A group booking regulation clause for both the Hotel's and OTA's interest
Should hoteliers allow group bookings via the OTAs?
Revenue Optimization — Viewpoint by Silvia Cantarella
The reason we qualify a reservation as a "group booking" is because the number of rooms booked requires special booking conditions to be applied by the Hotel, to prevent the risk of incurring massive revenue and profit loss for late cancellations of the bulk of rooms that cannot be replaced to the last minute.
Given that, should Hotels allow group bookings via OTAs?
Starting from what is happening in the market, it is in the news that Marriott recently implemented a direct integration with a third-party technology company to get instant group bookings for both rooms and meetings. This requires inventory, availability, and conditions to be sourced from the hotel PMS or RMS. Group allocations are indeed dynamic and are based on demand patterns, inventory and booking conditions can change based on the period, booking window, group size as well as multiple considerations are done in terms of revenue displacement, total group value including F&B, transient demand, pre and post stays, distribution costs and so on... As such, even if I can"t wait for the instant group booking to become mainstream, the reality is that not everybody is ready for that yet and OTAs alike.
Indeed, if we allowed OTAs to receive group bookings, it means that they should be able to source inventory, rates, and conditions from a sort of separate "dynamic allotment" with its own rules and conditions and that is not there yet. The result is that smart customers or agencies trick the system: they book multiple rooms at the same time, under different names and with the standard cxl policy.
This is a huge risk for both the Hotel and the OTA (late cancellations surely impact both), this should not be happening and OTAs should become more careful about this trend and must allow the Hotel to include special clauses in their T&C. Some of them allow special clauses, others not at all. The result is that hotels that are working with advanced RMSs or channel managers can limit the inventory (if they are lucky) and prevent in a way these situations (even though, as said, the system can be tricked!), the ones with insufficient technology end up into time-consuming post booking management, trying to obtain some guarantee from the customer, with very little or not help at all from the OTA customer service.
I unfortunately expect this issue to only grow because Hotels have just started to experience the overall boom in group booking requests and if the trends keep, the need to regulate group bookings via OTAs (and not only, should we talk about fake bookings for 7+ nights?) is already impellent.