OTA’s are not bad guys, however, over-dependence on any third party channel is simply poor revenue management or perhaps lazy revenue management. I would rather pay a travel agent 10% commission on consumed business than 20% to 30% to an OTA. But ask yourself…..is this business you would not attract yourself?
We are very fortunate today to have an incredible array of tools in our tool box that assist hotel marketers figure out the optimum channel mix and more importantly its ROI. Having been at the sharp end of hospitality marketing for 30 years, nothing changes the overarching objective of attracting, winning, engaging and retaining the customer. Over the years we have seen the relationship with the customer (the guest) erode and have allowed the guest to be the frequent customer of the OTA. Hospitality marketers have to work energetically and smarter to retain the loyalty of the guest. As demographics change and the GenX wave hit us their view of loyalty has nothing to with the definition of loyalty understood by Boomers. But that’s a different story.
OTA’s are big, bold and audacious and are not going away. I suggest that we take care of our own business and grow our own customer base and understand where the addictive reliance on OTA’s has its place in our channel mix strategy. We need to make data driven decisions.
But first we need a stated Channel Mix strategy. Here is my 7 point recovery plan to overcome the OTA addiction :
- Develop a clearly defined Channel Mix strategy
- Understand the real ROI by carrying out an analysis on your channel mix
- Property direct
- Wholesale and Receptive
- OTA (Merchant and Opaque)
- Know your revenue-to-cost ratios, flow through costs, and lifetime value by marketing channel
- Understand the value of each channel
- Can you grow a relationship with channels that deliver high value customers (LOS, Rate etc)
- Drill deeper in your existing database and grow the sales pipeline and engage
- Negotiate better terms, especially if you’re not located in a very competitive location (i.e. downtown)
OTA’s are great when you need to “fill a hole” but should not become your number one source of business. Bottom line is that you are in business to grow your business. You are not in business to grow the share value of an OTA and definitely not in business to build their loyalty. Loyalty in hospitality is built on personal relationships. OTA’s after all cannot greet and check in a guest, engage face to face with a guest at all the many guest touch points. These touch points allow you to communicate with your guest post check-out, like nobody else can and extend the Life Time Value. I guess it’s time to reposition the playing field.