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OTAs, Brands & Airbnb – How New Players Are Giving Hoteliers A Run For Their Money

Prabhash Bhatnagar
Prabhash Bhatnagar

Competition in hospitality is growing

Few would argue that hospitality is an extremely competitive industry. Hoteliers have to constantly stay up to date with the latest trends in order to stay relevant. With guest becoming even more demanding, properties that aren’t able to fulfil their needs are quickly left behind. Building a brand has never been of greater importance to hotels. Depending on OTAs is becoming increasingly unpredictable as a storm appears to be brewing between agencies, hotels and local governments.

Today, hoteliers face all sorts of competition. Even with a well-managed, successful hotel business, managers are left with little bargaining room when it comes to distribution. Unlike the large brands that can afford to set aside large sums of money for marketing, independent properties have no choice but to agree to OTA commissions. Commissions that can rise as high as 30%! Independent hotels also face threats from other local hotels and inns, especially the ‘budget hotel’ aggregators.

OTAs Aren’t Making Things Any Simpler

Ironically, the lowest commissions are awarded to the large hotel groups that can afford to spend millions on marketing. These extravagant establishments are also usually ranked high on the first page. Independent hotels on the other hand, are asked to pay higher commissions and are charged additionally for a high ranking within the site. This can give properties that are prepared to pay higher commissions an unfair advantage over hotels that cannot afford to do so. Moreover, many OTAs have been taking things a step too far. Hotels today cannot offer guests special promotions or personalized offers for fear of being delisted by their online partners. OTAs however, have not only continued to entice guests with special rates, but also begun to implement loyalty schemes lifted directly from the hotel’s model. Not only does this destabilize the relationship between the suppliers and distributors, it also robs the hotel of a unique selling point – rewarding guest loyalty. Cloud-hosted services provide hoteliers with an opportunity to combat these aggressive OTA measures. By hosting their websites, mobile apps, management systems, and so on, hoteliers can work on generating more direct bookings and lessen their dependence on OTA partners.

Hotel Aggregators – a growing sector of hospitality

Rebranding local hotels as part of a larger hospitality group has provided small property owners with unprecedented exposure. By rebranding themselves under the name of the larger group, these properties have enjoyed increased occupancy and global visibility that they would have been unable to afford by themselves. With the larger corporations behind them, these rebranded properties can give traditional hotels a run for their money. The situation in India is of particular interest. A whole new segment of hospitality has emerged in the country, casually named the ‘budget hotel’ sector. Aggregators are rebranding local accommodation providers as affordable properties that strictly adhere to certain standards that guests would find in regular hotels, such as reliable wifi. These budget hotel aggregators are going head-to-head with OTAs, who have delisted their properties. These properties are direct competition to independent hoteliers and their OTA partners alike, and only time will tell if the trend gains popularity in other parts of the world where rebranding properties is successful.

Ignoring Airbnb is No Longer an Option

Widely touted as a venture doomed to fail from the very beginning, Airbnb has pulled through all major challenges and grown into one of the largest accommodation sharing communities in the world today. The company is projected to host as many as 129 million room-nights per year by the end of this year. As for hoteliers who figured this was nothing to worry about? Airbnb has ensnared 17.2% of the room inventory in New York, 11.9% in Paris and 10.4% in London. And that number is fast growing. Properties that assumed guests who prefer staying in hotels would not consider Airbnb properties have been proven wrong – travelers today are no longer enticed by many of the additional facilities available in these hotels, such as the extravagant restaurant and organized city tours. An increasing number of guests are choosing to dine in local joints and explore more of the city by themselves. Hoteliers will need to start taking Airbnb seriously and concentrate more on their visitors to avoid being left behind.

Staying ahead of the competition is on ongoing challenge and in order to maintain consistent occupancy in the face of newer players like these, hotels cannot afford to leave any stone unturned. Fortunately though, managers have found more than just an ally in the cloud computing platform – a platform that’s enabling independent hoteliers from across the world to access enterprise-level solutions that were once only within the reach of the biggest hotel groups.

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