Exploring the dynamic and sometimes complex relationship between online travel agencies (OTAs) and hoteliers, our series of articles looks at this pivotal relationship that is shaping the hotel industry today. In our first article, “OTAs: Hoteliers’ Friend or Foe?”, we assessed the positive sides of this partnership, highlighting how OTAs can be powerful business allies by increasing visibility and making the booking process easier for hotels. If you haven’t had a chance to read it yet, we invite you to have a look.
This second part takes a closer look at the issues facing hoteliers when partnerships with OTAs emerge as fierce competition, sometimes threatening their autonomy and profitability. Join us for a deep dive into the complex world of relationships between hotels and OTAs, and let’s discover together whether these entities are valuable collaborators or camouflaged competitors in the quest by hoteliers to capture and retain their customers.
Are OTAs the enemy of hoteliers?
It’s time to look at the other side of the coin: why are OTAs sometimes seen as the enemy of hoteliers? “Enemy” isn’t really the right word, as it’s a bit extreme… Here we’re talking about competition.
Dependence and loss of control
Hoteliers faced with partnerships with OTAs are faced with a harsh reality: dependence and loss of autonomy. On the one hand, the substantial commissions charged by these platforms can seriously affect profits, especially when the price war forces hotels to sacrifice their margins. On the other hand, by handing over customer relationship management to OTAs, hoteliers lose a valuable contact that would enable them to better understand and serve their customers.
Commission and impact on revenue
The struggle to offer the most competitive prices on OTAs puts downward pressure on hotel revenue margins. This results in a squeeze on profits, where profitability can be out of reach when the commissions inherent in these services are taken into account.
Loss of the direct relationship with the customer
The direct relationship between the hotel and its customers is being eroded by the intermediation of OTAs. Information about guests’ preferences and contact details remains in the hands of the OTAs, reducing hotels’ ability to build lasting relationships with their customers.
Standardisation of the offer
The commoditisation of the booking experience imposed by OTAs often masks the uniqueness of hotel establishments. This standardisation leaves little room for highlighting the unique characteristics and charm of each hotel, which are essential if they are to stand out in a saturated industry.
Impact on brand image
Over-reliance on OTAs can lead to an erosion of a hotel’s brand identity, making it harder to build loyalty with customers. When the customer relationship is mediated by third parties, hotels’ ability to communicate their values and personalise their offering is severely limited.
The challenges of building customer loyalty
- Customer relations: cultivating customer loyalty becomes a challenge when interactions are dominated by OTAs. Customer communication, loyalty programmes, personalised promotions and rewards, all key elements of hotel marketing, find themselves overshadowed by OTAs.
- Presence on search engines (Google, Bing, etc.): the purchase by OTAs of hotels’ trade names on platforms such as Google AdWords strengthens their presence to the detriment of hotels, often capturing customers who would have searched directly for the establishment by its own name.
OTAs’ attempts to dominate natural search results add to this phenomenon, with hoteliers seeing their website relayed behind OTA listings, creating confusion that may lead customers to think they are booking directly with the hotel.
- E-reputation: The OTAs’ approach to customer reviews also raises e-reputation issues. The result is a loss of control over the hotel’s brand image and public perception.
- The network of OTA affiliates: this can lead to a further dilution of control over how the hotel’s information and image is shared online, affecting not only the presentation but also the timeliness of information available to potential customers.
These elements converge towards a scenario where hotels become vulnerable to a loss of brand identity, a decrease in their influence on guest perception and, ultimately, a weakening of their independent competitiveness in the marketplace.
Balance between collaboration and independence
Your relationship with OTAs
Hoteliers, a multi-channel approach to diversifying their sources of bookings is now a necessity, and that includes OTAs. The judicious use of different OTAs can form part of a wider distribution strategy, offering extended visibility while retaining a degree of autonomy. Renegotiating contractual terms can also be beneficial, allowing hotels to negotiate more flexible terms and potentially lower commissions, which could give them more freedom in their pricing and promotional management.
Developing direct: complementing OTAs
- Not seen, not taken: a presence on OTAs is essential to ensure visibility. This involves meticulous profile management to project a seductive and authentic brand image that faithfully reflects the experience offered by the hotel and encourages users to discover more directly on the establishment’s site.
- The hotel website must be optimised to attract direct bookings. It should stand out easily in search results when guests are specifically looking for the hotel and offer a seamless user experience with all the necessary information, if not more than that available on OTAs. To encourage direct bookings, the site should also highlight exclusive offers that are more advantageous than those available on OTAs, and be equipped with integrated booking engines that simplify the booking process.
- Customer loyalty is another crucial aspect: the aim is to convert customers from the OTAs into direct customers for future holidays. This can be achieved through personalised communications, an attractive loyalty programme and by ensuring an exceptional customer experience that makes them want to return.
- Finally, the network and local partnerships offer significant opportunities for hoteliers. By joining forces with other regional tourism players, associations and local businesses, hotels can enrich their offer with unique packages, taking advantage of collective knowledge and skills to create richer, more diversified experiences. These collaborations strengthen the hotel’s presence in local tourist circuits and enable it to stand out from the crowd, encouraging guests to prefer direct booking, thus benefiting both the establishment and the local economy.
OTAs, while representing a turnkey solution for global visibility and increased volume of bookings, must be used in conjunction with the development of direct strategies. Establishing a strong online presence, paying attention to brand details and ensuring that the best rate is offered directly can reverse the billboard effect and encourage direct bookings.
This balance between using OTAs and strengthening direct sales can reduce commission costs and maximise their long-term profitability.
Conclusion: Are OTAs our friends or our enemies?
The dual role of OTAs
Let’s face it, online travel agencies (OTAs) play a dual role in the hospitality arena: they are both customer enablers and major competitors. While they can extend the reach of hotels and simplify bookings, they can also threaten independence and eat into profit margins.
OTAs as strategic partners
The key then lies in a considered approach to integrating OTAs into a wider range of marketing methods, not as the sole pillar of bookings, but rather as one lever in a broader arsenal of marketing strategies. Savvy accommodation providers should exploit the visibility that OTAs offer to attract customers while, at the same time, making efforts to encourage direct bookings. This means offering attractive deals, effective communication and an intelligent pricing policy that encourages customers to book directly with the establishment.
In short, OTAs should be seen as strategic partners-friends who offer indispensable visibility-while remaining vigilant so as not to become dependent on these digital giants. By skilfully balancing the use of OTAs, a considered pricing strategy and improved customer satisfaction, hotels can pave the way to greater independence and sustainable prosperity.
