads the development of integrated marketing solutions that help hotels increase direct bookings and drive revenue growth. A digital marketing veteran and former agency founder, Ben combines decades of expertise in SEO, customer acquisition, and performance marketing with a focus on AI-driven discoverability, helping hospitality businesses adapt to the next generation of digital search and marketing.

Are you an industry thought leader with a point of view on hotel technology that you would like to share with our readers? If so, we invite you to review our editorial guidelines and submit your article for publishing consideration.