Hotels vs. OTAs

accommodation - Saigon/HCMC: June 22, 2016

It’s been about 10 years since OTA giants made themselves comfortable in the hospitality industry. What was once embraced as a quick and easy way to get unfilled rooms booked last minute, has now become an epic battle. Hotels are starting to tire of the commissions they are giving up to TripAdvisor, Expedia, Agoda and the like - along with meta search engines like Trivago who scour these OTAs.

It’s a marriage that started off great - mutual benefits for all - that is now slowly turning into what may be a nasty divorce. But who needs the other more? Hotels seem to get the (very) short end of the stick - OTAs (and meta search engines) after all, have large budgets that can afford the likes of Trivago Guy…

… and the Priceline Negotiator.

Marketing efforts like these steer potential customers away from hotel websites - which may not look as good or function as smoothly, or have a cool spokesman - that in fact may have the lowest prices. Recently, Hilton entered the fray by releasing their Stop Clicking Around commercial, encouraging Hilton members to book directly with the brand for the lowest prices.

According to Larry Mogelonsky, respected hospitality authority and founder of LMA Communications, OTAs collectively spent $34 million on advertising per day. Larry gives a sombering conclusion: you need a fat wallet to compete with the creative marketing efforts of the big guys. Memorability comes at a price.

But eye-catching frontmen are just one way to go about getting attention. Another is great benefits. According to servicedapartmentnews.com, Staycity Aparthotels launched a campaign at the start of 2016 encouraging guests to book direct, in return getting:

The lowest rate available or a 10% refund... complimentary early check-in and late check-out, flexible cancellation facilities, the opportunity to book larger apartments that aren't available through OTAs, as well as the opportunity to win a stay for free. A donation to one of Staycity's nominated charities will also be made for every online booking made.

Attractive benefits like these make it simpler for users to distance themselves from the addictive price hunt that OTAs induce in budget conscious travelers. Another way is a seemingly unglamorous digital channel: email marketing. In 2015, Screenpilot.com wrote an article on beating OTAs that said:

According to a recently released 2015 Email Marketing Industry report from Adestra, 20% of survey respondents’ sales were directly attributed to email marketing. Yet despite email’s dependable sales numbers, only 13% of all marketing budgets are allocated towards this tried and true marketing channel.

Hetras.com offers a more friendly solution that suggests ways you can increase direct bookings without cutting yourself off from OTAs completely:

On high-demand nights, close off the OTAs completely and take only direct bookings…. When your direct bookers arrive at your hotel, assign them one of the better standard rooms as thanks for the direct booking…. [And] train guests to book at your site by offering special packages that are not available at the OTAs.

Despite the uproar against OTAs, there are several factors that prevent many hotels from putting their best efforts into the solutions above: time and money (for proper marketing efforts); distracting mutual enemies like Airbnb; and co-dependency on OTAs to fill up empty rooms.