13 Mar The Relationship Between Hotels and OTAs • Necessary Evil or Harmonious Co-existence?
The volume of online business driven into hotels via OTA channels has proven to be both valuable and valued. Of that there is no doubt. Independent hotels just don’t have the same, seemingly bottomless pocket to match OTA market access and command such attention. The volume of business generated by these powerful bookers means that most hotels are forced to accept the high commission costs that come with it as a necessary evil. It makes for an uneasy relationship. On the one hand the industry has resented the dictatorial demands of rate parity and absence of an equal playing field, yet it can’t afford to bite the hands that feed it so generously.
The powerful, global hotel chains are now reacting robustly, getting smarter with their technology and marketing widely to increase direct booking levels and reduce CPA. There has never been a more pertinent time for independent hotels to wholly embrace 21st Century technology and take their own robust actions. The tools are now readily available. Specialist hotel technology companies like GlobRes anticipated the need to forge a more harmonious co-existence. They have introduced solutions that address dual needs – give hotels greater ability to attract bookings directly and the means to better manage the balance of business with OTAs. Alongside clever management of OTA use (limiting inventory type available, choosing niche OTAs with lower commission levels, etc.) deployment of a more proactive direct booking strategy will certainly go some way to altering the business dynamics more in favour of the hotel. From an independent hotel standpoint, it is the most effective and efficient way to turn a “necessary evil” into a “harmonious co-existence”. Better business with less commission cost surely has to remain the noble objective.
It’s possible that anticipation of this fightback has prompted OTAs to begin their own evolution. Having already flexed their financial might by buying up keywords for search purposes to ensure domination of top search engine slots, some OTAs are now flexing their muscles and moving into technology provider territory, starting with the introduction of their own booking solutions.
Take Booking.com’s majority stake in BookingSuite – a sure sign that the next OTA move is going to be into the provider sector. Clearly Booking.com is aiming to become an all in one provider, going beyond its core distribution service and getting its hand into the direct channel – being able to collect commissions from a hotel’s own website if it uses the Booking.com booking engine. Hot on their heels are Expedia, Priceline and Trivago. It is a clever courtship of hotels – keep them at heel on the lead so to speak and their own pockets well-lined.
The situation is akin to that of “David and Goliath”. The OTA “Goliaths” will undoubtedly prosper and further increase charges unless more hotels seek to use the tools available and work to redress the balance and lessen the commission burden by driving more direct bookings.
The newest solution from Globres is one of several good solutions to start the fightback with. It is an exclusive Yield Management Service that works to help grow direct bookings. XYMS is like having your own one-to-one consultant. A hotel gets effective and proven rate structures, dynamic pricing tactics, a rate structure design, daily data analysis for a year ahead and a tailor made algorithm. Included also are hotel reputation monitoring and reporting, rate shopping, regular optimization reviews, parity rate controls and a raft of additional hints and tips that are part of the Globres “extra mile” service with this solution. Through investment in a working partnership of this type it’s perfectly possible to grow and develop a business that will enjoy a more harmonious and profitable co-existence alongside OTAs.
For more information on XYMS by GlobRes or to discuss any of our tailored, scalable marketing and reservation solutions, please let us know at email@example.com