When OTAs first appeared, travelers made reservations by phone, used brick-and-mortar travel agents who had access to the Global Distribution System (GDS) channel, or (gasp) walked in. Not only did OTAs survive the dot-com bubble burst, they flourished as the internet grew and the convenience of online booking and promises of the “best deal” forever altered how people plan trips.
NB: This is an article from Canary Technologies
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Since then, the GDS channel has become synonymous with business travel bookings. Loyalty programs now fuel direct bookings, and phone reservations … well, do people even call places anymore? The latest evolution: Airbnb. In response, Expedia and Booking.com now also source and list short-term rentals.
Along the way, hotels and OTAs became frenemies. In 2021, hotels reclaimed valuable direct bookings, securing 52% of the online booking market for the first time. Yet, hotels cannot ignore other vendors that still hold a massive part of the pie: US-based OTAs generated more than $100 billion in 2023, driving 21% of all U.S. travel bookings last year.
8 Ways to Overcome OTA Pain Points and Drive Revenue
Hotels often find themselves weighing the pros and cons of working with OTAs. While some unique properties can thrive by cutting out third parties and going direct, most hotels rely on OTAs, especially during the low season.
To make the partnership work for your hotel, focus on the following strategies.
- Calibrate and offset costly commissions
- Avoid overreliance on OTAs
- Go beyond the data that OTAs provide
- Compete with alternative lodging
- Treat your listing like real estate
- Use rate parity to your advantage
- Proactively manage your reputation
1. Calibrate And Offset Costly Commissions
Charging commissions up to 30%, OTAs are one of the most expensive ways to gain business. Before ditching them, determine whether the amount of business you earn through the channel is something you can easily earn back in other ways.
You can do this by assessing if you have a “fair share” of business in your market. If 20% of bookings in your region come from an OTA and that OTA also makes up 20% of your bookings, you have a fair share. Anything less than 20% suggests that you’re missing out on revenue streams; anything more suggests you’re relying too much on OTAs — and that you can attract guests through potentially cheaper channels. Your goal is to create a fair share.
Then, offset commissions by reclaiming (or exceeding) your expenses during a guest’s stay through timely upsells. Off-site OTAs can’t create tailored experiences, but your in-house team can easily offer things like in-room bottles of wine, airport transportation, early check-ins or late check-outs that elevate the experience and drive revenue.
An intuitive upselling tool like Canary Upsells can present relevant add-ons and amenities to guests at several points throughout the stay, helping your team recoup the money spent on the OTA booking while also pleasing guests.
