Recent years have seen a rise in the number of the online booking platforms. They’ve become increasingly popular, and as the intermediaries between hotels and their guests, seem to be taking over a significant chunk of reservations made via Internet. Their growth seems inevitable – and so does the loss of control by the hoteliers. But does it mean the end of the direct bookings?
OTAs
Online Travel Agencies, or OTAs, gained an immense amount of power over the last decade. Most of them came to the scene even before the Internet grew into what it is now, and quickly established their position.
They gave people what they wanted. Quick, easy to use, accessible tools to book rooms whenever and wherever they want. All hotels in one, easy-to-navigate place. An opportunity to compare and choose from millions of options. Essentially, they provide what the good 21st-century online products boil down to -easy designs, comfort and accessibility.
Customers don’t like over complications. They want to make a reservation with one click of a button, without the hassle of making phone calls and sending emails. The creators of online booking platforms noticed this and used it to their advantage. Most importantly, that is what differs them from many hoteliers. They understand, that the world is moving forward and that their target groups need the products to be up-to-date with their expectations.
Many hotel owners don’t feel as comfortable on the internet and social media. They know their business, they do it well, but marketing-wise, they often cannot keep up with the OTAs, who have crews of hundreds working on their advertising and online communication strategies.
It seems as if the battle for the direct bookings is lost, and soon the OTAs will take over the entire process.
The rate parity issue
One tool the OTAs use to control the hotels is rate parity. It is a legal agreement between those two parties, ensuring, that the hoteliers use the same rates for their room prices on all the distribution channels. Having such an agreement signifies that the hotel can’t give discounts on its prices, not even on its own website. Because of that, guests often don’t even bother going to the hotels’ own site, believing that it won’t lower the costs. If the price for the room is the same via a direct channel and the OTAs, it means, that the 30% commission lowers the income of the hotel by 30%.
