If you’re hoping that OTAs will eventually disappear, or that they will spontaneously be more reasonable in the fees they take, the tactics they employ, or the cannibalization they desire, you’re wrong. They want to become the only destination for online bookings, and forming a mutually beneficial symbiotic relationship with the hotels themselves is not part of the plan. They want you to do all of the hard work while they skim off a percentage of the sales they generate. We fall short of calling them bullies because in the marketplace there are no bullies – there are just market leaders who can always be challenged and overtaken.
OTAs are here to stay, so how can hotels small and large compete with them directly?
Accept that they’ll win low-funnel unaffiliated guests
It should come as no surprise that unaffiliated guests, those that have not developed a preference for a specific hotel, seek to compare the offerings of multiple hotels. OTAs are perfect for these guests, as they provide an array of hotels, rooms within hotels, and often convincing travel and stay packages based on a variety of adjustable filters. For someone who hasn’t been sold on a hotel rewards program, or expected level of service, or even type of stay (e.g., relaxing, adventurous, curated, hassle-free, etc), OTAs let guests find what’s right for them, regardless of brand name. Unless you plan on incorporating another hotel’s inventory on your site (which you shouldn’t), it’s best to let them keep these guests. We’ll talk about how to capitalize on their inherent advantage below.
Accept that they’ll win bargain shoppers
With the advanced price filtering, deal alerts, and promotions that draw upon inventories across brands and hotels, OTAs are a bargain shopper’s best way to shop. Your website has a handful of offers and a lowest possible rate for your specific hotel, but OTAs are able to aggregate all hotels, and unless you’re a budget provider, consumers will likely be able to find a better available rate or special promotion from a competitor. And once a budget shopper finds a deal, it’s easier for them to sacrifice on common UVPs like quality, hospitality, comfort, brand name and amenities.
Accept that they have an advantage with Millenials and younger generations
Toh, DeKay, and Raven found that guests using OTAs tend to be younger, have higher incomes, and purchase more room nights that those using more traditional channels. Millennials and younger generations grew up with the internet as a place for perusal. The internet is the ultimate window-shopping experience, and for those who rely heavily on reviews, amateur photos, descriptions of real experiences, and “objective” marketplaces, OTAs have an upper hand. They provide an outsiders view that you as the hotel couldn’t possibly manage, and occasionally wouldn’t want to. With this in mind, you have to work a little harder to grab the attention of younger generations – especially when it comes to word of mouth.
With these strengths in mind, hotels must come up with a strategy that brings more customers through direct channels to avoid the exorbitant commissions. Although OTAs will likely edge out hotels with unaffiliated guests, bargain shoppers, and younger generations, there are still plenty of opportunities to profit from their advantages and your own.
Treat OTAs as marketing channels
You know your brand better than anyone, that’s a given. You’ve got your usual selling points, you know your individual offerings, and you know your typical guests. What you likely don’t know is how your hotel stacks up against others in the buying process. Because they’re used to selling your brand side-by-side others, they’re able to take advantage of analytics that reveal the true UVPs that compel potential guests to book you rather than other hotels. OTAs are unlikely to provide you direct access to this information, but they are willing to sell you preferred placement, promoted search results, and ad space that utilize their ability to differentiate your brand from others. It’s often easier to swallow using OTAs as part of a marketing plan, instead of treating them as a threat to internal sales teams.
Chris Anderson advises this exact strategy. In his work at Cornell, Anderson found that for every booking a specific hotel received through Expedia, the brand.com website received 3 – 9 additional bookings. Whether or not there was a confounding variable isn’t clear, but considering consumers on OTAs requested, on average 7.5 pages per visit, and spent close to 5 minutes per page, those numbers don’t seem surprising. Treat OTAs as marketing channels to grab the attention of new guests. Once they’re in your doors, sell them on the experience of your hotel. If you become their preferred hotel there’s little incentive for them to return to OTAs next time.
OTAs are good at capturing demand, but not creating it. A potential guest that has dates, duration and destinations in mind might be drawn to the distinct aforementioned advantages of OTAs. Their strength is also their weakness; they service thousands of hotels from around the world. With that breadth to cover, there is no ways OTAs can gain the area expertise that you posses. You know the attractions, excitement, and secrets of the cities you service in ways that OTAs couldn’t dream of.
Do what OTAs can never do: inspire travel, not sell rooms.
Use your own proprietary information
OTAs have no knowledge of what happens after they book a guest’s room. Do guests order room service, rent movies, book excursions, go sightseeing, upgrade their rooms or book a coveted spa treatment? Do they ask your concierge for recommendations? This is proprietary information that you alone have access to and which can help you prepare offerings and experiences which exceed guest expectations. If your website is able to track user preferences through CRM integrations, you can display targeted advertisements or email campaigns to sell experiences based on historical data.
Revisit brand.com experiences
Brand.com websites are surprisingly stagnant; they’re akin to lazy shop owners who display their goods for the public but then resign to the back of the shop to read the newspaper, leaving customers to browse for themselves. There are a few exceptions (examples) which do very well in ushering potential guests through the conversion funnel, but these are exceptions.
First, your website needs to be personalized for the nuanced shopper experience. Guests enter your site at various stages of purchase, have varied needs, and want to be able to customize a stay that is theirs. Make them feel that that is possible. Plugging into CRM data and providing customizable packages are good starts. Don’t make the experience seem rigid.
Second, your website needs to be more personable. OTAs are exceptionally good at carrying users through to conversion. They do this by constantly reinforcing that the guest making the best move, regardless of which move they’re making. Their headlines, tooltips, and iconography (smiling faces, thumbs up) are happy, exciting and enthusiastic. The ratings, recommendations and encouraging messages give the confidence necessary for purchase.
Hotels have trailed OTAs in almost every measure: marketing proficiency, technological innovation, user experience optimization, and mobile engagement. All is not lost. Reframe the relationship with OTAs from necessarily antagonistic to progressively optimistic. Use them for their strengths with bottom-of-funnel, unaffiliated guests and deploy a strategy to win customers higher in the funnel or more receptive to tailored travel experiences. Also get a head start on the future of digital experience by expanding your online presence to include mobile, last minute booking opportunities, and experiential marketing.