Today, we’re talking about… Hotel OTA strategy
Like them or not, the OTAs are a crucial part of a hotel’s digital strategy. And that’s not likely to change any time soon. As the market adjusts to recent events, more and more hoteliers are leaning on the OTAs to help them increase bookings.
So who’s in charge of your OTA strategy these days?
In some hotel organizations, OTA strategy rests in the purview of revenue management. In others, it’s marketing’s responsibility. In many, many others, OTA strategy has actually been broken up and compartmentalized. Things like reputation management go to marketing. OTA rate management goes to revenue management. But what happens to everything in between?
Who makes the decision to list with the OTAs in the first place?
In most organizations, it’s the revenue manager’s decision. The OTAs offer obvious brand building benefits, exposure, and revenue opportunities. But as we all know, listing with the OTAs comes at a cost—OTA Commissions.
Whose job is it to reduce OTA commissions?
Here’s where things get interesting. Typically, it’s marketing’s job to look for ways to reduce OTA costs (i.e. increase direct bookings). If marketing can intercept that booking before it gets to the OTA (at a marketing cost that’s less than the cost of commission), that’s money in the bank.
What’s the catch?
The trouble here is that marketing needs more media budget to do this. And quite often, those additional costs come as a surprise to ownership, because they were never factored into the decision to list with the OTAs in the first place. Metasearch is a great example of this. It’s one of the best tools to fight back against OTA commissions, but marketing teams continuously struggle to find additional media dollars to fund it. This is an extremely common gap in OTA strategy. And it’s a reflection of a fundamental misalignment between the functions of revenue management and marketing.
Who makes the decision to run paid advertising on the OTAs?
The phrase OTA advertising can be confusing. To clarify: The OTAs come with a host of paid advertising opportunities above and beyond the commission based structure of your standard hotel listing. For example, Expedia offers search ads on a cost per click model that you can leverage to amplify exposure. Some hoteliers are hesitant to invest more marketing dollars into the OTAs for fear their marketing cost per booking will skyrocket. But that’s not necessarily true. Many of the OTA advertising opportunities, in fact, let you take users away from the OTA and drive them directly to your hotel website. Or interrupt them at different points in their hotel search.
Whose job is that?
These are complex decisions to make. Who should be in the driver seat here? Who should be responsible for weighing the pros and cons of these additional advertising opportunities and aligning them with your overall goals?
Yup, that’s another common gap.
In some organizations revenue management holds tightly to the reins of these additional OTA advertising opportunities. This, of course, can create friction if marketing’s job is to drive direct bookings and some of the tools they need to do it are housed within the OTAs. And vice-versa.
OTA strategy crosses disciplines.
The decision to run on the OTAs results in a series of cascading decisions that you’ll need to make as a team on how best to leverage them (additional ads) or counteract them (increase direct bookings). As the market continues to change and the tools continue to evolve, hotel OTA strategy is going to rely on marketing and revenue management being totally and completely aligned.
Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 36th year, is located in Fort Lauderdale, Carlsbad, and Bogota. Visit Tambourine to learn more about our new line of segment-based hospitality solutions.