You fancy a short city break in Prague. You don’t know anyone there and are unfamiliar with the destination and its accommodation landscape, so what do you do? Put your non-hotelier hat on for a moment and, assuming you’re looking for a hotel – rather than camping, short-term rental, or other bed and breakfast – the chances are you’ll go to your favorite search engine and type in “hotels in prague” or similar.
NB: This is an article from Lighthouse, formerly OTA Insight
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When we do this on Google in incognito-mode, so that none of our search history affects the results, the top two hits, both sponsored, are for Expedia and Booking.com. Below the sponsored panel, there’s a cluster of further results, including both of those sites again, Hotels.com, Kayak and TripAdvisor.
With the exception of the latter, which is an aggregator, these are all online travel agents – or OTAs.
OTAs attract huge volumes of traffic and transactions for the hospitality industry, with estimates of around 80% of travelers using OTAs before making any purchase.
So if you don’t have a well-defined strategy for when and how to work with them – or your policy is out of date – now’s the time to (re)appraise your operations.
When and why you need to partner with an OTA
The heading above begs the question that you do need to partner with an online travel agency. Technically, you don’t, and certain enormous chains, particularly those in the budget market, make a point of taking only direct bookings on your own website, a.k.a. Brand.com (or over the phone).
But even they are a very small minority among their peers, and for smaller chains and independents, not partnering with OTAs is almost certainly a false economy on the basis that you can never achieve the marketing reach, increased visibility and reputational advantages that they offer, and, as a result, occupancy will suffer.
OTAs attract huge volumes of traffic and transactions for the hospitality industry, with estimates of around 80% of travelers using OTAs before making any purchase.
When the relationship is finely tuned and tailored such that OTAs don’t become your only channel, the cost of these relationships in the form of the fees is more than compensated for by significant bookings that you’d otherwise not have made.
We’d refer you back to the search engine scenario above; the majority of hits were for OTAs, and it would take a bold traveler to book one of the handful of actual hotels that were returned without conducting additional price comparisons.
In any case, clicking on those hotels doesn’t take you to Brand.com sites; instead, it’s an extra Google layer on top of further OTA results.
Yes, these fees will dent your profit margins, but a good revenue manager will be able to build that into their projections and calculations and still come out smiling.
So the case for working with online travel agencies is clear. But this doesn’t mean that you can’t reserve some of your best offers for Brand.com, the ones you promote through your own marketing channels.
You can set aside blocks of hotel rooms for bulk bookings. And you can temporarily switch off certain OTAs in certain markets whenever it’s strategically necessary. You’re in charge.
