Top Tips for Hotels Participating in Special OTA Deals

“In the US we have seen a significant increase in OTA traffic in many markets as the price of accommodations has risen sharply. OTA promos can help hotels tap into demand pockets when they need to fill. As with any discounting, OTA promos should be targeted at both the traveller demographic and time frame, rather than casting a wide net. Independent hotels can take advantage of this with less friction than branded hotels which often have parity agreements and fees attached to them. Independent hotels do not pay brand franchise fees so OTA commissions can often be easier to swallow.”

“The big advantage is visibility. Participating with OTA deals must be controlled and carefully chosen by geography, customer mix, etc., and what hotels can really offer. Some deals can be tailored for example only for specific room categories and specific times. One of the bigger pitfalls is multi-mix deals which can create damage to ADR.”

“Participating in special deals with Online Travel Agencies (OTAs) offers advantages for hotels. Firstly, it provides increased visibility and exposure to a wide customer base, leading to more bookings and revenue. Secondly, OTAs can help hotels fill empty rooms during low-demand periods, ensuring optimal occupancy levels.

A successful example of participating in OTA deals is when a hotel collaborates with a popular OTA to offer exclusive promotions or discounted rates for a limited time. This attracts price-sensitive travellers and increases bookings and potential repeat customers.”

“Participating in special OTA (Online Travel Agency) deals and promotions can have both pros and cons for hotels.

Pros:

• Increased Visibility: OTA platforms have a large user base and can provide exposure to a broader audience, increasing the hotel’s visibility and potential bookings
• Fill Occupancy Gaps: Hotels can use OTAs to fill unoccupied rooms during low-demand periods or last-minute vacancies.
• Customer Acquisition: OTAs can help hotels acquire new customers who may not have discovered the hotel through other channels.
• Simplified Booking Process: OTAs provide a convenient and user-friendly booking process for guests, potentially leading to more bookings.

Cons:

• Commissions: OTAs typically charge hotels a commission, which can range from 15% to 25% or even more per booking. This can significantly impact a hotel’s profitability.
• Reduced Control: Hotels may have limited control over their branding and customer relationships when bookings are made through OTAs, as guests primarily interact with the OTA platform.
• Rate Parity: OTAs often require rate parity, meaning that the hotel must offer the same or lower prices on the OTA as on their own website. This can restrict a hotel’s ability to offer exclusive deals to direct bookers. It includes the risk of losing direct customers to OTAs.
• Customer Data Access: Hotels may have limited access to guest data and preferences when bookings are made through OTAs, making it harder to build direct relationships with customers.
• Cannibalization: Overreliance on OTAs can lead to a situation where a significant portion of bookings comes through these platforms, potentially reducing direct bookings and profitability.
• Promotional Costs: Participating in OTA promotions or deals can involve additional costs for hotels, impacting their margins.
• Less Personalisation: OTAs often offer a standard booking process, which may not allow for the same level of personalization and customization that a hotel’s own website can provide. Customers sometimes don’t realize that they book on a 3rd party booking engine.

In summary, while OTAs can be a valuable distribution channel for hotels, they come with trade-offs. Hotels must carefully consider their distribution strategy, weigh the pros and cons, and find a balance between using OTAs and driving direct bookings to maximise their revenue and profitability. Good participations are those where no other business (especially from regular clients who usually book direct) is displaced and that it supports the profitability from rooms and ancillary revenues during low seasons. Even better if it also supports the acquisition of future bookers through in-property initiatives to motivate OTA clients to return and book direct in future.”

“Before participating in any special deals, it’s important to reflect and ask yourself… Is it necessary? What do I want to achieve? Are there any other ways to stimulate demand? Am I undermining my direct channel? If all your answers are pointing in a direction, it is always worth trying. However, if you do so, make sure you closely monitor results and ROI. keeping in mind your cost of distribution and acquisition.”

“The advantages are that you are getting more revenue, badges and banners. We have seen great success. However, many hotels have been hooked on them or even worse, increase their rates before the sale to then give more discount – only to have the same rate as before… and then wonder why nothing happened!

This is silly and in many cases against Advertising standards in many countries. The key things you need to decide on are:

• Do I need the deal?
• How many rooms do I want to allocate?
• Is it outside my lead time?

Not every deal is created equal. The pitfall is that all your bookings come in via sale and that is it.”

“First and foremost it is important that you at least have parity with your own website. Is it possible to run the promotion via your own channels as well? Run a displacement based on your forecast to see what need there is for promotions to avoid dilution of your regular pick-up/demand. Make sure you calculate worst / best-case scenarios and keep the option open to close out certain days. What is the regular lead time for a certain period of time, are you already in it, or are you missing business, do you really need a promotion? Make sure you have those questions answered before running any kind of promotion.”