NAVIGATING THE DISTRIBUTION WORLD & DEMYSTIFYING THE ROLE OF ONLINE TRAVEL AGENTS
Welcome to the wonderful world of hotel distribution! As a digital marketing agency that specializes in hotels in Thailand, located in the tropical paradise of Phuket, we understand the importance of effectively utilizing and leveraging online travel agencies (OTAs) to maximize your hotel’s visibility and bookings.
In this article, I’ll break down the concept of OTAs and their role in an effectively implemented hotel commercial and distribution strategy into smaller, more digestible parts. Hopefully, using some examples, I’ll simplify the concept and help you navigate the complex world of OTAs with confidence. So, let’s get to it!
Understanding the Hotel Distribution Landscape
Perhaps it will help get my point across if you imagine the hotel distribution landscape as a busy marketplace or exhibition center where hotels showcase their offerings to prospective guests. Just like in a vibrant market, hotels need to find ways to attract potential guests and to stand out from the crowd by showing their offering is more interesting than the competition. This is where OTAs come into play.
What are Online Travel Agencies (OTAs)?
Think of OTAs as the intermediaries or middle-men that allow hotels to connect with travelers. They act as a digital version of the bricks-and-mortar travel agents of old, providing a platform where travelers can search for hotels, compare rates, and book hotels online instantly. Some of the key OTAs in Thailand for example include Booking.com, Expedia.com, Agoda.com and Ctrip.com to name a few.
The Benefits & negatives of Partnering with OTAs
Partnering with OTAs as with all booking sources, offers several benefits as well as negative points for hotels. First and foremost, OTAs provide unrivaled access to a vast online audience with significant market share and therefore, expands your hotel’s reach and visibility. They invest significant amounts of money in global marketing and advertising to attract travelers, saving hotels the effort and significant expense of individual marketing campaigns.
OTAs also provide advanced booking technology, secure payment systems, and customer support, making it convenient for travelers to book accommodations. The negatives are that the commissions charged are relatively high and one could argue that they reduce loyalty to hotels, but on balance, working with online travel agents is certainly a net positive for the hospitality industry.
Maximizing OTA Visibility and Ultimately Bookings
OTAs are powerful distribution channels, helping expose your hotel instantly to a global audience of millions. They employ sophisticated algorithms, search engine optimization & search engine marketing techniques to ensure your hotel has a chance to offer your solutions to guests worldwide.
By optimizing your hotel’s profile on OTAs, including high-quality photos, compelling descriptions, and competitive rates and offers, you can increase your chances of attracting potential guests and securing bookings. The hotels that are able to appear prominently in each OTA’s search results, will gain a relative competitive advantage and gain market share, which converts to bookings and ultimately increased revenue.
Managing Inventory and Rates
Just as a supermarket manages its inventory to ensure that the shelves are always stocked at your local store, hotels also need to effectively and efficiently manage their room inventory across various OTAs. This involves coordinating availability, rates, and policies and restrictions to avoid overbooking, rate parity discrepancies and loss of potential bookings. Utilizing web-based channel managers such as Myallocator from Cloudbeds or Siteminder, hotels can use technology to streamline this process to ensure accuracy across OTA. Alternatively, you can ask a certain expert hotel digital marketing agency to help with that! 🙂
Commission Structure and Costs
OTAs typically charge a commission for each booking made via their online platform. Think of this commission as the fee you pay for utilizing their services and gaining access to their extensive global customer base. While commissions can vary significantly among different OTAs, they generally range from 15% to 30% of the booking value. I know what you’re thinking, that’s a bit steep! That’s why we put so much effort into maximizing the direct booking channels and in reducing our CAC (customer acquisition costs). As such, it’s important to factor these costs into your pricing strategy and analyze the return on investment (ROI) of each channel to ensure profitability.
The Importance of Direct Bookings
While OTAs are clearly valuable distribution channels, especially for independent hotels, it’s crucial for your hotels to encourage direct bookings through your own official website, where the costs of booking are lower. Direct bookings allow your hotel to establish a direct relationship with your guests, retain a higher proportion or the sales revenue, and avoid excessive reliance on third party OTAs, which is a good thing! Offering incentives such as best price guarantees, exclusive perks, and loyalty rewards are just some of the things you can do to entice guests to book directly.
Building Your Brand on OTAs
Just as you decorate your hotel lobby and reception area to attract passersby, it’s essential to optimize your hotel’s presence on all of the OTAs to showcase your unique brand and offerings and present a unified brand presence online. Customize your hotel’s profile with captivating visuals, compelling descriptions, and personalized messages that reflect your brand’s personality and most importantly, value proposition. Consistency in branding across all distribution channels will help create a memorable and cohesive guest experience, provide credibility and help to expose your brand to a wider audience..
Monitoring Performance and Guest Reviews
OTAs provide valuable data and analytics to help you assess the performance of your hotel on their platform. Monitor key performance indicators (KPIs) such as conversion rates, average daily rates, and guest reviews to evaluate the effectiveness of your OTA strategy. Positive guest reviews not only boost your visibility on OTAs but also contribute to your hotel’s overall reputation and success.
Striking the Right Balance
Finding the right balance between OTAs production and direct bookings is absolutely crucial to having longevity and sustainability in your sales platform. While OTAs provide a significant opportunity for exposure and bookings, it’s also important to diversify your distribution channels and invest in direct booking strategies. This way, you can maintain control over your hotel’s brand, guest relationships, and ultimately your profitability.
The Key Takeaways
In the vast wide world of hotel distribution & digital marketing, understanding the role of the OTAs as part of the marketing mix is essential for maximizing your hotel’s visibility, bookings, and revenue. By partnering with OTAs, optimizing your hotel’s presence, managing inventory and rates effectively, and striking the right balance with direct bookings, you will be able to navigate the complex landscape of hotel distribution with confidence. Remember, the key is to leverage the strengths of OTAs while maintaining control over your hotel’s brand and guest relationships. Happy distribution!
Are you looking for expert OTA representation for your hotel? At The Percentage Company we provide a wide range of hotel digital sales and marketing packages to help hotels navigate the revenue management, distribution and commercial strategy landscape with minimal fuss, leaving your team to focus on making your property the best it can be. Ask us about our extremely affordable, no-fixed-fee 260 degree packages for hotels in Thailand today!