How long has it been since you had lunch with your OTA market manager?
I used to really enjoy those lunches when I worked briefly as a market manager for Expedia. I got to know some really great revenue managers throughout the Midwest — Chicago, Detroit, Indianapolis — and I can honestly say I helped drive a lot of demand to hotels which, at that time in 2005, were rebounding from some hard profitability hits.
I enjoyed analyzing the data and building reports for hotels, and then developing promotions that would convert well, particularly during need periods. Yes, we even optimized the sort order to shift share toward better partners.
I was good at driving demand to hotels. I could assure my clients higher ADRs, because the higher the rate the more commission Expedia made as well.
Now, more than a decade later, Expedia is still really good at driving demand to hotels, as are Booking.com, Kayak, Trivago and all the other big names. As I wrote in Hotel Management recently, they’re better than the hotels themselves at digital marketing, and the balance of travelers opting for a third-party distributor over a direct booking with a hotel supplier is tilted in favor of the OTAs. The numbers don’t lie.
Why? For many reasons. It’s hard for hotels to compete with OTAs in several areas, particularly on scale, marketing budget and even technology innovation.
For example, Priceline’s ad spend in 2018 will be more than several of the top hotel brands combined. Which unfortunately means that if you’re affiliated with a brand, that brand can get outmatched in the contest to drive direct, less costly bookings.
I’m not telling you anything you don’t already know: OTAs heavily reinvest the commissions you’re paying them into beating you at your own game.
ADVANTAGE: HOTELS
Fortunately, while you’ll never compete with the OTAs on ad spend or marketing, there are areas where hotels still have the leg up.
OTAs might own the transaction business today, but you own the hospitality business. Once a guest clicks “book,” he or she becomes yours — yours to welcome and wow and leave with a beyond-satisfactory experience.
