Hotels v OTAs – how did it all go wrong?
Some might argue that the phenomenal success of Priceline and Expedia altered the negotiating balance of power between hotels and Online Travel Agencies. Hotels feel high-jacked and what began as a symbiotic relationship has, through the OTA’s exorbitant commissions and restricted access to guest data, become combative and controversial.
So how will Google’s expansion into hotel distribution change any of that?
Perhaps simply by adding another player of the size and reach of Priceline and Expedia into the negotiating mix. Thinking in basic economic terms, greater competition generates lower prices and better quality. Translated into the current context, Google is going to need inventory: the potential loss of inventory to Google may make established OTAs re-think their current strategies.
Re-opening the conversation
This is where hotels come in. According to Marc Fries of Carat Hotels, “In my opinion, a hotel could not afford at all to pay the distribution it gets through Google, and the […commission charged is] well invested. The main factor remains how travelers can be motivated to book their second stay through the hotel’s IBE [Internet Booking Engine]” thus increasing loyalty to the brand and helping the hotelier maintain a close relationship with guests.
Top 3 Concerns
So just what are the main talking points for hotels when dealing with OTAs?
- Commissions – As the big become bigger, ever rising commission rates have hotels owners up in arms.
- Guest data – access to the market is being funneled to an ever greater extent through sponsored advertisements to the OTAs thereby cutting off the hotel’s direct access to new customers. The additional step by many OTAs of withholding some or all guest data is seen by many as aggressive and predatory.
- Guest satisfaction – hotels have noticed that guests booking through third party channels often arrive with little or faulty information regarding the hotel. Subsequent poor ratings are rarely directed at the OTA handling the booking and hotels find themselves in the weak position of having to play the blame game.
As the three most decisive road-blocks to a constructive working relationship between OTAs and the hotel industry, this is where the conversation, once re-opened, must begin.
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