Should hoteliers allow group bookings via the OTAs?
13 experts shared their view
The OTAs have been trying to enter the leisure group booking market for decades now. Traditionally, hoteliers have been reluctant to allow the OTAs to enter the lucrative group market, limiting their OTA exposure to the transient leisure and unmanaged business market.
Lately, more and more hoteliers are receiving group bookings from the OTAs that are disguised as individual reservations under the same guest name and with the typical OTA 24h cancellation policy. Some hotels end up getting 10 and more rooms for the same stay period and for the same booker.
Obviously, these reservations constitute a group booking, split into separate reservations, without adhering to all the hotel group policies, such as deposits, restrictions and cancellations.
The question is, should hoteliers allow OTA customers to "trick the system" or should demand that the OTAs disallow multiple reservations for same stay period by the same customer. Should hoteliers demand the OTAs insert in the booking path a policy that "For group reservations of xx and more rooms, different group policies, deposits and restrictions apply?"
*This viewpoint is co-authored by Max Starkov.
This does not surprise me to see this trend. It could be an indication of one of two things. One, they percieve that the best deal to be had is through the OTA site. Secondly, the convenience factor of booking and managing without having to speak to anyone and deal with deposits, cut-offs, etc.
This is where we, as hotel companies, can do a better job of messaging (best group rates by booking direct) as well as ensure its easy for organizers to book on their own if they so desire. The other issue hotel companies need to consider as they negotiate agreements with their OTA partners, would be to allow an individual to only book a certain number of rooms though an OTA over a given time period.
If the above issues are addressed I believe the issue will be significantly reduced.
The answer is simple: only if it generates incremental revenues.
What's not simple is differentiating between incremental and displaced. The Revenue Management discipline in our industry hasn't yet evolved to the point that would allow to find reliable ways to calculate those.On top of that, OTA's haven't been very transparent in the way they report contributions from their channels making everything look like incremental bookings and thus misleading hotel operators.
So until we develop a reliable method to monitor channel production the way that would lead to minimum displacement and maximum profits, until majority of operators adopt automated RMS solutions, until those solutions develop intelligent algorithms that would allow to manage different channels with profit as a target - no, we shouldn't sell groups on OTAs. It's too early.
I think it's great that OTA's are doing this as it means A) there is demand and B) OTAs are making money doing so.... which in tune will drive more revneue to the properties. And when we think about the way groups are handled in the indsutry at present: It is slow and painful for all parties involved most of the time. And how does this "tricking" the system differ from someone booking 10x individual rooms one after the other vs ticking in 10 right now? It doesn't. How come a group of 6 adults is considered a group and yet same room configuration requirements for a family of 6 is not? It is not.
We need to stop looking at OTA's being the devious ones....changes are, when they are doing it, it works, makes money from them (equals money for you) and has demand.
The question of group reservations is more important than ever since group demand - both corporate and SMERF - is expected to bounce back in 2023.
Amadeus reports that group demand has steadily recovered in Q4 2022, with 4.3 million group room nights already booked for the first half of 2023. According to HotelAVE group demand should bounce in 2023 back to around 90% of pre-pandemic levels.
Airlines do not allow group bookings via the OTAs. Period. Hoteliers should learn from them how to protect this very lucrative business from the OTAs.
Corporate groups, SMERFs and family reunions, require more than just rooms: meeting rooms/spaces, F+B, receptions, get-togethers, activities, entertainment, audio-visual equipment. Many details need to be ironed out, many upsells can be sold during the negotiation/booking process ONLY if this process is directly between the hotel and group organizers.
If I were a hotelier today, I would not allow rooms above a certain level to be booked via the OTAs ex. more than 3-4 rooms traveling together. I will enable a group booking engine like GroupSync Engage on my property website, create a group section presenting your group product, optimize it for SEO, and launch marketing campaigns.
Related article by Max Starkov
In general, hotels should ask OTA partners to limit the number of rooms that can be booked in one reservation and OTAs should include a clause on their booking engines and confirmations that different deposit, cancellation rules will apply to reservations of a certain number of rooms.
The possibility of last minute cancellations without time to re-sell the rooms and not being able to yield large blocks of rooms properly simply have an oversize impact on the commercial success of the hotel
The only exception could be fully pre-paid and non-refundable bookings of up to 15-20 rooms in a large hotel due to the limited impact on hotel occupancy.
Related article by Harald Bindeus
The short answer is no; now, there is a longer explanation for the reason. In my opining, the purpose of an Online Travel Agent is to help us promote and sell our unsold inventory. Its focus is to drive incremental revenues to our hotels that we would otherwise not be able to sell on our own direct channels. By definition, a group booking has already been sold to a client, therefore it is not available for guest bookings other than direct channels such as our branded website, call, or rooming list. These group bookings might also be subject to commission and rebates where the distribution through an OTA would increase the cost associated with this pre-sold room.
Should we allow this to happen, this would blur the lines of an OTA making the transition from being a distributor of unsold inventory to a channel manager. In the case of a brand, we already have a CRS provider, and likely brands will not allow this practice to take place. Independent hotels have a CRS system of record with a high cost of distribution. Allowing OTAs to book will certainly lead to an unintended shift in behavior increasing the cost sales.
