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?
There is no denying that OTAs are essential to hotels' success and that any hotel unwilling to work with them is only shooting itself in the foot. However, they are more of a necessary evil than a saving grace. Indeed, thanks to their billion-dollar marketing budgets, OTAs have reached a dominant position in the online travel market, which enabled them to impose drastic conditions on hotel partners (high commissions, rate parity, guest data ownership, ...). And while hoteliers are basically forced to list on OTAs to generate online bookings, this does not mean necessarily that the likes of Booking.com and Expedia should be praised for their generosity.
In fact, we would advise hoteliers to take advantage of OTAs' online reach by listing on their platforms while, concurrently, strongly reinforcing their direct channels by adopting new technology solutions.