Hotels start fighting back against OTAs
The participants of a round-table discussion last month, organised by NatWest and BigHospitality, spoke about the ‘necessary evil’ of online bookings websites, such as Booking.com, Expedia and Laterooms.com, which have grown their presence considerably over the last 10 years.
While the majority of those hoteliers attending recognised that external websites have marketing benefits and are a key way to fill rooms, many feel that they are being forced to pay high commission rates to OTAs and not benefiting from the loyalty they’d receive from guests booking direct.
As a result hoteliers, particularly those working for the major hotel brands, are starting to fight back in a number of ways to shift the balance of power.
Black-out dates
One of the ways hotel companies are being encouraged to is by introducing ‘black-out dates’ – days approved in advance with OTAs, which can only be sold via a hotel’s own website on the specified date.
This is an approach taken already by InterContinental Hotel Group (IHG) who is hoping to use it again to its advantage.
Philip Lassman, development director at IHG, said: "We are fighting back - all the brands are encouraging guests to book direct. At Holiday Inn Express you get free internet if you book direct and you don't get loyalty club points if you don't book direct, but I think this step of giving black-out dates is an industry first and shows that we mean business.
"Obviously, the OTAs do bring business and they do extend the reach that the brands have, particularly in countries where we are not, but where we have a problem with the OTAs is where they bring us business that we would get directly."
Competition
For the smaller operator, however, particularly those operating under a franchise, trying to control or compete with the OTAs can be harder.
"We do need to compete, but it's difficult to compete with the power of Booking.com, particularly when it comes to SEO," said Paul Callingham, managing director at Starboard Hotels.
"OK, IHG and Hilton should be able to do it, but there is a challenge. Why should we pay a third party if we're already paying a franchise fee? With IHG as well, not only do we pay a fee, but extra if the booking comes through performance marketing, so it's fees on fees that we need to try and get on top of."
"The problem is you don't have the ability to switch off certain OTAs on a franchise route, whereas as an independent hotel you can" said Meher Nawab, managing director of Euro Hotels.
"So, if I've got six channels I want to turn one off because I'm paying high commission, I can do that as an independent, but as a franchise you can't, you've got to keep all of them open and you've got to keep your rate parity on them as well."
Not working with an OTA is more of a danger than working with one, however, many agreed.
Steve Terry, development director at Chardon Hotel Management said: "We are looking at two hotels at the moment where they haven't used OTAs at all and there is no question that they've lost business as a result. We believe it's 10 per cent of occupancy lost through not working with OTAs."
Redressing the balance
Niall Kelly of Starwood said it was clear the websites were here to stay, but stressed that it was up to the hotel company to redress the balance of power.
“If all the big hotel companies didn’t give them any rooms than they haven’t got anything to sell,” he said. “I think there is a place for them, but it’s a case of knowing when and where you let them play.
“In our view we want to own the customer and the cheapest delivery mechanic we can do that in is through is via our own website.
“I think it would be foolhardy for anyone to pretend that we would get rid of the OTAs, but you need to know which ones you can work with – it’s an educated and calculated relationship.”
The comments on OTAs were made as part of a discussion on Independent vs Branded held by NatWest in association with BigHospitality.
To read the full report, click here.
