OTA’s and How Hotels Can Best Use Them
By David Lund, The Hotel Financial Coach
A lot gets said about OTA's and most of it is negative coming from the hotel world. I get it on one hand as I was the one having to explain to owners each month why our commission expense was constantly on the increase. However, on the other hand I also knew we had our backsides saved many months because we turned on the tap and let them in.
What's the alternative - no OTA's at all? That's probably not on anyone's wish list at this time of the year. Would another alternative be lower fees? Absolutely this would be welcomed but it's a super competitive landscape out there with lots of different options for hotels to consider. I say the market sets the fees. How about a third alternative - getting the most out of the OTA?
One aspect that I see all the time from hoteliers is a single focus on the elephant in the room, no matter what the issue. Talk about profit and they want to talk about increasing RevPAR. Talk about service and they default to negative Trip Advisor comments. There are always other ways to look at any situation. The elephant in the room with OTA's for hotels is the commission costs. What hotels could do to alter their perspective just a little would be to consider and take advantage of the other services offered by the OTA's. The services BTW are free! That's like the old glass of water in the restaurant is "free."
When it comes to OTA's, hotels are fixed almost all the time on the same two things. The revenue generated by the room bookings and the commissions. What if there were more aspects to consider than just the immediate gratification and the hangover afterwards?
Here is a list of what I think are very compelling value-adds from some OTA's that hotels could and should take advantage of. I also believe when they do use these services it adds bottom line improvements as well as long-term business intelligence, greater stability and market diversification. This longer term view is priceless, especially in markets where there is new supply and fierce competition.
- Work with your OTA's personal market manager to create a distribution strategy that works for your individual property.
- Look at the mix of guests and see where the gaps are. Then target these opportunities using OTA tools and promotions for only the segments and dates you need.
- Utilize their mobile productivity tools that allow you and your staff to work from anywhere and anytime.
- Optimize your content and photos to get the power of a free online brochure that can generate new direct business and referrals.
- Leverage the OTA's data by using property, competitive set, market and guest data to understand guests' travel motivations and booking behavior, allowing you to reach and convert travelers in a more focused way and then turn them into loyal returning guests that book direct.
- Hotels could stop paying for loyalty programs when OTA's are offering the same product and they are paying the bill for it. https://www.tnooz.com/article/hotel-loyalty-programs/
- Use their free revenue management tools which can save you time and money and drive incremental revenue gains. Also, these free tools help you know the competition.
- Let the OTA take the risk for international currency conversions and testing out new payment solutions.
- Gain a better understanding of compression events in your location by working with your market manager who has a much better perspective of the overall market demand.
- Last, but certainly not leas,t is take advantage of all the value-adds the OTA's offer. Hotels are notoriously suspicious of outside services and new technology as if they were a permanent disease. OTA's are investing mega wads of cash to continue to be on the forefront of the travel worlds' evolution. Remember that's how it all started. Take advantage of their investment and don't be too concerned that the evil empire will have you hooked like a bad drug.
Hotels that utilize a strategy that considers how they can get the most value from their partnership with their OTA's are going to be the most successful in the long run. This reminds me of a saying that an old boss of mine would use quite often. He would say this to the director of sales when he/she were full of himself after a good month's results on our RevPAR index or the revenue picture to budget.
He would say, "Any Monkey Can Fill This Place When the Phones are Ringing" - "What are You Doing to Keep the Phones Ringing?"
David Lund is The Hotel Financial Coach, an international hospitality financial leadership expert. He has held positions as a Regional Financial Controller, Corporate Director and Hotel Manager with an international brand for over 30 years. He authored an award-winning workshop on hospitality financial leadership and has delivered it to hundreds of hotel managers.More from David Lund