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Hotel Owners vs. OTAs – A Love-Hate Relationship

Hotel Owners vs. OTAs – A Love-Hate Relationship

Too often you hear hotel owners complain about Booking.com, Expedia and other OTAs (online travel agencies). They can’t fill their hotel rooms without them, but they feel the pain of paying the OTAs’ high commission fees. Hoteliers often feel trapped in this relationship- they don’t want it but they can’t live without it.

20 years ago there were no OTAs, but back then hotels were also highly dependent on other parties such as travel agents and tour operators to help them with bookings. Nowadays paying a 15-20% commission rate to an OTA may sound high, but it comes at the benefit of receiving a higher number of bookings. Research shows that 76% of all bookings of independent hotels come from OTAs.

It’s clear that the game has changed and will continue to change every year. So quit the complaints, adjust and embrace the change! Treat OTAs as your true partners and use them to your advantage.

Like Expedia’s CEO, Dara Khosrowshahi, once said at a hoteliers conference:

“You guys all criticize me for how much I charge you for guests to come to your hotel. I think you’re looking at it wrong. Look at us as the cheapest source of referrals that you could imagine. If they come through me, you pay me once, and if they come back to me again and again, shame on you. You should make them a loyal customer.”

Nothing can be more true than that. The key is to convert your guests into loyal customers. Paying a one-time 15% commission should be treated as the advertising cost to acquire a loyal customer. If that same customer makes a booking through an OTA for the second time as well, and not through your hotel website, then something is wrong. Not with the OTA, not with the system, but with your hotel website, booking experience, social media presence or other parts in your ecosystem.

Remember: half of the customers who book through Booking.com also visit your hotels’ official websites. They visit Booking.com, then they visit your hotel website, then they make the conscious decision to go back to Booking.com and finish the booking there. Your goal and energy should be focused on keeping those visitors on your website and finalizing the bookings on your site. In that case, you do not pay commission and you used Booking.com as an advertising platform for free. That’s not such a bad deal.

“You guys all criticize me for how much I charge you for guests to come to your hotel. I think you’re looking at it wrong…”

More direct bookings? Sure, but how?

This is where giant businesses like Booking.com and your small independent hotel operation can actually compete. First of all, be clever and choose your battles wisely. Priceline Group (which owns Booking.com) spent 3.5 billion dollars on marketing last year only. Almost 1 billion more than the year before. Most of it was spent on Google ads. They have bigger budgets and deeper pockets. Clearly, that’s not your battlefield. That’s not where your few thousand dollars could make a difference.

BUT: No matter how advanced and giant Booking.com look like, you have an advantage: your size. You can move faster and adjust quicker to the changing landscape due to your smaller size. Booking.com built its system to cater to hundreds of thousands of hotels. Its functionalities have to work for all of them. It lacks the flexibility and the personal touch. Bring the battle to the fields you know best, the environment you can control: your platforms.

Here are 3 tips which work best for hotel owners:

1) Use “Best Price Guaranteed” messaging or price comparison tools like Triptease.com. Customers book on OTAs because they think OTAs offer the best rates online. Convince your own website visitors that your website has the best rates.

2) Create the best rates on your website. Do not get into bidding wars or undercut rates. Those shady tactics provide only short term gains and can seriously damage your partnership with OTAs. Besides, you probably have a rate parity agreement in your OTA contract as well. Instead, create gated offers through your loyalty program.

3) Offer freebies: free room upgrade upon check-in based on availability, free late check-out, free breakfast, free welcome drink, book 3 nights and pay for 2. Anything which gives more value for direct bookers for the same price.

Take control of your platforms and improve them. Stay flexible and follow the trends. Pick only fights that you can win. Your own platforms can help you to decrease your dependency on OTAs.

Don’t have a loyalty program yet?  Get in touch and we’ll guide you through the right steps to get guests coming back to your website for more.

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