Fighting OTAs just makes your hotel less competitive
John Jones, managing director of Welcome Systems, Published by Tnooz on January 26, 2018
I’m still surprised to find large parts of the hospitality sector who continue to stick out their bottom lip, stamp their feet and sulk their way through OTA relationships, while thinking nothing of continuing to buy their own airline tickets, hire cars or insurance using online consolidators.
‘Direct is best,’ ‘101 ways to avoid paying OTAs,’ and even ‘How to Win the OTA War’ are just a few of the headlines and industry advice columns I’ve witnessed with incredulity over the past several months.
Despite plenty of evidence to the contrary, there appears to be a deep-seated resistance to the simple fact that hotel booking engines, while vitally important, are now secondary to OTAs.
There, I’ve said it. Although this will be painful for many to read, it should be of little surprise when you consider the habits of the millennial generation.
Millennials like OTAs — but so do other demographics
According to data from Expedia, millennials tend to be less brand loyal than their parents and appear to be drawn to the simplicity and choice offered by OTAs. In other words, they’re far more likely to book a hotel room via an OTA, which is important as they’re the biggest generation in existence.
However, it’s not all about the millennial generation. Our own statistics also reflect the habits, needs and wants of the modern day traveller.
During 2017, the Welcome Anywhere property management system processed £74m of hotel reservations. More than 50% of these bookings came from Booking.com, while the number of direct bookings decreased by almost £2m in value.
These figures may be alarming to some, but to us they offer a key insight into how the modern hospitality industry and its guests genuinely operate.
Hotels that cling to outdated rhetoric are effectively saying that they don’t want to provide what their prospective guests want. This is astonishing and no more out of step with the times than saying ‘sorry but we don’t take contactless payments.’
And then there’s the whole ‘cost of acquisition’ issue, which is easier to summarise than some might believe. The OTAs are the actual cost of acquisition these days. Period.
While the cost of using OTAs is often quoted as a negative, the cost of not using them gets little airtime. It’s absolutely possible for a hotel to market its rooms without OTAs, by taking a few small steps. These include:
- Investing in effective digital platforms for e-shots, graphic design and social media output
- The purchase of royalty-free images
- Producing professionally designed leaflets and mailing them out
- Effective use of a decent CRM system to monitor results
- A full SEO campaign and expenditure on Google Adwords
- Use of a local ad agency
- Someone to do all of the above.
Quite a large list, isn’t it?
OTAs don’t just take a booking and top slice it. Most actually also provide extra tools, some chargeable, some not, to help hoteliers. These can include rate intelligence and management modules, yield management and comprehensive reporting. Additionally, the guest gets a booking experience tailored to them thanks to clever use of language support, currency conversion and Points of Interest.
How can hotels seek to obtain loyal customers by seemingly doing everything right with their property (the decor, facilities, F&B operation, friendly team, etc), yet fundamentally be at war with those same customers?
Are hotels at war with their guests?
By turning their noses up at OTAs, some hoteliers seem to be effectively at war with modern guests and their booking preferences.
Over the years, guests’ expectations have changed and the hotel industry has responded admirably. In-room tea and coffee facilities, modern comfort cooling, mood lighting, phone charging, USB sockets and mirror TVs, free wifi, locally sourced artisan bread, and fairtrade cotton duvet covers – it’s all been done. Naturally, this has come at a cost — but as hoteliers we provided these services because the guests wanted them.
Given that we’ve responded to guest preferences within the hotel experience, why the outcry over another key service which guests want: the ability to book by OTA?
Some hotel software providers are looking increasingly behind the times, thanks to their anti-OTA rhetoric, and are either inadvertently or blatantly ignoring the facts. I think it’s time that hotels and property management system vendors buried the hatchet with OTAs. Providing guests with what they expect costs money, but the cost of denial could be far higher. It’s about meeting the guest where they are, allowing them to book how they want, and then delivering them a memorable experience once they’re on property. It’s that memorable experience that keeps them coming back — no matter where they book.