While the majority of hotel marketing articles focus on OTAs being too expensive and too aggressive. We find it important to take a step back and look at the bigger picture.
OTAs became powerful and efficient due to good work (and a little brand-jacking). Before, hotels sold to wholesalers, who sold to tour operators, who sold to travel agents and finally to guests. Transparency in this markup system was non-existent. Neither the hotel nor the guest knew how much was being paid. When OTAs entered this space, they gave control back to the hotels and guests received a clear picture of how much they were going to pay.
Hotels could now yield their rates and develop a more intelligent pricing strategy other than just a high / low season. OTAs encountered almost no friction when taking over the online space. Even though users were flocking to the internet, many hotels didn’t have an online marketing strategy in place.
Another point that benefits the OTAs, as well as meta-search sites, is what we call the vertical search. Specialized sites, such as Expedia and Amazon, account for almost 33% of product and travel searches. The user experience of finding the perfect travel destination is much better on these niche sites as opposed to Google or Bing.
OTAs were able to become big and powerful because there was nothing else there. They filled a void, that could have been filled over by GDS, Tour Operators or Wholesalers. OTAs just happened to be faster.
Most hotels would love to have 100% of their bookings be direct without having to pay commission to anyone. We have achieved this with some clients but it’s not necessarily the best solution and certainly isn’t the fastest.
We find the best balance comes from direct bookings being on par with OTA bookings. However, exact percentages can vary from city to city. For example, the best balance for a hotel in Paris is around 30% direct and 30% OTA. The remaining 40% come from corporate and phone bookings, return guests and some tour operators. Those figures are different in Rome where it’s closer to 40% direct and 40% OTA.
These are not absolutes, but they are a good benchmark for a healthy split.
This article is a recap of the second hotel marketing seminar in the WIHP Academy series. Find out when we’ll be giving seminars in your city.
Source: Wihphotels.com