With the right strategy, OTAs can be a much better channel for many hotels. Although it's easy to criticize some policies and commissions, many hotels are not doing the right things to maximize revenue and bookings in these channels. This short video will show you a few of the tips that make a big difference in the volume of bookings and even better net revenue.
Although the hotel industry is making a push for more direct bookings, there is much evidence that OTAs will continue to be major sources for reservations. Consumers preference for variety, one-stop shopping, trust, and convenience are all factors that keep OTAs strong.
Many travelers have the perception that OTA prices are better, even though that is rarely the case. Many of these opinions include travelers from all over the world and are the result of massive investments in marketing and technology from the OTAs. As the world shifts to tablets and mobile devices the experience for search, selection, booking, and payment become an extremely important part of the overall travel experience and consumers think that OTAs do a pretty good job.
There is both art and science to getting the most out of these channels, but OTAs can be enormously effective in generating reservations if managed properly. Some OTAs come right out and tell you what they are looking for, while others are less direct. For example, Expedia publishes guidelines that tell hotels what to do for better rankings. Naturally, the details vary by hotel, the guidelines are still subject to interpretation, and it is a lot of work. On the other hand, these items can serve as a guideline for getting better placement on most third-party websites.
1) Offer Strength. This is a benchmark of price relative to value. It takes into account the current price, relative to historical prices and actual ADR sales. It also looks at current promotions and production levels over time. Plus, it weighs reviews and star ratings and compares all of this to your local market. All of these variables taken together provide a measure of the current offer strength.
2) Quality Score. This measure scores how well you partner with Expedia and its customers. This calculation is based on rate competitiveness, which means rate parity between Expedia and other OTAs. Being out of parity has a significant impact on where your hotel ranks in the searches made on your local market. This score also includes other content measurements like quality and quantity of photographs and completeness of profile items such as directions, restaurant information, credit cards accepted, check in/out hours, shuttle services, children facilities, and many other features of the property and its rooms. Last but not least, guest ratings and experience also play a role and this can include things like guest relocations due to being oversold.
3) Compensation is the last category. Commissions are generally established in your contract with Expedia, but accelerators and paying extra points can get you better placement. This is also common among other OTAs. But keep in mind that paying extra will not get you better placement all by itself. If all the other items above are in poor shape, then paying extra points will only improve things a little bit. We have also found through our own experience that this can work occasionally, but for many hotels paying extra commissions only increases their costs, with little impact to volume. This truly depends on your market and your position within it, since some hotels do very well with this tactic. This is about experimenting and measuring with your own hotel.
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