Online travel agents offer a convenient revenue stream but, as hotels are discovering, at a cost – that guests are ignoring direct bookings in favour of the hotel that appears at the top of their search results – and commissions are getting higher and higher. But the tide could be about to turn, discovers Emma Lake
Hotel operators have described a toxic relationship developing with online travel agents (OTAs) as the platforms’ increasing dominance of the market leaves them with “no negotiating power”.
Operators told The Caterer of increasing demands being made by OTAs who can buy up search engine advertising, making it very difficult, particularly for independent hotels, to secure direct bookings.
But Richard Clarke, a senior analyst of European leisure and hotels at investment company Bernstein, predicts the tide could be about to change as operators reach a tipping point and consumers realise the benefits of booking direct.
He said: “I think there’s an impression across the industry that they’ve created a monster. Digital distribution used to be small compared to phone calls and walk-ins, but consumers have got used to using them and they’ve become more and more powerful.
“You’ve seen Booking.com and Expedia buy up a lot of their rivals. While 10 years ago there were a lot of largeish OTAs and hoteliers could pick and choose, giving them a reasonably strong negotiating position, you’ve now got next to no negotiating power because, particularly in Europe, the only one that counts is Booking.com. You need to be at the top of its list, so you need to pay higher and higher commissions to get yourself there.
“This is impacting the profitability of independent hotels and I’ve seen a shift in mentality recently, with hoteliers asking if there is more we could be doing to drive direct distribution and move away from the OTAs.”
