OTAs and How Hotels Can Best Use Them
A lot gets said about OTAs and most of it is negative coming from the hotel world. I get it on one hand as I was the one having to explain to owners each month why our commission expense was constantly on the increase.
NB: This is an article by David Lund, founder of The Hotel Financial Coach
However, on the other hand I also knew we had our backsides saved many months because we turned on the tap and let them in.
What’s the alternative – no OTAs at all? That’s probably not on anyone’s wish list at this time of the year. Would another alternative be lower fees? Absolutely this would be welcomed but it’s a super competitive landscape out there with lots of different options for hotels to consider. I say the market sets the fees. How about a third alternative – getting the most out of the OTA?
One aspect that I see all the time from hoteliers is a single focus on the elephant in the room, no matter what the issue. Talk about profit and they want to talk about increasing RevPAR. Talk about service and they default to negative Trip Advisor comments. There are always other ways to look at any situation. The elephant in the room with OTAs for hotels is the commission costs. What hotels could do to alter their perspective just a little would be to consider and take advantage of the other services offered by the OTAs. The services BTW are free! That’s like the old glass of water in the restaurant is “free.”
When it comes to OTAs, hotels are fixed almost all the time on the same two things. The revenue generated by the room bookings and the commissions. What if there were more aspects to consider than just the immediate gratification and the hangover afterwards?
Here is a list of what I think are very compelling value-adds from some OTAs that hotels could and should take advantage of. I also believe when they do use these services it adds bottom line improvements as well as long-term business intelligence, greater stability and market diversification. This longer term view is priceless, especially in markets where there is new supply and fierce competition.
- Work with your OTA’s personal market manager to create a distribution strategy that works for your individual property.
- Look at the mix of guests and see where the gaps are. Then target these opportunities using OTA tools and promotions for only the segments and dates you need.
- Utilize their mobile productivity tools that allow you and your staff to work from anywhere and anytime.
- Optimize your content and photos to get the power of a free online brochure that can generate new direct business and referrals.
- Leverage the OTA’s data by using property, competitive set, market and guest data to understand guests’ travel motivations and booking behavior, allowing you to reach and convert travelers in a more focused way and then turn them into loyal returning guests that book direct.
- Hotels could stop paying for loyalty programs when OTAs are offering the same product and they are paying the bill for it.
- Use their free revenue management tools which can save you time and money and drive incremental revenue gains. Also, these free tools help you know the competition.
- Let the OTA take the risk for international currency conversions and testing out new payment solutions.
- Gain a better understanding of compression events in your location by working with your market manager who has a much better perspective of the overall market demand.
- Last, but certainly not least is take advantage of all the value-adds the OTAs offer. Hotels are notoriously suspicious of outside services and new technology as if they were a permanent disease. OTA’s are investing mega wads of cash to continue to be on the forefront of the travel worlds’ evolution. Remember that’s how it all started. Take advantage of their investment and don’t be too concerned that the evil empire will have you hooked like a bad drug.
Hotels that utilize a strategy that considers how they can get the most value from their partnership with their OTA’s are going to be the most successful in the long run. This reminds me of a saying that an old boss of mine would use quite often. He would say this to the director of sales when he/she were full of himself after a good month’s results on our RevPAR index or the revenue picture to budget.
He would say, “Any Monkey Can Fill This Place When the Phones are Ringing” – “What are You Doing to Keep the Phones Ringing?”
David Lund is The Hotel Financial Coach, an international hospitality financial leadership pioneer. He has held positions as a Regional Controller, Corporate Director and Hotel Manager with an international brand for over 30 years.
He authored an award-winning workshop on financial leadership and has delivered it to hundreds of hotel managers. David coach’s hospitality executives and delivers his Financial Leadership Training, helping hotels increase profits and build financially engaged management teams. David helps aspiring hotel leaders overcome their uncertainty with the financials in a safe and productive environment. The coach also consults on hotel financial statement and system design, financial policy and asset management.
He speaks at hospitality associations and company events and he has had many articles published in hotel trade magazines. David is the author of the book, Seven Secrets to Create a Financially Engaged Leadership Team in Your Hotel.
David is a CHAE through HFTP and a Certified Professional Coach
This is how you can contact David