One of the biggest challenges hoteliers face is that the distribution landscape is evolving constantly and with this, the relationship between hotels and OTAs.
We see hotels dealing with OTAs undercutting them on a regular basis, a large number of technical issues, and almost 50% of wholesaler revenue on static rates coming from ‘Leakage’. So does this mean ‘direct is best’? Not necessarily. We truly believe OTAs give hotels a real advantage in many ways with their reach and scale, allowing for hotels to reach massive amounts of travellers, as well as providing the hotels with online expertise.
Subscribe to our weekly newsletter and stay up to date
The challenge comes from ‘a wholesaler leakage spiral’, whereby OTAs reduce the brand ranking and visibility and turn instead to 3rd party distribution channels, creating a billboard effect. Consequently, hotels end up paying higher OTA commissions to be kept in a good position. As a result, hotel sales teams will try and solve the occupancy gaps created by the OTAs with more wholesaler deals. Direct conversions will keep dropping and the brand strength will decline. The result: Profit for owners and net REVPAR will continue to decrease.
It’s not just about the data, it’s about solving the issue
While data is important in managing your distribution and improving your profitability, it’s not everything. It’s about creating a strategy, and organisation that is aligned to resolve the problem and ultimately create a process working towards improving your distribution.
We see many different examples of ways in which some OTAs try to get away with undercutting. So here are some tips to overcome these issues:
- ‘Connectivity issues’ – Often OTAs will say that the reason the rates were out of parity is due to ‘caching’ issues. Manually try and check by re-shopping for the room, and see if it is actually resolved after a few hours.
- ‘Time differences’ – OTAs will sometimes play with hours, for example when you are not in the office or the point of sale (PoS). To overcome this you can take screenshots with a timestamp and provide them as evidence to your partners.
- Wholesaler leakage – If you believe the rates you are seeing on an OTA for your inventory are coming from a third party wholesaler, carry out a test reservation. While this process can be time-consuming, you can use data to identify which shops have the highest chances of success and which are hurting you the most. Once you have several examples and you have built a case you can approach the wholesaler.
The hotels business alignment challenge
Improving the alignments and mutual KPIs between the different roles in the hotels is critical for the success of the business. However, data and reporting in hotels today is fragmented between different systems and roles, internal and external, which makes it complicated and time-consuming, be proactive and make daily business decisions based on updated data.
This complexity is multiplied when chains grow through acquisitions and have multiple PMSs, this makes it almost impossible for the chain to get an accurate daily picture of the business and make quick decisions based on budget and forecast.