1. What is an OTA?
As a hotel owner, you may have come across the acronym, OTA.
So what is an OTA?
OTA stands for Online Travel Agency, which is a website that allows people to book various travel-related services. OTAs are third-party agents who resell services and allow people to book hotel rooms, flight tickets, travel packages, tour activities, train tickets, and more.
OTAs in recent times has become quite popular with the hotel industry. They allow travelers to view and compare numerous hotels and their prices and book their stay with ease while accumulating benefits such as points, and being guaranteed the ‘lowest price’.
Initially, the OTA model was considered a win-win for both the independent business owner and the OTA.
OTAs provide hotels a significant amount of exposure on their platforms, bringing hotels bookings that couldn’t have been possible on their own, especially in the nascent days of the internet when technology was expensive and difficult to implement or non-existent. In recent years, the coexistence between OTAs and hotels has in many ways become dysfunctional, primarily a result of degrading economics, restrictive and encroaching policies, and egregious business practices, but also because of the proliferation of technology. Many hoteliers are finding that tools to distribute and sell their room inventory directly can reduce their costs significantly and help drive more direct bookings. This drive has led hoteliers to question the restrictive policies that OTAs enforce, such as rate parity and encroachment on property policies bending them to their will.
Over the years, hoteliers have soured on the relationship between themselves and the OTAs to be unjust. Many OTAs have begun to increase their commissions driving upwards of 30% on gross room revenue, thus decreasing the profitability of independently owned hotels, imposing strict controls which amount to price-fixing, and sometimes even predatory practices that are not only unfair business practice but could be illegal. Many hoteliers feel like they have lost control of their hotels to OTAs, which in many cases even try to exert their will on cancelation policies and late cancelation fees.
However, a growing number of people choose to book via established booking channels instead of booking directly with hotels, primarily due to the following:
Research has found that 52% of Millennials prefer to book their hotels via an OTA!
All these factors have led owners to realize that their hotel should not depend entirely on OTAs and they must have an efficient strategy to increase direct bookings of their own.
Let us review some of the commonly known Online Travel Agents below:
TripAdvisor, mainly known as the world’s largest reviews website, provides bookings for transportation, lodging, travel experiences, and restaurants. It is the world's largest travel platform that operates on user-generated content, a comparison-shopping website, and offers online hotel reservations. It allows customers to browse hundreds of millions of traveler reviews and opinions on their website.
Booking.com is one of the world's leading digital travel companies. Founded in 1996, Booking.com is now available in over 40 different languages and has a vast reach of over 155,000 properties across 207 countries! They have recently expanded into the small accommodation or vacation rental market as well. One great benefit of Booking.com for hoteliers is that they get paid directly by the guest. There is no monthly subscription fee. Booking.com was purchased by Priceline.com in what is considered one of the best acquisitions in history.
Also founded in 1996, Expedia is an online travel agency that provides hotel reservations, airline tickets, and vacation packages. Expedia.com belongs to Expedia Group and is particularly popular among the North American and Asian markets. Expedia owns more than 200 travel booking sites and over 150 mobile apps and websites.
Travelocity is an OTA that provides its users with direct-to-consumer travel services. It is also owned by the biggest Travel Agency in the world, Expedia Group, and has over 12.4 million unique visitors and 91 million page views.
Airbnb is an online marketplace company that lets people rent out their properties or spare rooms to guests. Airbnb was started in 2006, as a home-sharing website, but is turning into a top player in the hospitality industry. Airbnb connects travelers looking for an authentic local experience with hosts offering unique and genuine spaces. Offering about 4,500,000 listings in over 65,000 cities in 191 countries, Airbnb offers a variety of homes to travelers in almost all price ranges.
Hotels.com is an OTA that provides booking services through its network of localized websites and telephone call centers. Hotels.com is also owned by Expedia.
Agoda is one of the world's fastest-growing online travel booking platforms. Agoda is a metasearch engine for hotels, vacation rentals, flights, and airport transfer and is known to offer some of the best deals online. They are also well known for the millions of real hotel reviews they display on their website. Agoda is owned by Priceline.
Orbitz.com is a travel fare aggregator website and travel metasearch engine, a subsidiary of Expedia Group. Orbitz uses technology to transform the way consumers plan and purchase travel. They provide flight tickets, inexpensive vacations, rental cars, and hotel deals.
