Beyond Booking: Why Harnessing the Power of OTAs is Worth the Cost

Contributed by Sarah Jones, Director of Revenue Management & Special Projects, SHR

Most hoteliers understand that Online Travel Agencies (OTAs), once regarded as mere intermediaries, have matured to become the main and often customer-preferred room booking route worldwide. But what if you could go beyond booking and turn your OTA into a hybrid tool that functioned as your marketing, search, and even direct booking engine, making the OTA worth its weight in commissions? Taking some time to explore the latest in OTA trends can help when trying to figure out how to execute your best OTA strategy.

A Changing Landscape

To get a better handle on this balancing act, it’s helpful to first get a better understanding of the current hotel booking landscape and how it’s changed in recent years. It used to be that it was enough to simply open your hotel and expect guests to just show up. Now things are a bit more complex, with the new “sharing” economy prompted by Airbnb, plus the changes in the hotel industry itself, where multi-mergers between companies and multi-brands within those companies have grown commonplace.

There is also the growth of metasearch; search tools that use data from third-party search engines to feed guest search results. Using metasearch cannot be overlooked, as, according to eRevMax.com, the big four, Trivago, Kayak, Skyscanner, and Google, alone are expected to account for 20% of hotel bookings by 2020. Considering all of this, plus the preference of today’s increasingly tech-savvy, global hotel guest to book almost exclusively on mobile platforms, and the bottom line becomes clearer. We not only have to make friends with the OTAs but adopt some sharper strategies on how to make the most of that ever-evolving friendship.

The Importance of OTAs Now

As most hoteliers might have already guessed, the major reason we need the OTAs is their spending ability and their reach, both local and international. We’ve all seen the ads on TV, and it becomes clear that the average hotel cannot hope to match the reach or pull of the OTA’s social presence. And that’s fine, because your guests need to find you, and the OTAs can help make that happen, at least initially, better than you can on your own. You can also advertise with your OTAs and use their reach that way. And keep in mind, while you may be paying more in commissions to an OTA for those guests on the front end, you can then take that great booking experience that they’ve just had, coupled with a great stay experience you provide, and easily turn them into a direct booking guest in the future. As for loyalty programs, the OTAs can help you there as well, for they all have their own programs. And considering that recent studies consistently state that today’s tech-wise guests tend to be very loyal to one program, you can take advantage of this tendency via the OTAs, boosting your bookings and brand while you attract—and keep—today’s increasingly global guests.

Marketing Your Brand the OTA Way

Considering that 80% of today’s hotel guests make their booking decisions based on shared online reviews, managing your online reputation has never mattered more than now. To this end, you need to make full use of the OTA’s customer review features to see what your guests are saying about your hotel, and to help you structure your pricing and promotions. These tools also act as a huge window into data that can help unlock guest preferences, behaviors, and spending habits; their whole booking journey. Considering that the latest Raymond James report stated that most hotels allocate less than 20% of their IT budgets to intelligence initiatives, using powerful OTA tools to help hotels better understand how they appear to their guests can only work to a hotel’s advantage. Don’t forget to collaborate with your OTA marketing manager, and make full use of their wealth of knowledge. Make sure they come out to your property to get to know your hotel and your brand. Remember, they’re competing with other OTAs in their market, too, and they want to know who to feature and why to help them put their best hotel brands forward.

Pricing to Your Best Advantage

Getting your pricing right within your OTA strategy is vital. For instance, “flash sales” have their place. But while these kinds of sales are often unavoidable from cancellations, and a 24 or 48-hour special can have its benefits, keep in mind that you are often giving substantial discounts for normally only an 11% chance at a repeat guest. Also, used too frequently, such sales can cause issues in the future if people come to expect deeply discounted rates all the time, even canceling their previous full-price reservations to grab a flash sale, costing you more money in the long-run than you anticipated.

Another pricing question concerns opaque OTA channels like Priceline and HotWire. Though there are several theories on how to handle these channels, working them into your forecast in advance to better manage them is often the best strategy. You could decide to not deal with them at all, and some hotels do but keep in mind, they can be helpful to correct any pricing mistakes you might have made in previous weeks that resulted in un-booked rooms. Just remember that these discounts are often 30-60% per room, and, like flash sales, often don’t result in the types of guests that are likely to become long-term patrons. Whether flash sales or opaque channel managing, the theme is the same; aim for consistency and pre-planning within a real pricing strategy to keep panic sales to a minimum in favor of more sustainable strategies within your OTA pricing framework.

To-Do List

  • Monitor your online booking channels and search engines closely.
  • Continuously monitor your OTA presence—do not set it and forget it!
  • Maintain up-to-date, rich content on all channels.
  • Analyze market performance reports from multiple sources for new opportunities.
  • Develop a plan with each channel manager to maximize your hotel’s booking potential.

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