The relationship between OTAs and hotels has always been complicated. Ever since the launch of the first online travel agency—Travelocity—all the way back in 1996, hotel owners and managers have experienced both big benefits and deep pitfalls in listing their properties on these massive websites.
Early on, hoteliers all over the world—from small, independent property owners to managers of global brands — recognized the power of the web and realized that OTAs provided a fantastic way to get in front of potential new guests and ensure room occupancy remained high.
However, as time went on, the dynamic between hotels and OTAs shifted and, in many ways, grew more acrimonious.
Today, many hotels are declaring their independence from the OTA industry and taking more direct control of their marketing and guest booking initiatives.
In 2018, OTAs accounted for 51 percent of all online gross bookings in the American hospitality industry. However, due to a variety of factors, such as hotels investing heavily in their own websites and changing consumer behavior due to the COVID-19 pandemic, today’s trends show that this may have been the OTA industry's zenith.
Phocuswright, a market research company focused on the hospitality industry, is now predicting direct bookings will be back to 50 percent of overall online gross bookings in the United States by the end of 2022.
At first glance, the clawing back of one percent of online gross bookings through direct channels may not seem like a sea change. But make no mistake, this is a watershed moment.
Why Some Hotels Are Abandoning OTAs Altogether
As the OTA industry expanded and evolved, hotels that relied on them slowly but surely lost control of certain aspects of their business and were forced into Faustian bargains.
Throughout the first two decades of the 21st century, it is true that OTAs continued to provide a scalable way to ensure travelers found a hotelier's property. But at what cost?
There are three main pain points that hotels experience when working with OTAs.
- OTAs take a cut of revenue for every room that is booked through their service. Generally this commission is between 15 and 30 percent of the total cost of the room.
- The practice of price parity, which most OTAs enforce on the hotels they list, requires that property owners and managers display the exact same price point on their websites that is shown on the OTA. No discounts or special pricing allowed.
- Most OTAs prevent hotels from collecting valuable guest data (e.g., email address, phone numbers, etc.) during the booking process. This makes it much more difficult for hotels to create guest loyalty programs and forge personal bonds with their patrons.
In an industry that has been rocked by COVID-19 like almost no other, some hoteliers have now decided that the time is right to remove themselves from OTAs and take back full control over the entire guest journey—from reservation to checkout.
How Are Hotels Attracting and Engaging with Guests without OTAs?
Hotels and resorts that remove themselves from these massive online listing services are taking a variety of steps to ensure rooms remain full. Many report investing heavily in their own digital presence across the web.
Here are just a few examples of where hoteliers are deploying their efforts to attract guests sans OTAs:
Websites are being updated to offer a streamlined booking process.
- Blogs are being built to help boost organic search engine optimization and ensure properties are found on search engine results pages.
- Hotels across the world are claiming their Google Business Profiles to ensure they appear in local search and maps results.
- Property owners and managers are leveraging new technology like contactless check-in to streamline the guest journey and collect valuable personal information.
- Many properties have made ample investments in social media profiles and pay-per-click ad campaigns.
Danny Min, director of operations at Two Bunch Palms resort and spa in Desert Hot Springs, Calif., and a customer of Canary Technologies, recently made the decision to completely remove Two Bunch Palms from all online travel agencies. “We made a concerted effort to engage with our guests to discover how they found us," he said. "We realized that many repeat guests were searching solely for our property on all reservation platforms. Even our first time guests—who were directed to us by previous guests—were searching specifically for our property when using OTA platforms. We wanted to allow our guests and staff to have the ability to modify reservations without the run around. When last minute date changes or modifications to rooms were made, we often needed to get the third-party partner involved. This caused an added frustration for guests who correlate the entire reservation process with Two Bunch Palms. Also, the amount of revenue lost via commissions was adding up to the total revenue of our smallest outlets.”
Two Bunch Palms’ sole channel for booking is now its website. The hotel's team has seen increased positive feedback from guests due to the ease of booking a room, as well as higher levels of revenues. It also alleviated the staff from monitoring multiple extranets for incoming reservations from various OTA channels.
There are definitely options for hoteliers to come off of OTAs, and we’re finding that our customers are eager to explore these steps to generate more revenues while providing a smoother guest experience.
SJ Sawhney is the co-founder of Canary Technologies.