How can Hotels Balance their use of OTAs Vs Direct Booking Channels?

“Speaking on behalf of myself and the hotels that I have worked with, driving business directly to our websites was always the #1 priority. We made sure that there were always advantages to booking direct and that those advantages were easy to see. Often our occupancy was very high, thanks to great reviews, and we focused on profitability. That meant striving to keep OTAs in check as a helping hand for off-peak times. On the other hand, when opening a new hotel or expanding our reach to fill a larger hotel, OTAs were our best friends and partners.

Sure, we might all someday aspire to having the vast majority of our bookings come directly and only a small, even single-digit percentage come from OTAs and other commissioned providers. Even if it may be possible for a boutique hotel to manage without OTAs, based on today’s commission rates it may be short-sighted to be unprepared for changing tides if you have not created a long-term relationship before you really need them. To stabilize business as much as possible, both in good times and bad, it is important to have partners who can help fill holes and help you access customers that may be too challenging to target on your own. However, everything has a limit, so if commission levels were to rise on the major players, I would certainly begin to consider alternatives.

Ideally speaking, once a traveler has come to your hotel the first time, it is up to you to do everything in your power to make a more human connection with them so that they prefer to communicate and book with you directly. This takes great tools – but more than that, it takes great service, great experiences, and a team that is fully aligned on ensuring that every guest leaves more than content. Our mission is to ensure that they leave feeling fully cared for, appreciated and respected – and looking forward to returning with their friends! OTAs are very popular, so use that relationship to meet some new travelers and turn them into customers for life.”

“Online Travel Agencies grow their popularity very much amongst travellers and make them a necessity to be part of every hotel booking strategy. As a hotelier, we can not ignore them.

Most hotels, especially large hotel chains, have been trying to drive direct bookings to their websites to avoid OTA fees, but even so, a survey by Google states that 52% of travellers worldwide access hotel websites only after they locate the hotel on OTAs. For small or medium-sized properties that have limited marketing budgets, it is impossible to operate without OTAs, because they offer greater online exposure, quick access to information and reviews, and an easy booking process.

There’s no denying that OTAs can extend your reach and create booking opportunities, but by limiting your reliance on these external booking sites and optimizing direct bookings, you can maximize your revenue, cut down on costs and create a positive customer experience.”

“In general, hotels require OTAs to become visible. OTAs have a great reach and are used by potential hotel guests to find accommodation suited to their specific requirements. Typically, guests use OTAs to find a suitable hotel and then use a search engine to find the hotel’s own website. The hotel website should be fully optimised to turn website visitors into hotel guests.

To achieve this, we recommend clearly displaying the best, most tempting content possible, showing the benefits given to guests who make a reservation via a hotel’s own website. Also, offering special offers and package deals exclusively via the hotel website helps hotels in becoming less dependent on OTAs.

Hotels can also work with special promotion codes or rate types for visitors that have reached the hotel’s website via social media, online campaigns or marketing programs offered by metasearch websites.”

“I’ll preface this by saying that this is a very property-specific, market-specific question! That being said, I believe that OTAs should still be used as a means for the “billboard effect”. Consider them a marketing channel, while still fully investing in your Direct Booking strategy. The technology is now available to enable hotels with modern direct booking functionality to be able to compete with the deep pockets of OTAs.

While considering your hotel’s direct booking strategy, make sure to explore the following:

• digital marketing automation & optimization
• a modern booking engine experience
• upselling apps
• reservation chatbots
• a website experience geared towards conversion
• …and most importantly, technology that was designed for integration using modern APIs.

There will not be one application that does everything you want and need for your direct booking strategy, and that’s ok! Just make sure that you choose technology that allows for easy integration to help you deploy the strategy that is best for your property.”

“OTAs are very important when opening a new hotel to create brand awareness and to build up guest feedback, along with a good rating. It is then crucial to have an up-to-date, engaging website with a strong brand story and brand identity that will encourage guests to book via the hotel website directly. Strong visuals obviously play a vital role here too, as well as tactical online marketing campaigns to optimise SEO/SEA.

This is exactly the approach we take when helping hotels to grow their direct bookings; however we would still recommend to work with OTAs as this is often the first step in a customer’s search for hotel inspiration.”

“I consider OTAs a necessary evil. OTAs own so much real estate on search engine results pages that if you’re not listed, or if your listing isn’t optimized, you’re missing out on metasearch. OTAs are like encyclopedias for hotels, i.e., an easy reference point for all of the hotels in a given location, which is why ensuring you’re listed and optimized could be the difference when it comes to being found online.

If you skip the OTAs altogether, you miss out on that billboard effect, and you’ll be hard-pressed to compete with the OTAs in search results on your own. When it comes to optimizing your OTA listing, make sure you’re putting your best foot forward, including photos, descriptions, and respond to reviews, both positive and negative.

Your revenue manager can fence the available inventory, so you’re not deeply discounting over busy weekends, and even decide which room types are worth including on the OTAs. A little strategy can go a long way.”

“I would say that every hotel is different, depending on the destination and the area they are in – but that being said, every hotel should yield their bookings based on supply and demand. I don’t think hotels should completely shut their OTA channels. As we speak, city center hotels who do not have the typical business travel or convention traffic, now have every booking channel open, simply because there isn’t enough demand.”

“OTAs are a great option for small and large accommodation chains. If you find yourself not being able to spend money on advertising, SEO or optimizing your site correctly to acquire direct bookings, you should use OTAs as a way to increase your bottom line and create on-location strategies to extract data sent from customers from OTA sites. A good way to do this is to have a sign-in portal for customers looking to use your free, in-house WiFi.

