One of the first questions that arise regarding a hotel’s online distribution is how many Online Travel Agents a hotel should use and which of them.
Currently, there are hundreds of OTAs that are available in the market trying to get a piece of the hotels’ online sales. But should you work with any OTA available? Or should you only stick to the “big ones”? Is the commission the main factor to consider when choosing an OTA or not?
This is not a simple question to answer as it may vary from hotel to hotel.
The main issue that you need to consider regarding the number of OTAs that you will work with, is the time and effort needed for the management of all those OTAs. Having a Hotel Channel Manager will definitely reduce the time needed to update availability and rates in every single OTA.
However, there is also the issue of the time needed for reconciliation and accounting actions. If you work with a reasonable number of OTAs (e.g. up to 10 OTAs for a 200 rooms hotel), then this issue is not important. But if you have added as many OTAs as you can, no matter the size of your property, then your OTA management cost will rise accordingly.
Choosing the right OTAs for your hotel is a tricky puzzle that you must solve. There is no need to add any new OTAs, if they are not suitable for your property and your market.
Undeniably, Booking.com and Expedia are the two main OTAs that, along with their affiliates, dominate the online hotel distribution. Each one of them has a wide penetration in a global level and they are undoubtedly the leaders of the market. As per that, it is at no surprise that the majority of the hotels choose to cooperate with both Booking.com and Expedia, in order to reach the widest range of travelers possible.
Taking the cooperation with one or both main players as granted, you should focus on the characteristics of your property and your market. For example, if you manage a 5-star hotel then there is no need for you to work with a budget-targeted OTA. Not only it will be difficult to receive even a single reservation, it will also have a negative impact on your hotel’s prestige. On the other hand, if you run a vacation rental, then you should definitely work with an OTA that targets this specific travel audience, such as Airbnb. Likewise, if your hotel’s area doesn’t attract specific nations due to lack of transportation or political restrictions, then it makes no sense to work with an OTA that mainly targets these travelers.
When coming down to the decision of whether a hotel will work with an OTA or not, one of the main factors that the hoteliers check is the commission paid. The commissions to OTAs usually vary from 15% to 23% and are usually not negotiable. Of course, the biggest hotels and hotel chains can always negotiate the terms of their cooperation, but OTAs are usually strict about their commission.
There are numerous cases where several hotel managers and owners have decided not to work with an OTA basing their decision only on the high percentage of commission that they require. Is commission though the main factor one should consider?
The answer is no. There are many other factors that you must consider before deciding to work with an OTA or not.
There are several other factors that you should consider when choosing the perfect distribution mix for your hotel, such as the payment period and method or the support offered, yet still the ones mentioned in this article are the most important.
Do not focus only on the issue of the commission. There is no doubt that this is one of the most important factors, but paying a low commission may result in not getting enough reservations. Combine OTAs that offer a wide distribution with OTAs that target your own hotel’s target group. And of course, follow a pricing and distribution policy that will enhance your direct sales, through your own website and your own booking engine.
To sum up, make sure to select only OTAs that relate to your target group and will help you increase your bookings despite the commission but mainly focus on how to get direct bookings from your hotel’s own website.
Bookwize offers you both a Channel Manager to smoothly distribute your availability and rates and manage your reservations, and a Booking Engine to receive direct reservations as well as Business Intelligence reports to enhance your Revenue Management Strategy through all your online distribution channels.