Are hoteliers moving away from OTAs with direct bookings?

The online booking space is changing fast and a handful of powerful OTAs now dominate the market. Where does this leave hoteliers?

Whilst the wrangling between hoteliers and OTAs continues, the industry is looking at ways to sidestep the high-commission demanded by OTAs. Developments in online consumer trends may benefit the hotel industry and enable them to weaken the power wielded by OTAs.

In the lead up to our hotel technology special issue in February, we asked some of the industry’s major players a single question:

Industry View: Are UK hoteliers aiming to attract more direct bookings and take potential bookings away from high-commission OTAs?

“OTAs will always have a place in the market, helping to drive new customers to a brand,” explained Stephen Dodman, Revenue Director from Macdonald Hotels and Resorts. “Indeed, research highlights that along the research-to-buy cycle, customers will use an OTA site. So by working with OTAs we can position our business front of mind with customers previously unfamiliar with Macdonald Hotels.”

“However, once we have engaged a guest, our strategy is to encourage that guest to directly book with us for their next visit.”

Dodman is not alone in his view: hoteliers worldwide are aspiring to attract more direct bookings by diverting sales from commission-free channels to their own websites.

The explosion in social media has created the perfect commission-free platform to convert sales, as Rupert Gutteridge from Guestline confirms:

“With the growth of social media as social business, many hoteliers are looking to social media platforms as an alternative, commission-free, online sales channel to drive direct business.”

“This medium is fast becoming an essential tool in the hotel marketing kit to converse with customers and from there, build a two-way communication platform – essentially enabling the conversion of looks to books.”

Internet Revolution

The pace of the internet revolution is staggering – and is completely transforming the online booking landscape.

There are now hundreds of OTAs to choose from, and the market is consolidating around a handful of major distribution channels, enabling them to command high commissions and impose inflexible terms.

“The hands of hoteliers are tied,” explained Yunna Takeuchi, director of e-distribution from evolution, “they have not been able to afford to dismiss the OTA’s when their competitors were using them.”

“Times are now changing – booking engines are becoming more of a commodity. Many hoteliers can get subscription-based booking engines if they commit to other services. Consequently, it is obvious that because hotel booking engines are such inexpensive channels, hoteliers do not wish to pay such high commissions to OTAs.”

The Price Parity Challenge

In this complex business environment, price parity has emerged as a real problem, as Ryan Haynes from eRevMax – RateTiger confirms:

“Rate parity is the dominant factor affecting hotels’ distribution and revenue strategies today. Rate Parity has been the key driver to influence booking journeys to bring customers direct to their website for the best deal. In this way trying to avoid the high commission charges by OTAs.”

“The Distribution Challenge 2012 found that revenue managers are using channel management tools and price shopping reports more than ever, up to 11 times a day on average, to drive revenue on their main booking channels. However as they struggle to maintain price consistency they are now seeking new ways to improve exposure, reach new markets and increase direct bookings.”

Back to Basics!

Whilst the wrangling between hoteliers and OTAs can be intense, hoteliers should not forget that online booking is only one part of the jigsaw. Whilst it may feel like OTAs wield a great deal of power, the digital revolution has actually returned control to the guest … as it should be!

“As the spheres of influence between OTAs and hoteliers get hashed out, it is critical that hoteliers do not lose focus on the one element they have full control over: customer experience,” explains Suresh Acharya, Vice President of Product Development from JDA.

“Studies have shown that prices play a relatively low role if ratings and customer remarks are not favourable The proliferation of social media and sites such as TripAdvisor has put the focus back on the customer. A hotel that has better ratings is also better positioned for favourable negotiations with OTAs and a hotel with poor ratings will always be at the mercy of OTAs. So ensuring a good customer experience is the hotelier’s best weapon in getting an upper hand in negotiations with OTAs.”

Industry View: Are UK hoteliers aiming to attract more direct bookings and take potential bookings away from high-commission OTAs?


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