If you ever walk into a room filled with hoteliers or folks working within the hotel marketing field, there are a variety of ways to strike a conversation, but most certainly one topic that will get the discussion to truly heat up: the relationship with online travel agencies, better known as OTAs. It remains unclear if the likes of Expedia, Orbitz, Travelocity, Booking, Hotels.com or Priceline are friends or foe, but they most certainly represent a must component of the online travel distribution as we know it. And I am not even talking about meta-search engines, such as Trivago, Kayak, Hipmunk or even TripAdvisor, which are a different lot. Some folks embrace them wholeheartedly, while others loathe them with a passion. Yup, it’s love-hate relationship, alright!

1. Hotels and OTAs,
from confrontation to
collaboration
Frédéric Gonzalo

3. If you ever walk into a room filled with
hoteliers or folks working within the hotel
marketing field, there are a variety of
ways to strike a conversation, but most
certainly one topic that will get the
discussion to truly heat up: the
relationship with online travel agencies,
better known as OTAs.

4. It remains unclear if the likes of
Expedia, Orbitz, Travelocity, Booking,
Hotels.com or Priceline are friends or
foe, but they most certainly represent
a must component of the online travel
distribution as we know it.

5. And I am not even talking about meta-search
engines, such as Trivago, Kayak,
Hipmunk or even TripAdvisor, which are
a different lot. Some folks embrace them
wholeheartedly, while others loathe
them with a passion. Yup, it’s love-hate
relationship, alright!

6. WHAT’S AT STAKE?
Let’s be honest, this confrontation
between hotels and OTAs has been
many years in the making. This
perception gap was once again
revealed in a recent survey, conducted
by Ipsos for TripAdvisor earlier in 2014.

7. While 95% of global travelers said
price was the most important factor
in booking an accommodation, only
50% of global hoteliers identified that
factor as having the biggest impact
on traveler bookings. Go figure!

8. Source: TripAdvisor TripBarometer, April 2014
Travelers seem to enjoy
using OTAs as a one-stop-
shop where prices
are usually ultra-competitive,
and user
experience is second to
none on most devices
(desktop, laptop,
smartphone, tablet).

9. Some online agencies, such as
Hotels.com even offer loyalty programs,
where you get a free room for every 10
nights booked with them.
So what’s the fuss? Here are the usual
complaints from hoteliers:

10. Commission levels
Whenever you make a reservation on
Booking.com, the hotel pays out a
commission of 15-18%, sometimes more.
With Expedia, it’s even higher, at 25% or
more, depending if you opt-in for
preferred display and advertisement.

11. These commission levels are
undergoing changes and
negotiations as we speak, due to
industry pressure from leading hotel
chains, but it remains nevertheless
the number one issue.

12. Restrictive conditions
Hotels, inns, hostels… everybody
who signs with OTAs are required to
sign complex and details contracts
that demand rate parity, rate
integrity, and room availability,
among key conditions.

13. In other words, a hotel can’t show a lower
rate on his own website, nor can he make
some rooms available on a site while
unavailable on another. Some of these
conditions are under fire in Europe, in
particular in France, Germany and the UK
where it goes against anti-competitive laws.

14. Online reputation
If a traveler writes a comment,
positive or negative, on TripAdvisor
or Yelp, hoteliers can respond
publicly. It gives context to the
situation. But if you have a bad
experience and write up a comment
on Booking.com?

15. Hoteliers can respond to you
privately, but it won’t show on the
site. So users only see traveler
reviews, and not the hotel response.
Not good for hotels, nor for site
users who don’t get the complete
picture.

16. Loss of direct relationship with clients
The OTAs have developed such brand
equity and user loyalty that many
tend to book over and over with
them. It makes sense when someone
is planning a two weeks vacation, to
make most reservations on one
platform such as Expedia or Booking.

17. But when folks reserve just for one
night in a property they are familiar
with, some may wonder why
bookings are made on the OTA site
rather than directly on the hotel
website.

18. In France, hotel associations are grouping
together to create a new movement, called
Fairbooking. The goal is to educate the
population on the merits of booking
direct with hoteliers, with upgrades or
free breakfast in tow for those who
choose to do so. Over 1,000 hotels have
joined forces, but is the general public taking
notice?

20. This reminds me somewhat of
RoomKey, another similar initiative that
was started in North America by leading
hotel chains. Another well-meaning
effort, but it is gaining any traction with
the general public if there is no serious
advertisement effort to back it up?

21. THE OPPORTUNITIES
Yet, for all the complaining we hear,
online travel agencies still contribute
positively by bringing in substantial
revenues. Here are a few areas of
opportunities for those who
embrace them:

22. The “billboard effect”
According to a Cornell University
study, hotels listed on Expedia
will benefit from reservations
directly to their site, simply as a
consequence of being seen on
Expedia.

23. Incremental reservations will vary
from 8% to 26%, depending on the
type of hotel – independent
hotels are the ones who seem to
benefit most!

24. Bearing in mind the substantial
amounts of money OTAs are
spending online, this reason
alone should be enough to
consider playing along.

25. Did you know Priceline (through its
subsidiary Booking.com) is the second
biggest client of Google AdWords in the
world? And they are now investing in
traditional mass media too, thus educating
the general public of their virtues.

27. Copy and paste
I am not suggesting that hotel
website ought to copy and paste
what is being done on OTA sites,
but what’s wrong with inspiring
yourself from best practices?

28. Some hotel
websites are so
outdated, yet
they insist on
presenting certain
types of rooms or
other details that
don’t matter
much to travelers.

29. Most OTA sites and mobile applications
are on their 4th or 5th generation, have
great UX and showcase seamlessly what
travelers want to see without having to
click too many times.

30. Hotel sites should watch, learn
and replicate what seems to
work, rather than ignore the
evolution in customer needs and
wants online. Check out the
image below for some examples!

32. Notice a few things that put
positive “pressure” on the
consumer looking at this hotel
listing on Booking.com for New
York City:

33. 1. There are 21 people looking at this hotel. Is
this really true? Who knows, who cares… it
must be popular, right?
2. Latest booking: 10 minutes ago. And it also
says there are 5 rooms left. Gee, I must book
fast or I may not get this property…

34. 3. Usual price if 657$ but I can save almost 110$ if I book
now, since it’s “only” 548$. A real bargain (really??),
right?
4. Free cancellation – PAY LATER. Well, as a consumer, I
feel like there is no risk associated with making a
reservation. So why not go ahead and book, and I
can always cancel later. Most people won’t, though.
5. Not sure about this room type or the rate? There are
5 more room types available to look at.

35. These are a few examples of things hotels could
do as well on their own website, just looking at
one listing. There are lots more many best
practices that could be replicated too.

36. Direct relationship
While the booking may have come from a
third-party, some hotels embrace this as
an opportunity to retain the customer by
asking their email upon checking-in,
either to become part of the hotel loyalty
program, or either to take advantage of a
promotion.

37. After I had booked a Montreal
hotel through Hotwire, the staff
at the reception gave me a 25$
coupon for my next reservation,
which had to be made online, on
their site. Brilliant!

38. Finally, most online travel agencies have a
cookie-cutter approach and standardized offer
on hand. Hotels, on the other hand, can
highlight their own distinctive personalities
through compelling visual storytelling and a
dynamic content marketing strategy: blog
posts, social media and newsletters, among
other tactics.

39. Thus, there is more potential for
collaboration than ruthless
competition in this relationship,
assuming hoteliers play their cards
right, have a recent, mobile-friendly
website and a content marketing
approach to draw travelers online.

40. So, hotels and OTAs,
friends or foe?
What do you think?

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