Everything You Need To Know To Fight The OTAs

Are you sick of Online Travel Agents (OTAs) reaching into your pocket and grabbing fistfuls of your money? I can only imagine how painful it must be for you to have to pay OTAs 15%- 25% commissions on every booking they send your hotel.

According to research carried out by Digital Key in 2014, 1 in 3 leisure bookings and 1 in 2 business bookings are now made through OTAs; which means there a lot of hotel owners and managers handing over colossal amounts of cash to the likes of Booking.com and Expedia.

However hotels do have options and take steps that will curb the power of the big OTAs and allow hotel managers like you to regain control over your hotel. In this blog I am going to show you how you can fight back against the OTAs.

Meta-search Engines

Investing both time and capital into meta-search is one of the key tools hoteliers from across the globe are using to fight back against the large powerful OTAs.

You have probably heard a lot about meta-search engines in past couple of years. It certainly seems like every hospitality insider and expert has been either talking or writing about meta-search engines. But what exactly is meta-search and how can it help you and your hotel?

Basically a meta-search engine brings together data from various different search engines such as Google, Yahoo, and Bing, in order to bring a user the best possible search results. If that didn’t make sense to you just think of a meta-search as a search engine inside a search engine!!

With meta-search potential guests are able to access information regarding your hotel’s location, availability, real-time rate information, and guest reviews, through your hotel’s website, provided of course you have this information uploaded on your website.

Many hospitality and tourism experts such as Des O’Mahony and Ciaran Rowe have descried meta-search as a halfway house between booking direct from a hotel and booking a hotel stay through an OTA. Meta-search on its own is not the answer to all your problems and troubles concerning OTAs.

Nevertheless meta-search if used in a smart way can definitely shift a guest’s focus away from OTAs and back to hotels. If a guest can find all the information they want on meta-search from a hotel website it serves no purpose to book with an OTA. Meta-search can put OTAs and hotels on an equal footing, if used correctly.

The pie chart above very clearly shows that travellers are really starting to embrace meta-search when booking a hotel. 43% of Chinese travellers and tourist now use meta-search when booking a hotel. It’s time you got your hotel on meta-search.

Capturing Guest’s Email Addresses

Clearly having a presence across meta-search engines is a must for any hotel that harbours ambitions of taking back control from the OTAs. However meta-search does require investment, takes time, and is quite technical (You will have to outsource the technical end of things to a third party).

Making a commitment to capturing and storing every one of your guest’s email addresses is relatively straightforward and is another absolute must for hotels in their battle with OTAs. Capturing and storing guest email addresses also doesn’t require any major investment on your part.

Having access to all your current and past guests email addresses allows you and your team to directly market your hotel to all your previous guests. You will be able to keep former customers informed about any special offers and promotions your hotel is running. The major advantage of direct emails is it lets you re-establish the link between hotelier and guest.

Madigan Pratt in his blog, “The New Hotel Mantra-Drive Profitable Direct Bookings”, argues that hotels who email their guests relevant quality marketing martial will see an impressive increase in their direct bookings.

Capturing and storing your guest’s emails will give you an advantage over the OTAs and will help you drive up your direct bookings. It is for this very reason I suspect Booking.com has decided not to hand over guest’s email addresses to hotels. It is very likely that the other big OTAs will follow suit.

To make sure you attain all of your guest’s email addresses I recommend you enforce a strict policy of making your reception staff collect every guest’s email address at check-in or check-out time.

If your hotel caters for group bookings then it is also worthwhile considering investing in group payment software. A group payment system will automatically capture and store every group member’s email address. If the average hotel takes in three bookings a month and the average group size is between 15 to 20 people, then you clearly have a sizable database of past guests to market to.

Incentivising Direct Bookings

Hotels still own most of the guest experience (although OTAs are increasingly trying to take more of it) and you as a hotel manager must use this to your advantage to generate more direct bookings. Selling your bedrooms at a lower rate than OTAs isn’t an option (because they demand rate parity) but you do have the option to add more value to your guest experience, and that is something the OTAs can’t do at the present time.

Many hotels have started to offer travellers incentivise such as mobile check-in, late check-out, and free breakfast room service to guests who book their stay with a hotel direct rather than through an OTA.

