OTA's - the ultimate frenemy

The relationship between hotels and OTA has always been complicated, but nobody can deny the impact that OTAs have had on global travel and hospitality, connecting travelers to hotel rooms with efficiency and ease. Despite this, major hotel chains are engaging in an online war with the very travel sites that helped get their businesses off the ground. What may have started as a partnership has turned into a battleground, with many hotel brands investing in major marketing campaigns to combat the army of OTAs dominating the market. Hoteliers are now working tirelessly to increase the benefits of direct bookings – lower nightly rates, free breakfast and loyalty points.

The problem is, travel portals have become essential travel tools, a first resort for the ever-powerful consumer searching for the best hotel at the best price. OTAs have invested so heavily in digital marketing and advertising over the years that they have shaped the behavior of travel customers –so much so that hotel brand name simply does not enter the equation when it comes to the all-important travel search. Travelers not only want to look at a polished photo gallery, they expect to check reviews, search for interesting places nearby and look at tourist photos to ensure they’re getting the “real deal.” To put the battle into context, OTAs were responsible for US$99 billion worth of worldwide hotel bookings last year, according to travel research group Phocuswright. Sites such as Expedia and Priceline, the two largest OTAs in the world, were lifelines for the hospitality sector in critical periods such as post-9/11, but they have gradually eaten into the share of overall bookings ever since.

There are many reasons hoteliers should avoid reliance on OTAS, not least the 30% slice of commission some are taking. OTAs hold the cards to customer data, with most OTA contracts stipulating that hotels can’t market to customers that booked directly with them. Last year Booking.com stated that it will no longer provide hotels with customer emails. Withholding this information is critical to the hotel-customer relationship -- communication is key at the beginning of any business transaction. This loss of control over customer’s data means losing the connection that is so important and unique for hotels.

With each passing year, hotels pass more and more money to the likes of Expedia, Booking.com and Priceline. Arguably hotels are fighting a losing battle, but we must make sure we equip ourselves with the tools to at least slow down the OTA takeover. Fifty percent of Internet users will visit the official hotel website after discovering them through an OTA – a key opportunity for a direct booking.Hoteliers must make sure hotel websites are fully transactional and updated consistently. With the price of building a website lower than ever, there’s simply no excuse for diverting customers to the “frenemy”!

It goes without saying that there should also be special privileges for direct bookings, creating the impression that there is a different treatment for customers that do so. Customers are increasingly sharing their experiences online, so if the perks are good, the business will reap the rewards through social word of mouth.

The decision to continue work with OTAs is not a difficult one. While no one desires to pay commissions to intermediaries, it’s still a viable and acceptable option to get your hotel’s brand out there. But if hoteliers do not tread carefully, the OTA will emerge victorious in the online hotel booking industry...

My tip: Work with OTAs but always make sure your BAR is on your web site and available direct.

Debrah Dhugga, managing director, Dukes Collection

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