From my marketing agency and OTA experience, I’ve had the privilege of seeing both sides of the coin and have reached the conclusion that they are both a vital part of running a successful accommodation business.

I know there is a crowd of people with pitchforks and torches who hate OTAs because they take 15-30% commission per booking. However, as an advertiser myself, I can confidently say from experience that at times, the cost of acquiring a customer with digital marketing may result in 15-30% of a bookable value depending on the accommodation type, price, desirability, offer and advertising channel. For smarter advertisers, you would be aware of other ways of acquiring customers for much cheaper, but that is a rarer possibility. Therefore in my professional opinion, you should view OTAs as a viable partner in increasing your bottom line.

However, there are instances where you should not use an OTA. That is to go with a distribution partner who may populate your listing online with the hope of bookings and never deliver. I would highly recommend anyone who guarantees at least a minimum of 25-40% increase in revenue per month. If not, they simply are not adding value to your business in a way that they should and therefore should be removed. Finding the right OTA partner who strategically manages distribution channels may be the best option for accommodation businesses looking to expand their reach into new markets and increase the possibility of attracting more customers.”

“Research proves that OTAs are great to fill inventory in the short term. Ideally, each hospitality business should try to own the customers driving the traffic on the website and bypassing the OTAs.

OTAs should be seen as a marketing tool rather than a sales tool. If managers make this shift, much of the effort should be concentrated on the repeaters and/or word of mouth.”

“Before you make the decision to use/not use OTAs, the first step is to calculate the cost of sale of both channels. Often enough,we assume that Direct Bookings are more profitable, but when we drill down on the revenues and the cost of sale (so in the end, the NET revenues) per channel, it shows that OTA’s are giving better results.

My advice? Compare apples to apples and be honest in including ALL costs when you make the comparison.”

“Why pick a side and leave money on the table? In the hotel industry there’s no place for prejudice or presumptions, so I’ll take them both. Why fight the market when I can tweak it in my favour? If it works, I keep it. If it doesn’t, I correct it or give it up – but I’d rather keep in mind that “Data is the King”.

If I have to pick an extreme example, I’d say that a property located in a popular destination with a strong die-hard regular guest base would probably need fewer OTA guests, since direct booking channels are greatly driven by word of mouth and Tripadvisor bookings.”

“Whilst all hotels will have their own book direct strategy, achieving your targeted book direct ratio % in this market will be almost impossible. Travellers want total flexibility in this uncertain climate and OTAs are offering enticing terms and conditions to capture a sale and bank some cash.

The best way to achieve the ideal mix is not to use the OTA as a deterrent, but ideally as a channel that makes a sale for your hotel. If your book direct strategy and during/post-stay communication is engaging and strong, you have the ability to convert this guest to become a repeat guest and book direct.”

“Understand your total market production, your own OTA channel mix production and then understand the OTA production of your competitive set. The same goes for your website and all your other channels. Use tools such as Demand360 or Kalibri to get the channel mix for your comp set. A hotel should be able to pull back on OTAs when demand is strong.”

“I believe in using the OTAs to build your brand and reputation. It would be my ultimate goal to become so exclusive that you are not listed on an OTA; this is something that the Red Carnation Hotel Group has done. However, to be successful in achieving this, there are three must-haves:

• a fantastic front office team to drive accurate guest profiles
• a marketing team that drives quality leads
• a reservations team that knows how to convert.”

“OTAs offer a strong marketing opportunity for both small hotels and big chains, enabling an easy way for guests to make a reservation. While they help hotels to boost their visibility, one disadvantage is the high commission charged on sales. For smaller independent hotels, OTAs can ask for up to 30% of the revenue for each booking and hotels always have to find a way to encourage guests to book directly through their website and not only through OTAs.

Certainly, the OTAs help to fill the rooms at the last minute that would otherwise remain unsold – but they have much higher marketing budgets than smaller, individual hotels. Additionally, OTAs are able to gather a lot of information on user & guest behaviour, enabling them to make targeted offers and do remarketing activities.

The occasions during which hotels should not use OTAs are represented by the objectives that hotels have set for themselves. Since the main objective is to get more bookings without necessarily having to pay a commission to an OTA, hotels have to focus on getting more visibility than the OTA and attracting new audiences. How? By presenting these 3 key elements:

• a responsive website
• an easy way to book the hotel in very few steps
• a careful presentation of offers and services

Hotels with those 3 key elements will be able to drive their communication strategy in the best possible way, allowing them to become more independent from OTAs. The advantage of direct bookings is that the guest liaises directly with the hotel and its staff, enabling hotel teams to gather more information, study guest behaviour and propose appealing cross-selling experiences to guests.”

“Since the OTAs came along, we have worked with them rather than against them. When you look at it from the client-side, they are an enormous convenience. I know I use them to make hotel bookings myself.

However, it is about finding balance, and there are segments of the market for whom only direct or bespoke concierge services will do.”

“This is a tricky one, because it all depends on the type of hotel, the market, and the clientele that books that property. There’s no one size fits all to this, but a healthy balance is necessary.”

Ask a Question & Join Our Expert Panel

Would you like a question to be answered by our Industry Expert Panel? Or would you like to join our community of experts and share your experience, insights, and knowledge with fellow industry professionals? Via the buttons below you can submit a question or submit a request to become part of our expert panel.