Increase Profitability Lower OTA Commission online travel agency list

Ways to Lower OTA Commission and Increase Profitability


Increase Profits by Lowering OTA Commissions | Hotelogix

If your position is within the corporate circle of the hospitality industry, looking for ways to increase hotel revenue should always be on the list of things to do. Some of the best ideas to increase hotel revenue may include tasks you haven’t even put any thought into yet.

When you’re looking for strategies to increase your hotel revenue, it’s important that you keep your options open and be willing to make changes to every channel. There are several elements involved with a hotel’s revenue management strategy and being flexible can present different opportunities to optimize.

In the following article, we’ll discuss methods of improving your hotel’s net profit margin and what areas to focus on.

How to Increase Revenue In Your Hotel Business

Increasing your revenue means analyzing critical points of data and making a significant number of minor changes that garner small increases. In the end, this leads to much higher profits overall.

One of the most effective ways to do this is by lowering the commission across OTA channels and encouraging more direct bookings. This is one of the most effective ways to improve hotel profitability.

The following section places emphasis on this strategy and includes a few other moves you can make to improve your hotel’s operating margins.

How to Maximize Hotel Revenue by Negotiating OTA Rates

One of the most effective ways to lower the commission you pay is to reduce the percentage. Normally, commissions tend to hover somewhere between 15% and 20%.

Can you go straight to the source and negotiate your commission rates? No, it doesn’t really work that way. Most likely, if you make a fuss about the prices you pay, they’ll end up cutting you off and not doing business with you. When you have thousands of hotels at your disposal, you can be selective.

We’re talking about the percentage of rooms booked using OTAs. The best course of action is to increase your direct bookings.

Lower OTA Commissions by Increasing Your Direct Bookings

Increasing your direct bookings will lower the percentage of rooms booked through OTAs. There are several incredibly efficient methods of accomplishing this, which we’ve listed below.

Diversify Your Booking Channels

Falling into the habit of relying on OTA bookings can be too easy. However, this is for a good reason. They do all of the advertising, handle reservations, and manage the online guest journey. However, the more frequently you use OTA bookings, the less revenue you make for your hotel.

Calculate the ROI of each channel. If you’re using multiple OTAs, look at how many bookings and how much revenue each one brings, then crosscheck that with the appropriate commission rates. Generally, it’s never a good idea to put all your eggs in one basket. When you over-rely on one specific channel, if that channel experiences lower booking rates, this means you’ll have lost a significant amount of revenue for your hotel.

An algorithm can sometimes put you at a disadvantage, and so can other third-party site tactics. The only way you avoid these pitfalls is by boosting your direct bookings. This means having your own booking engine and promoting its use to your customers.

Optimize Your Website

Your website is normally the first encounter that new customers have with your property. Things like slow load times, difficulty navigating, and trouble booking can all be ways to drive guests to other sites.

Leveraging the power of SEO is currently one of the most important marketing strategies a brand can have. If you don’t already have a Google My Business page, you should immediately focus on doing just that. Your business won’t appear anywhere in the Google hotel search feature without this page.

You don’t have to be a tech expert to understand SEO basics. Even the slightest adjustments can boost your ranking. The overall goal is getting more traffic to your site, which means a jump in direct bookings and lower commissions paid.

Provide an Efficient Mobile Journey

We know you’ve probably been beaten to death regarding mobile’s importance. However, it’s worth another mention. Be sure that you optimize your website for mobile traffic.

80% of consumers use a mobile app during their research phase of vacation. This leads to nearly half of all bookings being made on mobile. Nearly every single OTA you check out is optimized for mobile. This isn’t an accident. They understand the value of mobile traffic and the importance of capturing it.

Offer Guests Something OTAs Don’t Provide

You’ll have to be more creative than offering a lower rate for a direct booking. Rate parity agreements mean that you’re barred from doing this. But this doesn’t mean you don’t have options.

First, make sure your rates aren’t higher than the OTA rates. Then, make the deal a little better to encourage a traveler to book directly. Simple incentives like a free cocktail or a free late check-out won’t strain your revenue but might mean a lot to a customer.

Increase Your Branding and Marketing

One of the pitfalls of listing your property with an OTA is that it looks identical to every other property on the platform. However, you must follow the format per the regulations of the OTA.

However, when you use your own channels, you call the shots. Your website, social media, and your marketing and advertising is what sets you apart from the competition. Using the right images, content, and tone of voice are critical elements for brand uniformity.

When you capture guests’ imagination and connect with them emotionally through your content and messaging, they’re more likely to do business with you.

The more you segment and target your messaging and content, the more efficient the results. Be sure your message is driven home to the right demographic in order to capture their attention, and eventually, business.

Build Guest Loyalty

Use ways to build guest loyalty to increase hotel revenue and lower OTA commissions. When you can create a high amount of guest loyalty, most likely, these guests are going to continue to book directly through your website.

Make sure they do by offering them a rewards program to build guest loyalty. Using a points-based system that allows them to get free bookings is a great way to drive direct bookings, lower commissions, and not hurt your revenue too much.

Do some simple math and come up with the most efficient bonus or reward system so it makes sense when it comes to revenue. You want to build guest loyalty without giving away the farm.

Hotelogix offers a Web Booking Engine that’s mobile-optimized. Allow guests to book on mobile or their tablet without the fear of slow-loading pages or any other devastating glitches.

One of our representatives can get you started with a demo so you can check this tool and others just like it. Our strategies and tools are based on the goal of maximizing your revenue and streamlining important tasks, which are both critical in the hospitality industry.