A recent Hotel Management column captured well the full story in the ongoing debate between hotels and online travel agencies. The story, however, is ready for a new chapter.
Everyone knows that OTAs are behemoths, with marketing budgets many times the size of even the largest hotel brands. We also know that there is a “love/hate” relationship: hotels object to OTAs when they are surrendering revenue to them and paying commissions; they appreciate them when they have unoccupied rooms to fill and OTAs are a valuable distribution source for doing so.
Here’s the thing: It’s time to move beyond love and hate, and see reality for what it is. There is one main marketplace for selling rooms; that marketplace is online, and hotels and OTAs, together, are selling in that single marketplace.
Here are the facts: According to the Cornell University School of Hospitality, hotels are still losing the direct booking wars and still seeing their profitability continue to erode. Moreover, in today’s dynamic environment, room demand changes not week to week, but day to day and hour to hour.
It’s nearly impossible for a hotel or brand to keep tabs on changing demand as well as the OTAs can. Moreover, dozens of intermediaries are crowding the space to reach the consumer, making it incredibly difficult to see what offers a consumer in any market is seeing at any given time. And global markets are forcing hotels to compete in markets where they have little or no marketing budget.
Finally, prices are dynamic, not static. Consider a random day and time, July 20, 2017, at 6:00 PM EST, your branded property in a major U.S. market will be selling at one price on one OTA site, at a different price as part of a wholesale package and at another price altogether on brand.com.
At the same time, demand for your hotel from London or New York might be increasing, but demand from Toronto might be falling and there may be the potential to reach out to Chinese travelers who are willing to pay higher prices and spend a good deal more on food and beverage and on property retail.