Hotels have also found success in increasing their direct bookings by offering guests who book direct a more personalised guest experience. For example you could allow your guests to choose what kind of bed they sleep in, allow them to set the temperature and lighting in their bedrooms, and let them choose what the minibar will be stocked with.

To achieve more direct bookings you have to keep constantly adding value and improving the guest experience for those guests who book direct. Travellers need strong and compelling reasons to ignore the OTAs and book direct through your hotel’s website. It’s your job to provide the incentives that will make guests book direct.

Hotel Loyalty Programs

Hotel loyalty programs also give you the opportunity to both improve the guest experience and sell your bedrooms directly to your guests. OTAs can’t offer their customers the exclusives offers guest can acquire by being a part of a hotel’s loyalty program. Use your loyalty program to fight back against the OTAs and raise your direct bookings.

A hotel loyalty program works in very much the same way as frequent flyer miles work in the airline industry. Guests accumulate free awards when they make repeated purchases with a hotel. Typically a hotel loyalty program will offer guests (depending on the amount of points they have earned) value-added benefits such as free room upgrades, early check-in and late check-out, free spa treatments and guarantee room availability.

Dan Kowalewski in his article “Hotels, OTAs battle for guest experience,” writes, “Armed with the knowledge and data about how frequently loyalty members use direct booking channels rather than OTAs, hotel companies are increasing the value of their loyalty programs by offering exclusive experiences to members that, in many cases, cannot be purchased in retail channels.”

Focused Marketing

A lot of the success OTAs have enjoyed in the past 15 years is down to excellent marketing. OTAs are completely focused on their customers and what they want and need. All of their marketing and advertising is targeted at different segments of hotel guests. OTAs can never be accused of not understanding their customers.

Unfortunately the same cannot be said about the hospitality sector. We all know of hotel owners who run their hotel for themselves instead of their guests. Hotels need to become much better at understanding their guests and what they want and need from a hotel.

One of the best ways you can learn about your guests is to go onto hotel review sites and see the good and bad things your guests are saying about your hotel. Base all your marketing around the good feedback and take on board the negative comments and fix any problems.

However creating a marketing campaign that allows your hotel compete with the big OTAs will take more than just monitoring review sites. It will involve you and your team segmenting guests, analysing the results of your marketing campaigns and sadly it will entail you getting your cheque book out and spending money.

Lots of hotels make the mistake of setting a budget for developing a marketing strategy to attract more direct bookings. A general manager at the start of the financial year may come in and say he has £2,000 to spend on establishing his hotel on meta-search engines, another £2,000 to spend on a website and £1,000 to spend on a group payment system. Unfortunately it doesn’t quite work like that.

Setting a budget for your marketing is a like setting a budget for your bar or restaurant. Imagine you set a budget of £2,000 for your restaurant to spend on buying steaks, and after you had spent all of that £2,000 you don’t buy any more steaks even though steak was your biggest seller and you made a good profit.

Obviously you wouldn’t do that; you would keep spending money on buying new steaks for your restaurant as long as you were making money. You have to think of marketing in the same way. As Des Mahony says, “Keep spending as long as you are getting a return.”

If you want to redress the balance of power between OTAs and your hotel then you are going to have to continually invest and reinvest in marketing that attracts direct bookings. You have to realise that, every direct booking your hotel gets, the more cash at check-out for you. You make far more profit from a direct booking than a booking from an OTA.

Hotels Need to Start Working Together

No hotel on its own can beat Booking.com or Expedia, and nor can masses of hotels working independently of each other take back the power from OTAs. To really change the dynamic between hotels and OTAs; hotels need to join forces and work together as a collective.

One of the fundamental problems hotels have when going up against the OTAs is the lack of strong collective bargaining power. There is little point in one hotel or even a group of hotels trying to negotiate with joint OTAs. Instead the industry as a whole must negotiate with all OTAs on behalf of the whole industry.

Conclusion

The relationship between OTAs and hotels now resembles an abusive relationship, with OTAs calling all the shots and taking most of the rewards; while hotels are too afraid fight back and are forced to accept whatever the OTAs dictate.

But I believe the time has come for every hotelier to start fighting back against OTAs. In this blog I have outlined a number of actions you can take to achieve more direct bookings and win back control of your business. Do not become resigned to the belief that OTAs will always dominate hotels. You have the ability to fight, so let the battle begin.

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