In Brief: Rikki Cavanagh’s article provides a guide for independent hotels on how to effectively navigate and leverage OTAs to maximize their revenue, despite the competitive landscape.
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The OTA Playbook: How Independent Hotels Can Win – Image Credit Unsplash+
Let’s talk about the elephant in the room. Online Travel Agencies. I worked for a major OTA for 6 years before moving to Rate Yield RMS. In nearly all of my demos when I mention my career path I get a laugh or a comment. When I ask people what their goals are, I almost always hear that reducing OTA dependency is an objective. At Rate Yield, we understand where you are coming from and we understand OTAs.
Call them a necessary evil if you want, but that doesn’t change the fact that in today’s world, they are necessary. Unless you are running at 100% occupancy 365 days a year from direct bookings and your ADR is always exactly where you want it to be for those 365 days, I believe there is some room for distribution. Even if it might cost you a commission to use the services. You may be looking at your share of bookings by channel and seeing that a bigger portion than you’d like is coming through OTAs. And you may be asking yourself how you can reduce this number. So let’s talk about it.
If you want to shift share away from OTAs to your own website, you will need to invest money and time in achieving this. Here are some things you would likely need:
- You’ll need a dedicated sales team to drive group sales or negotiated rates. Keep in mind that if you are negotiating rates that are lower than your OTA net rate, you may not be winning from this scenario.
- You’ll need a marketing budget to guarantee placement on Google and metasearch sites.
- You’ll need a quality CRM to ensure you are connecting with guests who have stayed at your property and enticing them to come back and book directly with you.
- You’ll need a great website with all the information that a customer could be looking for and an easy to use booking engine.
Even with all of this in place, an independent hotel cannot compete with the point systems that the OTAs have developed to encourage loyalty. An independent hotel cannot spend nearly the same amount on marketing as the OTAs do. An independent hotel’s website cannot allow the customer the opportunity to compare it with nearby hotels seamlessly before selecting. Whether we like to pay commission or not, OTAs are likely here to stay. So let’s talk about how to make the most of them. To do that, we have to understand what OTAs do really well.
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OTAs have great campaigns and promotions. So when you are needing a boost in your bookings, and if it is relevant to your market, register for the campaigns. Target the need dates you have and include blackout dates where necessary. You can add limits to these campaigns so you aren’t discounting too many room nights or you can yield up your pricing to limit the impact. I have written a deep dive on mastering your campaigns here: https://www.rateyield.com/blogs/post/be-the-mastermind-of-your-black-friday-campaign.
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OTAs display room types very well and make it easy to compare the advantages of higher room categories. As such, you may be upselling better through OTAs than other channels. You may consider offering your superior rooms at a more advantageous rate on your own website than on OTAs. This is also in accordance with contracts where you have agreed to offer the lowest rate available to OTAs, which is to say, your entry-level room.
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OTAs bring heads in beds. Upselling them on site, encouraging them to spend in your restaurant or on ancillary revenues, is a huge opportunity for your hotel. Be sure that fees are listed clearly in your content, but don’t include them in your rate plans. Offering a parking or breakfast package on the OTAs is a good way to reduce the value of your ancillary products and also pay commission on them. If these offerings attract more customers to your hotel versus competition, use them when you need to in low season, and remove their availability in high season.
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OTAs bring in a brand new audience that is looking to compare multiple hotels in a new destination. They should not be your source for repeat guests. Having proper procedures in place to obtain the guests email and add them to your CRM for your internal campaigns after departure is 100% within your rights.
OTAs are necessary, but they are only “evil” if you let them be. At Rate Yield we have designed an RMS that works for you with all of the necessities to maximize your revenues on all channels. Reach out today to learn more about our software and how our team can help!
Rikki Cavanagh is the Director of Business Development at Rate Yield. Connect with Rikki on LinkedIn.
About Rate Yield
Rate Yield was created in 2019 by seasoned Revenue Management consultants with over 30 years of experience within the field. Rate Yield RMS was designed to adapt to small hotels, inns, and resorts as well as large hotels in city centers. With settings and thresholds that can be modified against a hotel’s unique market trends, Rate Yield makes it more accessible than ever to implement AI in revenue management strategies. With real-time insights, agile strategy development, modules for budgets and forecasts, as well as a tool for displacement analyses, Rate Yield provides a complete software that will help your hotel to yield more revenue, period! To learn more, visit us at www.rateyield.com
