Reimagining the Online Booking Channel
June 9, 2017 11:02am
By Mike Murray
For many years, hotels and OTAs have had an ongoing feud, acting more like rivals than the (business) partners that they should be.
While many hotels appreciate the bookings that OTAs provide, all hoteliers hate the exorbitant commission rates that top sites charge; to make matters worse, OTAs do not share customer information with hotels (which would be very helpful for hotels to improve the customer experience) because they want to “own the customer.” That being said, the OTAs are still an indispensable tool for hotels because “52% of U.S. travelers between the ages of 18 and 34 prefer booking hotels through online search engines as opposed to brand websites, compared with 37% age 35 and older.”
Though it may go contrary to many hoteliers’ perceptions, the benefits of the OTA/hotel relationship do go both ways; in fact, the OTAs wouldn’t be nearly as profitable without this ongoing relationship, as hotels “are the biggest source of growth” for the sites. The reason OTAs have been so successful is because they have an unfair advantage: unlimited spending power to boost customer acquisition. They use their high-tech systems to target and capture consumers, and then charge hotels dearly for the privilege of serving their own guests.
As a founder of a hotel technology company that offers both a (new) hotel booking app/website that could be categorized as an OTA and a suite of private label mobile and booking services to hotels that help them battle OTAs, I fully understand both sides of the argument. Because of this, I firmly believe the optimal success of both parties and the hospitality industry in general, will be based on hotels and OTAs learning to work more effectively as partners.
So, what would it take to create this utopic relationship between these two long-time adversaries?
Fortunately for hotels, this utopia is real and completely accessible. Since the early 2000s, Internet technology has provided OTAs with a big advantage over hotels, but changes in technology and consumer behavior are creating new ways for hotels and OTAs to work together. While the big boys of the OTA world (Booking.com, Hotels.com, Expedia, etc.) may not be willing or able to get on board, there is a new breed of online booking channels emerging that exist to provide hotels with both the valuable service of increased bookings, and the technology to bring hotels and guests closer together. Even better, these channels aren't looking charge hotels exorbitant commissions. In most cases, the business model behind these new channels is based on the idea of being partners that empower hotels to improve their bookings using unique strategies and tools (rather than the traditional disconnected OTA mindset).
What do these new breeds of online booking channels offer (that traditional OTAs can’t)?
They charge lower commission rates
Enough said, right?!
They offer greater value to both hotels and bookers
There are hundreds of online booking sites and apps that consumers can use when booking a hotel stay; there are the same number of options for hotels when choosing where to list their rooms. The new breed of booking channel offers true value to hotels and consumers, making them more attractive for both. Consumers get hotel rates and property features that build affinity to the brand, while hotels get access to technology and customer data that boost bookings and guest loyalty. The channel partner becomes the enabler of this win-win relationship and, of course, participates in the revenue stream and customer awareness.
Value-added hotel services offered by some of the new breed of online booking channels include:
In addition to offering services that benefit the hotel, these new online booking channels offer value-added services to guests which will create more positive travel experiences, including:
Don’t encourage a race-to-the-bottom in pricing
There is a mistaken idea in the minds of many consumers that they will find the best prices for hotels on the OTAs, rather than booking directly with the property; this is a because of the price-war awareness that OTAs have created with their huge marketing budgets and is also the primary reason that so many consumers still choose to book through OTAs. While it may have been true that cheaper rates were to be had via the OTAs in the past, today’s smart hoteliers have realized the benefits of more direct and partner-friendly sales channels where they can offer promotional rates and value-adds to incentivize consumers to book – while earning more revenue from each booking secured!
But until consumers realize that better deals are to be had via direct and partner-friendly channels, hotels should not emphasize discounting (as OTAs do) as a strategy to increase bookings. While it might provide a short-term benefit, it is not a smart revenue management strategy as it diminishes a property’s brand value in the minds of consumers. It’s also creates a downward spiral, as discounting strategies usually result in a race-to the-bottom that won’t stop until hotels are undercutting their bottom lines and eroding their financial performance.
By now, I’m sure that you can see that online booking channels and apps are not always the bad guys; there is a new breed of emerging online booking channels that want to partner with hotels and develop a mutually beneficial relationship, which in turn, will benefit potential guests and boost properties’ brand loyalty. So rather than listing all of your inventory on the big OTAs, try out the new channels; I can guarantee that you will not be disappointed!
Tags: mike murray
Mike Murray is the founder of Vir.al Vir.al is a new inspirational hotel booking app and website that capitalizes on today’s social media phenomenon to bring hotels and the valuable Millennial travel demographic together. Using curated, experience-based, destination-specific content, Vir.al enables users to create unique travel experiences, not just book a hotel room in which to sleep, and incentivizes them to increase their social media score in exchange for perks, promotions and status. Hoteliers can use the app’s back-end, which identifies socially active potential guests who are planning a trip to their destination, enables hoteliers to offer incentives to book and, as a result, boost their brand’s online visibility with and appeal to Millennials. Currently, Vir.al is available on iOS and can be used to plan travel experiences in eight popular destinations in the United States - New York, Boston, Miami, San Francisco, Los Angeles, Las Vegas, Austin and New Orleans - but more domestic and international destinations will be added on a regular basis.
To find out more, please visit http://vir.al/.
Contact: Jennifer Nagy
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