OTAs Hitting Hotel Owners Where It Hurts: Real Estate Values
November 3, 2016 12:48pm
A new report from the AHLA has sent a ripple of concern through many hotel owners.
According to the report, entitled: Demystifying the Digital Marketplace, “the revenue retained by US hotels after paying all customer acquisition costs declined by almost .4% or $600 million… That $600M in additional cost would have contributed directly to net operating income. Using an 8% capitalization rate (which most investors require), these additional acquisition costs of $600 million reduced the asset value of the overall hotel industry by at least $7.5 billion.”
Translation: Costly third party bookings are eroding profits and overall hotel asset values.
The situation for many owners is even more serious in markets with new supply and growing Airbnb listings. Meanwhile, pricing power and occupancy everywhere seem to be peaking, which restricts revenue even further. All of this, in conjunction with acquisition costs rising, appears to be signaling an impending slowdown in RevPar. All of these factors mean hoteliers are left with less net revenue each month, with only one smart option to pull them out of the sinkhole of eroded margins: to drive bookings from the hotel’s direct channel.
The only way for hoteliers to increase their margins is by reducing the fees they pay to third parties and focusing their efforts on increasing direct, higher margin bookings.
You may not be able to ditch OTAs altogether, but you can leverage them as a customer acquisition tool and convince the guest to remain loyal from that stay forward. Not only then do you “own” the customer, guests who book direct tend to be more loyal, spend more and stay longer.
Tambourine uses technology and creativity to increase revenue for hotels and destinations worldwide. The firm, now in its 30th year, is located in New York City and Fort Lauderdale. Please visit: www.Tambourine.com.
Does Your Hotel Suffer From Chronic Vendor Fatigue?
How Can a WWII Scientist Help Your Hotel Survive?
Tambourine Shares 20 Surprising Digital Marketing Stats Every Hotel Marketer Should Know
Stop Dangling the Wrong Carrots: How Revenue Incentive Plans Hurt Profits
7 Signs Your Hotel Marketing is Out of Control By Dave Spector
Is the iPhone Killing Your Hotel Revenue?
Tambourine Shares The Hidden Chasm: Why Your Bookings Keep Falling into the Abyss
Tambourine Shares 10 Secrets of Luxury Hotel Websites (Part 2)
Tambourine's Friday Freebie: Find Out What Your Compset Is Up To… Automatically
Tambourine Shares 10 Secrets of Luxury Hotel Websites (Part 1)
What Do Meeting Planners Actually Want? Here’s the Surprising Survey Results…
Tambourine Shares 5 Hotel Sales Tactics to Jumpstart 2017
Tambourine Shares Recommended DOSM Checklist for 2017
10 Gifts Hotel Marketers Want For The Holidays
Hotel Marketing: 10 Things That Worked in 2016
How to Find (And Keep) the Best Hotel Sales Talent Right Now: Tips From Tambourine’s DOSM-in-Residence
Six Things Scaring the $%#@ out of Hotel Marketers This Halloween
How Guests Can Amplify Your Hotel Marketing Budget
The Pros And Cons of Building an App for Your Hotel
What Every Hotelier Should Be Doing Before 2016 Ends
Please login or register to post a comment.