Saturday, 3 December 2016

Hotel vs OTA, or Hotel + OTA

Analyzing the recent researches and findings, there is a big question to be answered! Should the hotels compete the OTAs or should they work together? First of all it is very important to see the statistics of the market and the results of the "players" involved in the hotel booking and distribution market.
Regarding the hotels, we see that there are two different groups of accommodation providers. On one side is the hotel groups and big brands, and on the other side there are the independent hotels.
The role of the OTAs, can be much more important in independent hotels in secondary locations where they may provide as much as 70% to 80% of total bookings. In any case, branded hotels in major urban markets get almost two-thirds of their online bookings through direct channels (hotel property or brand website). Another 12% of total booked revenues are booked through CROs (central reservations offices) via voice (call centres) chat or email. The independent hotels are struggling to increase the direct bookings percentage in order to increase the profit margin.

On the other hand, the properties, which are most likely affiliated to major brands, get about 60% of their bookings in monetary terms through direct channels. The biggest single channel remains direct bookings by conventional means, which include walk-ins, meetings/groups, direct call-in. Surprising to many no doubt is the fact that the GDS (global distribution systems) channel remains a more important channel than the OTAs for hotels in major urban markets, which have a significant business traveller clientele who still tend to book via the major GDS like Sabre, Galileo, Worldspan, Amadeus. The OTAs (e.g. Expedia, HRS, Priceline/Booking.com) are in fact a rather marginal channel for this category of hotels, accounting for only 12% of bookings in value terms.
The next question, which appears is "Which should be the dependency from the OTAs? Is it a matter of cooperation or what should the hoteliers do to get the more from the OTAs and also increase its profit margin?
Distribution tools, like channel managers (i.e. HotelAvailabilites), can assist the independent hotels to maximize the online exposure and to avoid the dependence from specific OTA and also increase the potential market. In addition, the right use of all internet based promotion and distribution tools, creating the right mix, could be the right move for the hotel's business development.

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