Is the importance of the OTAs blown out of proportion?

• Wide reach: OTAs have a global presence and extensive marketing budgets, helping properties gain visibility to a broad audience.
• Marketing and advertising: OTAs invest heavily in marketing, which can drive significant traffic and bookings.

Here is my take on both of these points:

1. OTA’s Wide Reach

Many hotels do not need the “wide reach” of the OTAs since they have very well defined, even narrow, feeder markets. Hoteliers must own their feeder markets and not allow the OTAs to encroach on them.

The question is: how many hoteliers examine their feeder markets on a weekly basis and devise strategies how to capture additional guests from these? Digital marketing, SEO and content marketing, social media, etc., targeted on these key feeder markets can do miracles at a very reasonable cost. Use the Pareto Principle: 80% of your guests come from just a handful of feeder markets, 20% from everywhere else. Focus on the 80% and you will be just fine.

2. OTA’s marketing spend

In 2023 the OTAs spent $12 billion on their global marketing efforts. Many hoteliers feel defeated by this marketing might and give up on their own direct channel marketing.

We cannot outspend the OTAs, why even try? But if you do a simple math, you will see that the OTAs spend on marketing approximately $250 per month per hotel available on their platform. This is it!

Now, the question is, can even a small hotel spend $250/month to increase its Internet presence and steer people to book direct? Of course! Independents - even smaller properties - need to spend on marketing at least 4% of their room revenue.

Hoteliers know their destination, location and product far better than the OTAs do and, with a relatively small marketing budget, can outsmart the OTAs and increase direct bookings.

Direct bookings have become very important due to government privacy moves plus the elimination of the 3rd-party cookies by Google. OTA guests typically leave useless data: proxy OTA-related email contact info, etc. Only direct guests leave rich first-party data, which can be used for CRM marketing to boost your repeat business.

You can also use your first-party data about your best guests to launch similar audiences marketing on Google, Facebook, Instagram, etc. to target potential customers with similar characteristics as your best guests.

CRM initiatives in combination with ORM (Online Reputation Management) tech can turn your happy guests into brand ambassadors and avid social media influencers.

The above is not to suggest that hoteliers should stop working with the OTAs and other intermediaries. Even in 1995, before the OTA era, intermediaries booked 25% or hotel roomnights. But 75% were booked direct! Hoteliers should aim to balance their distribution channels and do their best to excel in the direct online channel.