The Battle for Direct Sales: How OTAs Challenge Hotels

OTAs have emerged as powerful intermediaries connecting travellers with accommodation options. While OTAs undoubtedly bring benefits such as increased exposure and booking convenience, they have also posed significant challenges for hotels striving to maximise their direct sales.

In this article, we will delve into the ways in which OTAs make it increasingly difficult for hotels to secure bookings directly and explore strategies that hoteliers can employ to maintain a balance between OTA partnerships and direct sales.

 

First things first, OTA stands for Online Travel Agency, which is a travel agency whose primary presence is on digital channels. Here Travellers, can use a website or mobile device to search and book their Diani Holiday, all without the traditional “gatekeeper” travel agent.

OTAs connect to the full breadth of travel providers, giving travellers access to the entire inventory that they may want for their next trip. Online travel agents are the travel industry’s largest source of bookings and often use package deals including airfare and hotels or special offers like flash sales to drive more bookings to airline and hotel partners. These massive travel websites like Booking and Expedia have millions of monthly visitors.

We have seen instances where large hotel groups have been consolidating and building new sub-brands, which means that they have a lower reliance on OTAs. In 2016, many major hotel chains launched a series of campaigns aimed at offering travellers incentives to encourage them to “Book Direct” through the hotel direct channels with an emphasis on hotel website. Yet, many independent hotels rely entirely on OTAs to drive their bookings as they don’t have a booking engine of their own. This really saddens! Either way, OTAs have a breadth and depth of travel inventory that covers all segments, geographies and groups of travellers.

The Power and Influence of OTAs

Price Parity Agreements

One of the most common challenges hotels face when partnering with OTAs is the imposition of price parity agreements. These agreements restrict hotels from offering lower prices on their own websites or through other distribution channels. The aim is to ensure that the rates displayed on OTAs are consistently competitive. However, this leaves hotels with little room to entice guests with special offers or exclusive discounts when booking directly. Consequently, potential guests are often drawn to OTAs by the promise of the best available rates.

High Commission Fees

OTAs charge hotels commission fees for every booking made through their platform. These fees can range from 15% to 30% or even higher, significantly eating into the hotel’s revenue. In a bid to maintain profitability, hotels may have to increase their room rates, making them less competitive compared to OTA offerings. This results in price-conscious travelers choosing OTAs over direct bookings, as they perceive the better value.

Search Engine Dominance

OTAs have invested heavily in search engine optimization (SEO) and online advertising, ensuring that their websites rank prominently in search engine results pages (SERPs). This means that when travellers search for the best hotels in Mombasa or a particular location, OTAs often appear at the top of the results. As a result, hotels struggle to compete for visibility, making it difficult to attract potential guests to their own websites.

User-Friendly Booking Platforms

OTAs have invested extensively in user experience design, creating intuitive and user-friendly booking platforms. Many travelers find these platforms more convenient and familiar, making them more likely to complete their reservations on OTAs. In contrast, some hotel websites may be less user-friendly, leading to abandoned bookings and lost revenue.

Reviews and Ratings

OTAs also serve as platforms for guest reviews and ratings. Travelers often rely on these reviews when making booking decisions. Hotels that have a few negative reviews on OTAs may find it challenging to convince potential guests to book directly, even if the hotel has improved its services.

Limited Guest Data

When guests book through OTAs, hotels often receive limited information about them, making it harder to personalize the guest experience and build long-term relationships.

Strategies for Hotels to Boost Direct Sales

While the challenges presented by OTAs are significant, hotels can employ several strategies to encourage direct bookings:

• • Invest in Direct Booking Campaigns: Hotels should allocate resources to direct booking campaigns, offering incentives such as discounts, loyalty programs, or exclusive perks to guests who book directly through the hotel’s website. You can further get get creative by offering complimentary breakfast, late check out or flexible cancellation policies for direct bookers.

• • Have a dedicated Hotel App: A guest app for hotels is a valuable tool that not only improves the guest experience but also offers operational efficiencies and direct revenue-generating opportunities. In today’s fast-paced and tech-driven world, having a guest app is increasingly becoming a necessity for hotels to stay competitive and meet the evolving expectations of modern travellers. We have seen affordable Hotel Apps like Sopago basically empowering properties to be in the guest minds anytime anywhere.

• • Loyalty Programs: Loyalty programs are a powerful hotel strategy to gain direct bookings by offering incentives, fostering guest loyalty, collecting data, and reducing reliance on third-party platforms. By providing a personalized and rewarding experience, hotels can encourage guests to book directly and continue building a loyal customer base.

• • Best Rate Guarantees: Best Rate Guarantee is a powerful hotel strategy to gain direct bookings by offering price transparency, building guest trust, reducing OTA dependency, promoting loyalty, and ensuring brand consistency. By assuring potential guests that they will receive the best rate, hotels can attract more bookings through their direct channels and enhance their overall profitability.

• • Enhanced Website Experience: Enhancing the website experience not only attracts more direct bookings but also contributes to improved guest satisfaction, as visitors find it easier to make informed decisions and bookings. Investing in a more attractive, user-friendly website can lead to higher conversion rates and increased revenue for hotels.

• • Online Advertising: Online advertising can be a cost-effective way to promote your hotel and attract direct bookings when executed strategically. By reaching potential guests where they are actively searching for accommodations and tailoring your messaging to their needs and preferences, you can significantly boost direct bookings and reduce dependency on OTA platforms.

• • Email Marketing: Email marketing is a powerful hotel strategy to gain direct bookings by nurturing relationships with past, current, and potential guests. Email marketing remains a highly effective way for hotels to gain direct bookings by nurturing relationships, providing valuable content, and promoting exclusive offers to a receptive audience. When executed thoughtfully, email campaigns can boost brand loyalty and drive revenue through direct bookings.

While OTAs have become dominant players in the hotel distribution landscape, hotels can still thrive by striking a balance between OTA partnerships and direct sales efforts.