“OTA Channel is About More than Just the Transaction” Expedia’s Matthew Crummack on the Role of OTAs in Today’s Environment
Expedia says through its supply partners garner access to an “unmatched volume of travel shoppers and also benefit from international exposure on more than 70 points of sale”.
And the value and utility of this partnership is being reflected in a number of ways, says Matthew Crummack, SVP, Lodging, Expedia.
“Hotels in the US, for example, can use Expedia’s marketplace to target European consumers at a time when they’re enjoying favourable exchange rates. Likewise, smaller properties are using Expedia’s marketplace to expand their reach, ease language barriers, and find new pockets of demand that they wouldn’t have the ability to reach without our market-specific points of sale,” Crummack told EyeforTravel.com’s Ritesh Gupta.
Plus, many hotels have been forced to cut back on their marketing and advertising budgets and so have come to recognise the value of mere exposure on OTAs, added Crummack, who is scheduled to speak at EyeforTravel’s Travel Distribution Summit North America 2009 to be held in Chicago (September 16-17) this year.
Expedia witnessed 18 percent growth in transactions in the second quarter. International room nights grew 37 percent, with the Venere volumes contributing nearly half of that. It also saw growth of 35 percent for Hotels.com in Europe, and APAC room night growth across both Hotels.com and Expedia brands was 80 percent.
Top hoteliers believe in working closely with market managers (representing the OTAs) to understand their audience and what has worked for their properties in the past.
“It always helps to test different types of promotions to see what works and then build on the strength of that campaign,” said Julie Atkinson, senior director global online sales and distribution, Starwood Hotels & Resorts.
From an OTA’s perspective, Crummack says Expedia offers a range of promotional opportunities and rate management tools that help hotels respond in a dynamic manner to manage their revenue per available room.
“We have market managers all over the world who play a consultative role in helping our hotel partners meet their goals by tailoring their promotion strategy to the needs of the property and the market. The hotels that work with their market manager and are actively managing rates and inventory in accordance with their need to fill rooms are the ones seeing strong production even in this challenging environment,” Crummack said.
(During Expedia’s second quarter earnings call, company’s CFO stated that suppliers are certainly happy about the volume that “we’re bringing them”.”
OTAs admit that they have to be sensitive to hotels needs about increasing distribution costs. At the same time, if there’s a reason for a hotel to pay a higher commission and it makes economic sense to the hotel, then OTAs do negotiate higher commissions. In most hotels, even in the worst of times, there are periods of high occupancy. Commission is just one factor of yield and its something that a hotel and OTA should discuss and plan for a dynamic environment.
The nature of the lodging business is that there are always peaks and troughs of demand related to the supply available in any given market, according to Crummack.
“This can be seasonal, development-related, or economic, which we’re seeing most acutely right now. We believe that the best partnerships between companies are those that can flex to the varying demands and needs of each party across time,” Crummack said.
He added, “Our global Partner Services team is focused on driving value for our partners based on the needs of their business, and we strive to build long term partnerships through good and bad times.”
Expedia says its strategy is simple, to continue improving its customer value proposition and removing barriers to purchase.
The elimination of the air booking fees and lower hotel service fees contributed to its volume growth in the second quarter but really represent initial steps in what is an ongoing process. In fact, in the past few months, the company has eliminated many changes and cancel fees, thus providing its travellers flexibility even after booking their trip.
VP North America
Phone: +44 207 375 7582