Due to the popularity of sites like Expedia and Priceline, online travel agencies (OTAs) have become a sometimes unwelcome reality in the travel and hospitality industries. In 2015, OTAs accounted for nearly 60 percent of online bookings for independent properties, and just under 50 percent for hotel chains. But there are many things to consider when working closely with an OTA that go beyond increased bookings.
The Advantages
Increased Visibility
Though some customers may prefer using an OTA to book stays, it’s possible for hotels to gain greater visibility for their own websites by partnering with OTAs. In one study, hotel website bookings increased anywhere from eight to 26 percent due to the “billboard effect” of hotels simply being listed on a popular OTA site.
More Bookings
OTAs can provide an easy, convenient way for hotels to earn more bookings during a slow season. Because they offer one-stop shopping that includes flight and car rental packages, OTAs can provide value-added perks to move rooms that might otherwise stay empty.
New Guests
OTA sites are user-friendly: information is available in multiple languages and customers can learn about activities and attractions to visit in the city they’re searching. As a result, these sites may help bring in new guests, who may not have known about or considered certain hotels before.
The Drawbacks
Commission Fees
Anytime a guest reserves a stay through an OTA, the hotel must pay a commission to the OTA, which can range anywhere from 15 to 30 percent of a booking. Much like a finder’s fee, the act of paying commission in return for booking guests is a long-standing business model. But because OTA usage is becoming so prevalent, it’s increasingly difficult for hotels to compete for bookings on their own sites, meaning commission payments are increasing for many properties at the expense of hotel website visits.
Price Parity
As any hotel manager can attest to, once their property has agreed to a price that is listed on an online travel site, they cannot then compete with that price by listing a lower one on their own website. And once guests have paid a reduced rate, you run the risk of them not returning if the same rate cannot be matched for subsequent visits.
Loss of Customer Information
When a customer books with an OTA, their email address, and phone number may go to the OTA, but this information isn’t necessarily passed along to the hotel. However, when a guest books their stay directly with the hotel, managers can maintain robust check-in/check-out processes and VIP loyalty programs in order to obtain visitors’ contact data.
Shifting Relationships
Consumers are building strong brand loyalty and trust with OTAs. This means that hotels are potentially losing the opportunity to develop relationships through their websites, as guests continue to head back to their favorite OTA every time they go on vacation.
There are ways a hotel manager can counteract this trend. Because of your market research, feedback surveys and PMS analytics, you already have a solid understanding of your customers and their preferences, which you can use to make your website stand out. Maybe you know that your guests always have lots of questions during the booking process. If this is the case, you can be sure your website has a live chat function or 1-800 prominently displayed as well as a FAQ page that addresses common queries.
Beyond an increased attention to brand loyalty, consider doubling down on marketing efforts so your hotel becomes less dependent on the visibility of third party sites. Also, consider value adds like packages and investing additional resources into the development of an efficient mobile site or app so you become the convenient, one-stop shop that consumers are looking for.
Like traditional travel agents, OTAs have become popular among consumers, making them an undeniable presence in the hospitality industry. In some cases, it will be prudent to use these avenues to your advantage, and it some cases you’ll be better served by funneling available resources into bolstering your own marketing efforts. By considering the above advantages and disadvantages, you’ll be better positioned to optimize guest lifecycles and your own brand visibility.
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