Hotels should not allow customers to trick the system and OTAs should interject and aid in this process. Group business is specialized for hotels, and provides guaranteed business. As part of that guarantee, the end user, whether it be a meeting planner, bride and groom, or even a sports team lead, is provided with a specialized Group Coordinator that understands the important nature of group business. The Group Coordinator at the hotel provides a multitude of services that an OTA cannot, such as holding a room block, assigning rooms based on requests, and providing rooming list updates. Additionally, the coordinator will inform appropriate hotel departments of the group to ensure the utmost service is provided. Furthermore, hotels will likely offer these groups discounted rates based on the guarantee of that business. Given the margins that are typically paid on OTA commissions, it is generally more profitable for the hotel to book discounted group business vs. paying the OTAs to act as a group booking engine.
I am of the opinion that guests (and groups) should be able to book the hotel on their preferred channel. As it is mentioned in the intro, apparently OTAs already enable group bookings in some way, of course one can blame the OTA for this, but the fact that it is happening clearly shows there is demand from guests and groups to book via an OTA, most likely because it is easier. To my knowledge group booking even small ones is largely a manual process where by the prospect has to call the hotel to arrange and negotiate. Simply booking than 10 rooms via an OTA is a lot easier.
My advice. Embrace what your customers want, work with the OTA's to arrange for group bookings (since their is a demand), with some of the special rules as part of the booking process build in. Better, make sure your website, actually allows customers to book their groups entirely as they book FTE reservations.
According to Statista, a website like booking.com has an average of around 500 million visits/month. Can you attract the same number of visits on your website? If the answer is a likely no, then why would you stop yourself from reaching a much wider audience?
Large hotel chains have a deep market penetration, brand awareness, marketing spending power...but when it comes to small companies, independent hotels, etc... that extra visibility that an OTA can provide, it's completely necessary.
Having said that, it's the hotel decision whether they apply tigher or flexible conditions to OTAs, wholesalers, etc... but that should not get into the way to making sure as many potential customers as possible learn about you and what you have to offer.
Having achieved that, it's all about gaining their loyalty, so that subsequent bookings are made directly.
As long as it's profitable, I don't see the issue.
Although the idea of organized groups may seem outdated, hotels still profit from them. Traditionally, large groups seek out well-known hotel chains for their convenience and predictability, and OTAs offer lower commission rates to big brands like Marriott and Hilton, making OTA group bookings a win/win for everyone. That's not always the case for indie hotels, but that's another story.
If I were a group organizer, I'd have no problem with OTA's room-by-room booking for better rates, even if it means wasting more time on it or using a bot.
If you know me, you also know I fully support finding ways to "trick the system." Therefore, if travel agencies are smart enough to find a workaround to get loose cancellation policies and lower prices, more power to them. Bottom line: if a group wants to book your hotel, it will, no matter what.
So it makes sense to make their (and yours) life easier and open group availability on OTAs, too, doesn't it?
Conditions of the OTAs are not combinable with group conditions, per example the prepayments methods (all groups must check in completely paid), rooming list operations. All of that is not combinable with free sales, almost 0 cancellation policy, and Last room availability.
For me, these are two completely different sources of business, and we need to manage with two different channels, maybe The OTAs must have a proper space where they manage "properly" group booking with other booking conditions.
A group could have also displacements costs, so it's insane having groups business into a OTAs channel without a proper control of that.
To avoid bad habits, I would suggest not having the possibility to make more than 3 bookings per reservation when you book through a OTA, and managing the group business with the proper partner/channel for that.
Group allocations are dynamic and are based on demand patterns: inventory and booking conditions change based on the period, booking window, group size as well as multiple considerations are done in terms of revenue displacement, total group value including F&B, transient demand, pre and post stays, distribution costs and so on... As such, even if I can't wait for the instant group booking to become mainstream, the reality is that not everybody is ready for that yet and OTAs alike.
Indeed, if we allowed OTAs to receive group bookings, it means that they should be able to source inventory, rates, and conditions from a sort of separate "dynamic allotment" with its own rules and conditions and that is not there yet.
Group bookings with no proper conditions attached represent a huge risk for both the Hotel and the OTA, this should not be happening and OTAs must allow for special clauses. Some allow that, others not at all. The result is that hotels that are working with advanced RMSs or channel managers can limit the inventory (if they are lucky) and prevent in a way these situations, the ones with insufficient technology end up into time-consuming post booking management.
Related article by Silvia Cantarella
Hoteliers should allow group bookings via OTA's, but with some limitations. Why? Many families and leisure groups are using OTA’s to book their family trips/groups, rather than calling the hotel and asking for a group block. This takes a lot of the friction out of the customer experience. That said, hoteliers should try to create a specific rate plan and sometimes even a specific rate plan linked to a specific room type.
By setting restrictions inside this specific rate plan as LOS, minimum rooms booked and more restricted cancellation policies, hoteliers protect their strategies and revenue forecast by not having cases where multiple rooms are booked for the same name in a regular refundable rate plan. This strategy would enable hoteliers to capture a new segment to the hotel, but protect their core business and revenue forecasts.
Revenue Optimization
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