The positive impact of the OTAs on hotel industry performance, at least in terms of occupancy numbers, can’t be argued, but identifying exactly where that business is coming from and how much it costs is a little more complicated.
A session from the recent Hotel Data Conference entitled, “Red, White & Brew Debate: Dissecting Distribution Decisions and Dilemmas,” offered a variety of perspectives.
As expected, the issue of the cost of different distribution channels was at the center of the debate.
Doug Browne, President, The Peabody Memphis, talked specifically about the cost of distribution from the perspective of owners. “There are so many different costs coming at you from different angles it is hard to figure out, but it’s probably somewhere in the 35 percent range, which is very expensive,” he noted.
“The biggest concern is the costs of OTAs. Sometimes there’s a feeling among us [owners] that’s there a disparity in what’s charged from one hotel brand to another. You start wondering, why are there differences?”
Browne further added of the OTAs, “it’s kind of a love/hate relationship. We need them, especially when times are low like Sunday and Monday nights, and then the other nights you don’t really want them, but they’re there.”
Bharat Patel, Chairman and CEO, Sun Development & Management Corporation, identified one of the issues when it comes to cost. “I don’t think hotel owners or hotel companies take into account what percentage it is,” he said, adding that they need to look beyond the actual dollars and take into account the number of rooms, for example.
Rebecca Bucnis, chief commercial officer and EVP, Kalibri Labs, acknowledged the challenge of identifying costs. “We know that they’re [costs] rising and the first way to think about measuring them is putting some metrics in place around them, which I think they are both [owners] arguing for,” she said.
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