Online Travel Agents (OTAs): Where Do Hotels Go From Here?

Online travel agents (OTAs) and hotels have a love-hate relationship. While hotels cannot deny the value they get from OTAs, they also can't ignore OTAs eating into their share of the revenue.

OTAs became mainstream in the early 2000s when hotel tech was in its infancy. Major OTAs such as, Expedia, Agoda, and more recently Airbnb take the responsibility of marketing and advertising properties so that hotels can focus on what they do best: provide hospitality services. In return for visibility and booking convenience, OTAs charge a commission for each booking.

What's ailing the OTA-Hotel relationship?

The partnership between OTAs and independent hotels started on the right foot but it has recently skewed in favor of OTAs. According to a Market Sampler survey, 41% of travelers use OTAs while only 29% of travelers book directly. Young travelers are overwhelmingly in favor of OTAs which makes customer acquisition a more difficult job for hotels.

OTAs justify their popularity by charging heavily from hotels. Depending on conditions, OTAs can charge up to 30% commission per booking! Hotels argue that commission rates are too high and OTAs put sponsored hotels at the top of search results, making smaller properties fight for scraps. On top of that, lack of brand identity, inventory mismatch, and customer anonymity have made the partnerships unsustainable.

Why are OTAs the go-to medium for most travelers?

To see how hotels can stand on their own in competitive markets, it's important to understand what OTAs do better than hotels:

  • OTAs have a technological and financial headstart that has allowed them to put customer convenience above everything else. From easy access to media gallery, in-depth reviews, and price comparison to discoverability, travelers prefer the all-in-one OTA platforms
  • OTAs have positioned themselves as pro-consumers by offering flexible cancellations, price breakups, and hefty discounts. Travelers simply trust OTAs more.
  • Almost 33% of respondents said they don't book directly because of poor booking experiences. In a way, OTAs have gone ahead in every aspect where hotels failed to serve their customers

What can you do to encourage customers to book direct?

Hoteliers can still make a mark on their own by following simple steps:

Improve the brand's online presence

Analyze the reasons why travelers trust OTAs over booking directly with you and try to close the gaps. The major issue that plagues legacy and small properties is the lack of a responsive, well-made, and SEO-optimised website populated with authentic content, media, and reviews. Invest in your online assets along with social media pages to build trust and coherent brand identity.

Invest in an efficient booking engine

Lack of price transparency is one of the main reasons why travelers stick to OTAs. Add in the broken booking engines and you have almost no chance to compete.

Restructure your pricing strategy and make it consistent across the board. Next, invest in a modern booking engine that's reliable and seamless to make sure customers feel safe putting their payment information. Add markup with the OTA prices and advertise the advantages of booking directly through the app or website.

Use a channel manager

There's a good chance you've listed your property on multiple OTA websites. Simultaneous booking and cancellations will strain your inventory so the best way to update real-time availability is by using a channel manager.

A lot of hotels have also found success in holding back the OTA canceled rooms and retargeting users with cheaper quotes. Whatever your inventory strategy might be, a channel manager can help!

Use mobile technology to wow guests

Retaining customers and banking on referrals are better than acquiring customers via OTAs. When travelers arrive at your hotel, go out of your way to create a personalized experience for them. Be proactive with suggestions and offer unique discounts to improve brand loyalty.

A contactless mobile app can help you do just that. MyCONECT's hotel guest app comes with virtual check-in/check-out, mobile keys, in-room services, chat support, valet parking, and much more. By using contactless technology you can map a consistent guest journey which will help you get ahead of OTAs.