The search for the balance between direct revenue and revenue from OTAs (Online Travel Agencies) is something much more complex than it seems. This relationship varies depending on several factors. It mainly depends on our niche market and competition in our destination, however there are others factors to take into account. It is essential to know what we have in hand and take advantage of the added value of being present in the OTAs. These are more than a distribution channel, they should be seen as a valuable marketing tool in highly competitive digital environments.
“ Decide how you want to distribute the eggs in the baskets, as well as how much profitability you want for your business, planning is the key! ”
In the last decade the scenario of hotel distribution has changed drastically. Where before the domain of distribution belonged to operators and street travel agencies, it is now in the hands of the OTA's giants. The price transparency is now common and the hotel has more control over the prices..
Sales costs for OTAs are getting bigger and this leads to strategies to increase direct bookings in order to lower commissions and increase our revenues. Ideally we want to have 100% direct reservations, but there are good points in the presence in OTAs.
It is estimated that 20% of direct bookings come from people who discovered the hotel through an OTA, this is called the Billboard Effect [1]. It is necessary to take into account that an OTA works as a showcase. In fact, it is estimated that 52% of people visit the hotel's website after seeing the hotel in an OTA. Being present in an OTA also enhances direct sales, hoteliers must be competent in converting these potential clients into sales.
We should also take into account that the hotel's excess presence in several OTA's leads to a dilution effect, deconcentrating the hotel's selling point and cannibalise revenue.
For analytical management, we will have to consider these two opposing effects, creating a mix of OTAs / Direct Booking tailored to the hotel, taking into account distribution costs and acquisition costs such as investing in marketing campaigns focused on direct bookings.
We can not neglect the importance of having our site updated, not only visually appealing, but also content-driven for SEO purposes. A good booking engine, with good quality photos, among many other steps already mentioned in the article, become a valuable asset and one of the main sources of revenue when well worked.
"How to tune your website with the new e-Commerce requirements?"
Anderson, C. K., & Han, S. (2017). The billboard effect: Still alive and well. Cornell Hospitality Report ↩︎
