Working with OTAs: The Indirect Distribution Dilemma
— 13 experts shared their view
Our recent study uses multi-year, objective data to clearly demonstrate that hotel properties that work with Online Travel Agents (OTAs) perform significantly better financially than those that do not, with commissions being more than compensated for by the increased revenues, resulting in higher bottom-line profits. However, in reality, many hotels still have a (perhaps historic) negative opinion of OTAs. While appreciating the resulting bookings, many still perceive OTAs as competitors rather than partners and fail to commit fully to what should be a win-win relationship.
With travel reigniting following the COVID-19 pandemic, what can/should OTAs consider doing to better seduce hotels and convince them to engage more fully with this valuable distribution channel?
Founder | CEO | Futurist
I am quite surprised we're still discussing this topic in "Them Vs. Us" terms. I've been in the travel industry since the late '90s, and I think, except for the early '00s (for obvious reasons), I've never seen a single property NOT listed on -at least one- OTA. Oh, that's not true; I've met a hotel in Paris, a few years ago, that was adamantine not to work with any OTA, and was aiming to go 100% direct. Plot twist: it didn't work out. My take is that, when hoteliers receive the monthly commission invoice, they only focus on how much they have to pay, versus how much money they made thanks to online travel agencies. With direct bookings, that's a whole different story: without a fixed commission, hoteliers tend to think these bookings are "free." Well, bad news is that they're not: booking engine commissions, advertising on search/metasearch engines, website creation, promo-codes, hosting, SEO, etc. It's not uncommon to get to two-digit % CPA quite easily, and I've seen properties making less profit from their direct bookings than from OTA's. So, from a profit point of view, the whole debate is pointless. What OTAs may (and should) do in order to "better seduce hotels" is probably to stop undercutting rates, but if you get me started on that, I may as well open a new viewpoint. What the hell! Maybe I will.