The antagonistic relationship that has typically existed between hotels and OTAs is starting to change. Hotels are realizing that OTAs are here to stay and that they are a major driver of bookings. In turn, OTAs want to preserve positive relationships with hotels to ensure hotels will choose to promote their properties on the OTA’s platform. Both parties seem to have concluded that cooperation is mutually beneficial.
This is great news for hotels because it allows them to practice strategic revenue management in a way that was not possible before. Instead of fighting against OTAs, they can leverage the opportunity for maximum benefit. The key is to manage room inventory effectively. For hoteliers to ensure their partnership with OTAs is a prosperous one, it is important they implement these strategies and processes.
Generate the Highest Demand
Managing room inventory is much easier when demand is consistent. OTAs are a great way to publicize a hotel and generate interest from newer guests, but standing out is challenging in competitive markets. Hotels should treat OTA marketing as seriously as any other form of marketing. Earning a high guest rating, posting interesting content, writing great copy and taking attractive pictures all have a direct effect on bookings. Once demand starts to accelerate, hotels are able to raise rates to offset OTA fees.
Drive Direct Bookings
A hotel can work productively with an OTA and still push direct bookings. Receiving reservations though an OTA does not have to complicate room inventory, but managing rates and availability is undeniably easier when a hotel handles everything itself. Compelling guests to book direct requires hotels to offer them something uniquely appealing. That could be a lower rate, a special perk or simply a higher-caliber of service. Identifying how to attract these guests is easy when data from various channels is organized into guest profiles. The hotel understands the guest better than an OTA ever could, which is an enticing value proposition.
Rely on a Channel Manager
It feels like a new OTA launches every day, which makes managing bookings from dozens of different sources a real challenge. A channel manager is designed specifically to ensure that OTAs don’t let room inventory grow disorganized or rates dip too low. New reservations are automatically entered into the booking engine while each OTA is updated with changes to availability, rates and restrictions. Thanks to this adaptability and visibility, revenue managers are able to carefully adjust rates across every OTA.
Monitor Where Your Cancellations Are Coming From
A major pain point for hotels when it comes to OTA bookings is the high rate of cancellations. Booking.com is a major culprit, with a cancellation rate of around 40%, while Expedia experiences a slightly less extreme rate of 20%. This has a lot to do with OTAs frequently advertising a free cancellation policy, which encourages travellers to book multiple properties with no strings attached, and then cancel right before their intended arrival date. To combat this frustration and the inevitable loss of revenue it brings, hotels need to be vigilant in monitoring cancellation rates and sources and adjust their revenue management practices accordingly. For instance, if a hotel knows x% of cancellations happen last minute, they can raise their overbooking thresholds for a particular room type. The key is ensuring that data, not gut feeling, guides decision making.
Implement a New PMS
Managing room inventory and working with OTAs are not minor issues. They play a crucial role in how a hotel operates on a daily basis and plans for both the short and long term. It’s much easier to manage inventory, bookings and overall revenue with a next-generation property management system. Tools like channel managers and direct connections are integrated with booking engines, housekeeping interfaces, revenue trackers and inventory forecasts. The PMS is a tool for optimizing bookings from OTAs or from any other physical or digital channel. And since every aspect of the hotel is integrated, it takes less time, effort and input to manage it all effectively.
Incorporating OTAs is an obligation and an opportunity. When data-driven tools build automation, visibility and adaptability into the process, hotels don’t have to resent OTAs. Instead, they can capitalize on them by making the most of every booking from every source.
RoomKeyPMS was the first property management system to connect directly with leading OTAs. Contact our experts to learn about using OTAs to your hotel’s advantage.
Photo Credits: Shutterstock / Goran Bogicevic
