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?
Distribution is a cost and getting a booking is not part of a "marketing budget cost" roughly estimated at the beginning of the year. Any booking has its cost of sale, a variable fee that has to be paid in ANY CASE. This is like to consider that you'll have an irregular cost for every breakfast you'll serve to your guests. Someone will eat like a pig, someone will not even show up. Online distribution then is a specific challenge and it's not in the typical host's masterships. OTAs scale these "new" era costs very efficiently serving many hotels without a particular preference. Is this distribution cost-effective? Yes, in most cases. Is this Hotel-centric and customized? No. This distribution can be optimized? Yes, if you want to play in the online distribution Premiere League. It's going to request investments and involve risks. On top, there is a mentality issue. Hoteliers are hotel-centric. They live their hotel business as the centre of their interest and belive that for customers would be the same. They think: "a guest calls US, a guest goes to OUR website". Even large hotel chains believe to be the first idea for a guest seeking a deal. On the other hand, customers are strongly like "I do my own interests". They want to scan the market, in a particular location in minutes and spot the best treatment, for the best possible price. Only after this, they get a shortlist of 2 or max 3 possible hotels to check on their site or, God bless, "we have to call them in office hours, just like in the eighties". OTAs know this very well. They stand on the customer's side with all the online tricks that people (and even more millennials) love. OTAs are storms of computer engineers with a pack of money. Would you bet them at their own game? Not sure. Can you "use them" for your own needs only when necessary under particular conditions? I'm sure you can!