Online Travel Agencies, also known as OTAs, are websites that provide hotels with more of an online presence and the ability to offer their rooms to a wider audience, with the idea being that they will help create a brand, and therefore increase sales. However, evidence has increasingly emerged to suggest that OTAs could in fact be more damaging than beneficial to hotels. Despite the obvious fact that the commission from OTAs eats up a significant percentage of profits, there are also a number of long term effects that can have a dramatic impact on the hotel’s future.
One of the most significant of these effects is the loss of the hotel’s independence, particularly for those that operate on a smaller scale. Over-reliance on OTAs during low season can lead to a loss of focus on other marketing areas, and therefore cause them to miss out on the higher revenue that would otherwise be obtained through directing customers straight to their website, thus saving the 10% – 20% commission paid to OTAs.
Another disadvantage for hotels is the dissemination of guest data. When OTAs receive bookings through their sites they obtain a significant amount of guest data which they don’t share with hotels. This data is vital for marketing purposes as it allows the hotels to find out more about their demographic, and hence improve their catering towards them. Many argue that OTAs should offer more information to hotels, rather than holding onto it for future use to benefit their profits only.
Reputation, one of the most important determining factors for the success of a hotel, can also receive a negative impact. Websites such as Booking.com and Expedia have been accused of failing to accurately represent aspects of hotels, leading to guest dissatisfaction when they arrive. Not just this, but also glitches in the website or poor cancellation policies can lead to customers leaving bad reviews which, in turn, tarnish the reputation that the hotel has spent years building for itself.
However, with the right online tools, such as database driven dynamic pricing tools, and more careful website marketing, hotels can manage a substantial shift from online travel agencies to direct bookings at a fraction of the cost. Hospitality technologies such as IBC break the OTA’s grip on hotel revenue with tools such as new direct bookings from Google, metasearch channels, optional GDS and International Vacation Hotels distribution, while also taking on all the CPC and CPA fees that OTAs add on top of the commission they charge.
Original photo: http://www.ibchospitality.com
Furthermore, companies like IBC also make sure that the hotel receives all guest information, including addresses, emails and phone numbers, meaning the hotel can drive higher occupancy rates over time and tailor their advertising to the right demographic. This offers hotels greater market transparency, making them less reliant on OTAs and leading to more repeat bookings, as well as higher revenues.
Therefore, it is important that hotels, particularly ones that operate on a smaller scale, look towards alternatives to OTAs in order to increase their bookings. As described, when all the downsides to OTAs are laid out, it is clear that by doing some more extensive research and opting for hospitality technologies such as those offered by IBC, hotels can maintain their independence while at the same time receiving all the information of their customers and increasing revenue.
If you are a hotel looking to take your property mobile in order to provide guests with better access to your services & amenities and increase revenue, please visit TheBestyHotel.