Online travel agencies (OTAs) play a pivotal role in most property distribution strategies.
NB: This is an article from Cloudbeds, one of our Expert Partners
Over the years, they’ve quickly evolved to keep up with changing consumer demands and expectations. The pandemic shifted the distribution environment as we know it, bringing new opportunities for hotels to attract more travelers.
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To reap the benefits of this fast-changing distribution environment, hoteliers must incorporate a strategic mix of OTAs in their strategy. Read on to learn more about three ways the distribution environment has changed post-pandemic and the recipe for building the optimal channel mix.
What are OTAs & why are they important?
By definition, online travel agencies are websites that act as a search engine for travel and connect providers across the industry to help travelers easily plan their trips. OTAs give travelers the tools they need to easily compare different accommodations while also allowing hoteliers to promote their property to a broad audience that would otherwise be extremely difficult to accomplish through direct channels.
Being visible on OTAs helps properties experience ‘The Billboard Effect’ – a phenomenon that occurs when a traveler sees a property listed on multiple OTAs and ends up visiting their website and completing a direct booking. The Cornell Study that identified the billboard effect found that 75% of consumers who booked directly with a hotel visited an OTA before purchasing.
Being listed on various OTAs can help properties increase brand awareness and drive bookings (both indirectly and directly through the billboard effect).
3 changes to the distribution environment post-pandemic
Before OTAs, the distribution environment was primarily dominated by in-person travel agents and direct phone calls. OTAs emerged in the 1990s and have used the internet’s extensive reach to simplify the travel booking process. Over the years, OTAs have changed the way people book travel, significantly impacting how properties distribute their inventory and attract guests online. The pandemic only accelerated this shift, introducing 3 critical changes to the distribution environment:
1. Airbnb drives innovation across distribution channels
Airbnb skyrocketed in popularity during the pandemic as travelers preferred private accommodations to minimize contact. This increase in demand resulted in Airbnb experiencing its best year ever, earning over $1.5 billion USD in revenue during its fourth quarter. With these earnings, Airbnb has invested in innovative offerings, including:
- Airbnb categories – a new way to search for all different property types
- Split stays – allows travelers to book longer stays by splitting trips between different properties
- AirCover for guests – comprehensive protection in travel free for every stay
Airbnb has improved the traveler experience and elevated expectations across the distribution environment with the ease of use of its platform, ample accommodation options, and flexibility regarding length of stay.
2. Google free bookings changes the way travel is booked
Google has significantly impacted the distribution environment by introducing new features over the past few years that have impacted how travel is booked. Google Hotel Search was the first disruptor. With this functionality, travelers who are searching for a hotel’s name will see that property’s rates across all the OTAs they are listed on in one place. They could choose the best rate from the list and be taken directly to that OTA to book, eliminating a few steps in the research and booking process.
Google took it a step further in 2021 with free booking links, allowing properties to list their direct rates within the Google Hotel search box and maps results for free. This has helped properties increase direct bookings, significantly impacting the distribution environment.
3. OTAs introduce more experiential offerings
OTAs have felt the pressure to expand their product offerings and provide a full-service experience to travelers, including accommodations, flights, tours, restaurants, activities, and more. They’ve had to become more creative to stay differentiate themselves from the growing competition and appeal to a younger demographic of travelers looking for unique experiences.
For example, Airbnb introduced 56 new vacation rental categories, including tiny homes, caves, castles, and more. At the same time, Hostelworld created “Roamies” a new group tour option for travelers to visit lesser-known spots and interact with local communities. These offerings have changed the distribution environment, resulting in more variety and value for travelers besides just a place to stay. It has also opened more opportunities and challenges for properties to attract travelers by providing unique experiences.
How to build the optimal OTA mix
With hundreds of OTAs in the market, property owners and operators who want to build an effective distribution strategy must prioritize channels that align with their hotel brand and attract visitors in their target market.
Choosing the right OTAs can help your property get exposure across different regions and audiences to increase occupancy without any additional marketing spend. It’s recommended that your OTA mix include a minimum of 6 channels made up of the following types of OTAs:
- 2 x Global OTAs – leading OTAs like Expedia, Booking.com, and Tripadvisor are the foundation of your channel mix. They have millions of monthly visitors and can give your property a lot of visibility, but they charge hefty commission rates, so they should not be your only channels.
- 3 x Regional OTAs – attract domestic travel within your region and from target regions using these types of OTAs. Regional OTAs are useful for filling demand during off-seasons. For optima results, include 2 OTAs that focus on your region and one that targets another region – possibly one with inverted seasons to keep your property businey year-around.
- 1 x Niche OTA – target particular audiences (ie. surfers, skiers, campers) who seek properties that cater to their interests. Depending on what your property offers, niche OTAs can often be the most lucrative channels as the audience is targeted and more likely to produce repeat guests.
This comprehensive channel mix has been shown to help hoteliers reach their target guest demographic on OTAs, increasing occupancy and driving traffic to their hotel website through the Billboard Effect. By choosing a diverse mix of channels, properties can stay flexible and competitive as the distribution environment continues to evolve and grow.
