Remember 20+ years ago, when guests could only book your hotel via phone or your brand’s 1-800 number? Soon thereafter came the internet where guests could book on your brand website and/or your own website.
Ahhhh… The good old days when you got to keep 100% of the rate. (Except when a travel agent booked for the guest and then you simply had to a pay a bargain 10% commission.)
Then, the OTAs came into the picture around 1996-97 claiming anywhere from 15-30% commissions—a service that added a middleman who soon muddied the waters for both consumers and hoteliers alike.
Allow me to run through the brief history of how the marriage—or shall I say dysfunctional marriage—between hoteliers and OTAs has transpired. At the time of this writing, I am 50 years old. I have personally observed this landscape change and continually transform.
In the beginning, I remember being a front-office manager and being fined by my brand franchisor for violations of lowest-rate guarantee. It was a learning curve as we hoteliers were trying to navigate around this new technology of its time.
Rate parity policies and the related processes have certainly become more streamlined. OTAs have come and gone, yet most have been merged to form a few powerhouses.
There is really no need to look back on additional historic points as to how we arrived on the scene today; both OTAs and hotels are here to stay. The real question is: How can we coexist and how can we, as hoteliers, drive more guests to book direct, which is our most profitable booking channel?
The OTAs of the world are becoming ever so much more clever at grabbing the attention of the guests we eventually host. OTA loyalty programs are just one example. Another would be the millions of dollars spent on advertising to lure our potential guests into using their services. Have you recently watched the national evening news on any of the three major networks? If so, do you notice what I have? One or more of the major OTAs advertise during almost every commercial break. These commercials are targeting your potential guests. Now, on the other hand, how many branded hotel ads do you see during the evening news? Zero. We, as hoteliers—even the huge international brands—can’t afford TV advertising. We never have been able to and probably never will. OTAs, on the other hand, can afford this medium.
One strategy that absolutely confuses consumers is Google AdWords campaigns that populate an OTA over a branded website. Here is one example: A guest Googles “brand X in city Y” and a listing pulls up in the number one spot. They proceed to call the 1-800 number attached, or book direct online thinking they are working directly with the property when, in fact, they are booking through an OTA.
At the hotel that I own and manage, I see this happening several times each week. Guests will swear to me they called my hotel direct and booked their room. What really occurred is that they did a web search, and my hotel populated results putting the OTAs ahead of my website. The guest then calls the number they see listed, which is not my hotel phone number. They book the room. Then the questions arise from the guest: Why can’t I cancel my room directly with the hotel? Why did I not get the specific type of room that I requested?
There are three specific strategies we, as hoteliers, should implement in order to pull our guests back offline and back to booking with us direct:
• Re-train our front desk staff or reservation agents to become more inquisitive when speaking with an incoming caller. Prior to calling your hotel, a guest has most likely been searching various OTAs regarding your hotel and some are online at the time they call your hotel. We in the business refer to this as the billboard effect. With specific training, your agents can book those guests right then and there and avoid a customer booking on an OTA. Too often, front-desk agents are placed in their jobs without reservation skills training, which is needed today more than ever.
• We need to advocate that our national and international brands run a joint and entire industry campaign to educate consumers as to the benefits and pitfalls of booking with an OTA versus booking direct—a campaign that is not brand specific, yet more like a Public service announcement in form. Note, I did say there are some benefits for some consumers to booking with an OTA, i.e., convenience of booking hotel, air and car is one of them.
• Continue to educate our customers who booked with an OTA that upon their return visit, they book direct. Inform them they can get the best rate by calling direct and they also have more control over reservation changes and/or cancellations. For us independent hoteliers not tied to a brand, we need to educate our guests on our social media channels and newsletters.
The relationship that hoteliers and OTAs have isn’t the perfect marriage made in heaven, but we can make the best of it by taking even a small percentage of our guests back offline and back to booking with us direct. It is time that we hoteliers put more money back into our own pockets!
Jay Hartz, CHA, is the owner of the Hotel Pattee as well as the owner of Next Generation Revenue Per Available Room, LLC, which is a training and consulting firm. Both are based in Central Iowa.
Let us know what you think… To comment on this opinion piece, or to voice your own opinion about pertinent industry topics, please email Christina Trauthwein at [email protected]. We’d love to hear from you and share your point of view.