In Brief: Megan Fratangeli and William Lee reason that hotel distribution strategies are increasingly shifting focus to influence potential guests before the booking stage, urging hoteliers to adopt earlier engagement tactics to secure reservations and drive direct business.
For years, discussions around hotel distribution have centered on the question, what is the right OTA mix? A recent HSMAI Rising Revenue Optimization Leader Council discussion challenged the premise that there is a single answer. Participants focused less on OTA share as a percentage and more on whether each channel generates profitable, incremental demand once the full cost of acquisition is considered. As one member summarized, “ultimately, each channel should have incremental business.” That perspective shifted the discussion away from direct-versus-OTA debates and toward the role each channel plays in a property’s commercial strategy.
When More OTA Business Makes Sense
Participants identified several situations where higher OTA contribution can be intentional and healthy. OTAs were viewed as an effective way to introduce a property to travelers who may not otherwise have discovered it. Several hoteliers referenced the “billboard effect,” using OTA visibility to attract first-time guests and then creating opportunities to convert those travelers into direct-booking customers on future stays.
The discussion also highlighted how ideal channel mix varies widely. Market type, hotel size, brand affiliation, location, and business objectives all influence the appropriate distribution strategy.
Independent and boutique properties may have very different needs than hotels operating under major brands. Some smaller properties with limited inventory may require little or no OTA contribution during certain periods, while others benefit from the reach OTAs provide.
There was broad agreement that no universal benchmark exists for a healthy OTA percentage.
Looking Beyond Commission Costs
Participants noted that OTA commissions are easy to identify, while the costs associated with direct bookings are often spread across marketing, loyalty programs, technology investments, and labor.
The group also discussed challenges associated with measuring true acquisition costs. Return on ad spend, conversion metrics, and other performance indicators can create significant noise, making it difficult to determine the actual cost of acquiring a reservation. Several attendees raised concerns about long-term customer ownership. OTA bookings can be difficult to convert into repeat direct guests because hotels often have limited access to guest data and communication channels. This creates a broader evaluation challenge. The question was not simply what a booking cost today, but what future value that guest may generate.
AI Enters the Distribution Conversation
The discussion then turned to how AI may influence hotel discovery and booking behavior.
Participants shared personal experiences using AI tools to plan travel. In some cases, the tools direct users to OTA platforms rather than brand websites. Others reported being directed to business listings and review platforms. Those experiences prompted discussion around how hotels can improve visibility when travelers begin their search with AI rather than a traditional search engine.
We discussed how important quest reviews are when AI recommendations often draw from publicly available information, including reviews and ratings across multiple platforms. Delivering strong guest experiences and actively responding to reviews were identified as practical steps hotels can take today. Content accuracy also surfaced as a key consideration. Property details, amenities, renovations, room descriptions, and operational updates need to remain current across digital channels. Outdated information could affect whether a hotel appears in AI-generated recommendations.
Website readiness was another topic we discussed, including the importance of understanding where AI systems source information and whether hotel websites are structured in ways that make property information accessible and discoverable. For now, the emphasis appears less focused on paid visibility and more focused on ensuring that accurate, relevant content exists wherever AI tools may be gathering information.
A Wider View of Distribution
As AI changes the way travelers discover options, participants suggested that future distribution conversations may focus less on where a booking occurs and more on what influenced the guest’s decision. The discussion returned repeatedly to three considerations:
- Incremental demand
- Full acquisition cost
- Visibility throughout the digital journey
Those factors, rather than any predetermined OTA percentage, shaped the group’s definition of a healthy distribution strategy.
Recommended Reading
Questions for Teams
- Under what circumstances can a higher OTA contribution be a healthy and intentional part of a hotel’s distribution strategy? When might it indicate overreliance or a distribution concern?
- How will AI change hotel distribution, and what should hotels do now to ensure their properties are surfaced and recommended when travelers begin their search with AI?
Megan Fratangeli, Revenue Manager, Omni William Penn Hotel, Rising Leader Council Member
William Lee, Senior Market Manager, Priceline Agoda Global Partner Services, Rising Leader Council Member
Source: View the original article at HSMAI.