Priceline.com is an online travel agency specializing in providing discounted rates for travel-related products such as airline tickets and hotel bookings. Priceline.com was founded in 1997 and is a part of Booking Holdings (also known as Booking.com).
Laterooms.com is a hotel reservations website providing discounted accommodation throughout the UK, Europe, and the rest of the world. Laterooms have a sister website called AsiaRooms.com, with a reach of 20,000 and 60,000, respectively.
See something interesting above? What you will find is there has been major consolidation in the industry and what we currently have is a duopoly headed by Expedia and Priceline, which are the 800 lb. OTA Gorillas that have come to dominate the world of online distribution and in many ways exert significant monopolistic behavior that stifles competition, suppresses hotels, and harms consumers.
OTAs provide a one-stop solution for comparative shopping. People these days want to visit one website, compare a multitude of different hotels, compare prices, and book right away. People love to have a variety of options right on their fingertips, and OTAs give people just what they want!
Some of these popular OTAs have a loyal customer base, leading them to book a variety of travel services from the same OTA instead of booking directly from hotels.
A consistent User Interface throughout the website and easy price comparison options plus a highly usable experience and secure booking flow give OTAs the trust factor that many hotels aren’t able to compete with.
Over the years, OTAs have successfully managed to give customers exactly what they want, and some more. They prioritize customers and user experience in such a way that most hotels seldom do.
To make a long story short, OTAs provide a solid digital user experience and a multitude of features giving them an advantage over MOST hotel websites.
You registered your hotel with an Online Travel Agent with the intention of an increase in bookings. You thought that increase in bookings would ultimately lead to high net profits.
You pay a commission to the OTA if someone books on their platform. Initially, you hardly gave a thought about sharing revenue as the commission rates were 10%.
In the past few years, many OTAs have increased their commission rates to 15%-30% of gross revenue on a booking.
This margin erosion is why hoteliers need to be shrewd and plan a strategy that helps drive more traffic to your lowest cost channel, which should be your hotel’s website.
You can avoid paying commissions to the giant OTAs only if your guests come directly to you.
You might have experienced overbooking where reserved rooms cannot be fulfilled by available rooms. This situation may arise when you have guests who decide to extend their stay, you have a walk-in guest, or there is another inventory management clash.
Though there is an increase in revenue due to full occupancy, on the contrary, you also have to deal with a lousy guest experience for the overbooked guest, which leads to negative reviews on social media or reviews aggregator websites like Yelp or TripAdvisor.
It is a hectic task to update your OTAs to ensure you update inventory to reflect the real-time nature regarding extended stays or walk-in guests.
Like overbookings, under bookings also can amount to management stress.
You can allocate some rooms with different OTAs. Not all OTAs are efficient in driving bookings regularly to your hotel. In that case, you face a situation where some rooms do not get booked. Indeed, you do not want this scenario to occur.
This is why a real-time allocation and central reservation system that connects all channels together and presents all of your real inventory online is integral to your revenue maximization.
INNsight offers a free Central Reservation System (CRS) that connects to Priceline, Expedia, TripConnect, and AirBnB to help manage all of your distribution needs in real-time from one place.
So, you registered your hotel on various OTAs? While agreeing to their terms to do business with them, you also have to admit to their price parity clause where you have to keep the rates and terms of your rooms at parity across all distribution channels.
Due to the Rate Parity agreement, you are prevented from offering and promoting lower rates or discounted rates on your hotel’s website.
You put in so much effort in marketing and trying to drive direct sales to your hotel, and an OTA contract can severely hamstring your freedom.
While following the rate parity clause, you sometimes have to bear losses in revenue, and your efforts are undermined. Now, this is an interesting topic because you can constitute a rate parity adherence between your own website and OTAs as an unfair business practice, namely price-fixing, which could result in antitrust litigation vs. OTAs.
Whenever a booking is made on a hotel website, you, as a hotelier, are granted access to information about the customer. You get the details regarding the name, location, address, credit card, e-mail id, etc. from the customer.
The information you get from the customer proves to be invaluable during the remarketing and customer relationship management process.
But the picture is different when you get a booking from an OTA channel. They do not forward such valuable information to you and they own the propriety of your very own guest!
It would be best if you had a strategy to get all the information and increase your relationship with who is for all intents and purposes, your guest. Customer information plays a vital role in making strategic decisions for the hotel and for direct marketing efforts.
