Online Travel Agents (popularly known as OTAs) are third-party websites that act as repositories of hotels from where travelers can make hotel bookings. While it does sound like a super convenient way for travelers to find their best accommodation, there are challenges that come with it. Hoteliers who tie up with OTAs have been plagued with some undeniable issues, that are far from resolved.
39% of the online booking market in the US is claimed by OTAs (Source: Traveltrends.biz), and this is not a stat to ignore. However, as necessary as they are for hotels to target the online audience, one can minimize dependency on OTAs to a large extent by implementing the right measures. The trick is to strike the right balance between all booking sources without depending too heavily on one. But let’s take a look at the challenges hoteliers face with OTAs before we get to how you can go about addressing these issues.
Disclaimer: If you are a hotelier who has counted on OTAs for bookings, you might find yourself nodding for the next few minutes. Let’s get right to it and sift through the top three challenges that hoteliers can expect to encounter when working with OTAs.
1. Exorbitant commission
This one is so obvious, I am tempted to claim my ‘mic drop’ moment by leaving it at just that. But for the sake of the novices, I will continue.
OTAs charge anywhere between 15%-35% commissions on bookings, which is borne by the hotel. In other words, you – the hotelier- end up spending quite a bit on OTA commissions. Several big brands have initiated marketing campaigns encouraging travelers to book directly with them in order to cut this cost.
Smaller hotels need to start studying their data to understand if their returns from OTAs is working out. Many hotels neither realize nor exploit the potential that direct bookings present to them. This data is crucial to small and mid-sized hotels as they could be spending a bit too much on OTAs. Instead, they could redirect a part of that amount towards their marketing budget to market their property on the right channels, in an attempt to promote direct bookings. A penny saved is a penny earned, they say. True in this case, wouldn’t you agree?
2. Too much manual effort
Many hoteliers make the mistake of assuming that by simply listing themselves on OTAs, they can expect bookings to come flooding in. What they miss out on is that the real magic happens when you integrate your PMS with a channel manager. Without a PMS or a channel manager, you not only end up spending money but also numerous man-hours on a task that can easily be automated.
Here is what you would do without a PMS and channel manager connect. My guess is you would use an excel sheet to track your booking data. Sigh! Every time you get a booking, you update your excel sheet. Then you log in to an OTA, you go update your inventory there. You do the same thing with every other OTA. That is, you log in and out of multiple OTAs updating inventory and price each time
There’s nothing “wrong” with this arrangement except that it is extremely laborious, and you cannot ignore the fact that there is immense scope for errors or negligence. Let’s say you get busy and forget to update the OTAs when a walk-in guest gets checked into a room. Chances of overbooking or double booking are very high. And you do not want that. It is embarrassing and can potentially ruin your online reputation.
However, when you invest in a PMS and integrate with a channel manager this will no longer be a concern. It is all automated, and in real-time. As in, the channel manager acts as a liaison between the OTAs and the PMS, updating inventory and prices to and from them both in real-time, automatically. So, effort to distribute rates and inventory as well as scope for error- zero.
3. Inaccessible guest data
In this day and age of customer experience, you will have to put your best foot forward at every touchpoint. What this translates to, for the hotel industry is engaging with your guests at every stage of their journey with you. When a guest makes a booking with you, it pays to reach out to them and tell them you are looking forward to hosting them, etc., even before they arrive at your property. Pre-arrival guest experience is a huge factor in determining the overall experience of your guests.
But OTAs don’t share guest data with hotels putting them at a huge loss. When guest data is not available, hotels have no means to get in touch with their guests before they arrive. Apart from closing all doors leading towards pre-arrival guest experience, it also implies that hotels have to wait until the guest arrives at their property to understand if they have any special requests, customizations or preferences!
If we were to suggest one solution to all these issues that are presented by OTAs, it would have to be a cloud-based PMS. How? Well, a PMS can help you increase your direct bookings which means you can minimize dependency on OTAs and spend lesser money on commissions. It also helps you automate inventory and price distribution in real-time via channel manager, so you don’t have to spend precious man-hours on such tasks. And lastly, with lesser and lesser dependency on OTAs, you will not have to worry that much about not having guest data because direct bookings resolves it for you!
Your hotel business needs the best technology to help build a successful, sustainable future for you. If your hotel doesn’t already have a cloud PMS, this is the best time for you to invest in one. Hotelogix brings to you its year-end offer where our award-winning cloud PMS is now available for half its price! As in, you pay for 6 months and get 6 months of free usage! But as with most good things in life, this offer comes with a condition too- Offer only valid for the first 100 sign ups.