The guest searches for the best hotel in a particular area, and they end up clicking on the listing of the OTAs on the Search Engine Results Page. The booking gets carried out through the OTA platform. After the stay, the guest also leaves a review on the OTA platform.
Here, you see that the customer journey from search to registration and post-stay revolves around the OTA’s ecosystem.
There is hardly any chance to create a space in the mind of the customer. Even if you give the customer excellent service and genuine hospitality, they will remember the OTA platform for bringing them to your hotel. In such a case, the customer will have more faith in the OTA platform than with your hotel.
Due to this, there is a relationship gap between you and the customer. There is a definite shift in customer relations because of the giant OTAs and all of their customer touchpoints during the guest’s discovery, booking process, and remarketing experience.
Once you register your hotel with an OTA platform, you have to put effort into ranking your hotel on that OTA platform too.
You cannot neglect your relationship with the OTA platforms because at the end of the day they bring you bookings and revenue for your hotel business, albeit at a price.
OTAs spend a chunk of their revenue on the marketing of their registered hotels. OTAs help in promoting, stimulating customers, support in branding, and many other things. OTAs are some of Google’s largest advertising customers and also spend heavily on print and television media buys.
It is clear that you need the assistance of OTAs for business, but you hardly have any control over it. The question is, how much should you rely on an OTA to drive your revenue, as this impacts your hotel’s bottom line, and how much of your total revenue should you make reliant on these relationships. As a hotelier, you need to work towards tipping the balance of power; taking back a larger portion of the pie while expanding its size, at the same time.
Everyone knows that Facebook plays a vital role in increasing your hotel's brand awareness across the net. You can encourage travelers to book directly on your website by offering various packages and specials!
According to Trivago, around 50% of travelers use metasearch engines to find their ideal hotel. When you promote your website rates on metasearch, it will prompt a traveler to visit the hotel's official website, hence giving a boost to direct bookings.
A loyalty program will keep your potential customers interested in your hotel, even if they're not actively looking to travel. By providing access to great deals and discounts, they will continue to open your emails, read your ads, and consider your hotel when they are ready to travel!
The trend towards mobile reservations and the accompanying trend towards last-minute bookings represent a massive opportunity for hotels to sell their final guest rooms, right up to the last minute, if they offer promotions and discounts on their website, and it is built to be responsive and function well across all types of devices.
Packages and specials can apply to both business and leisure travelers as a pleasure and convenience. Ideally, you need to set up packages that will impress every type of guest, but at the same time, if you have too many, it will reduce the impact of your promotions. THREE great packages are better than TEN mediocre ones.
With an effective Post-COVID digital marketing strategy for your hotel, you'll be able to approach your potential guests and build a loyal customer base for your hospitality business as the economy recovers.
SEO: It doesn't matter how much you slog if your website is not visible. Performing excellent SEO for a hotel will help you rank higher on search engines and give your business more visibility and help drive more direct bookings.
Hotels can better capture more guests vs. OTAs through improved user experience, user-driven web design, and an emphasis on creating a booking process that offers excellent user experience and security.
With a hospitality website Powered by INNsight, you will get the following features and benefits:
When the INNsight hotel booking engine is fully integrated into your website, you'll offer best-in-class usability, security, ADA accessibility, and a variety of features such as shopping cart abandonment, and the ability to handle many promotional use cases.
INNsight helps you to create a website for your business that will look good at any size--from large desktop monitors to small screen devices like smartphones and tablets.
INNsight's cloud-based hospitality CMS lets you quickly access your website's content, including images, room types, room details, offers, and more.
Achieve ADA Title III Compliance of your accommodation's website using our easy to use Content Management System (CMS) tools, which allow you to describe accessible features of your property easily. All INNsight websites are also coded to be WCAG 2.1 conforming and layer on a patent-pending assistive layer called ADA Tray. Learn more at www.ADAshield.com.
We provide dozens of traffic reports, daily rate reports of your competition, facilities reports, and financial data when you subscribe to INNsight so you can drive growth and save on costs and actually substantiate ROI.
INNsight has been creating dynamic hospitality business website design for over a decade. Our understanding of how travelers search, research, and book hotel rooms lead to a fine-tuned design standards and a website usability framework that lets travelers look and then drives them to book their stay with ease.
These tools can go a long way in providing a toolkit for hoteliers to fight back versus OTAs and drive more direct bookings at higher margins and manage the guest experience from looking to booking.