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Another Perspective on the OTA Argument

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By Chris Patridge, EVP Marketing and Co-Founder of BackBid.com
October 2011

This article is a response to the following articles on the same subject: “In Defence of OTAs - Why They Are Critical for Hotels, Especially Independent and Boutique Hotels” and “No Defense for the OTAs”.
 
There has been a great deal of controversy in recent weeks about the OTAs. Are they good or bad for hotels? Are they money-grubbing businesses, only looking tosteal your customers and revenues, or do they offer beneficial marketing opportunities that make the high commission rates worthwhile? Thus far, no consensus has been reached so I would like to present my thoughts on the issue.
 
In my opinion, the OTAs are a necessary evil, although not for all hotels. For flagged properties that already benefit from the brand association and increased marketing reach of the chain, the OTAs aren’t completely necessary. Yes, they may miss out on some bookings but in reality, the brand name to which they are associated will bring in a lot more business than a simple OTA profile ever will.
 
On the other hand, independent and boutique properties do need to take advantage of the OTAs. Because these properties are not associated with a strong brand name (in most cases) and because they are not able to spend the huge amounts of money on marketing that the chains do, OTAs should be an important part of their revenue and distribution strategies. OTAs give boutiques increased online presence and visibility to potential customers – referred to as “the billboard effect” – increasing their bookings drastically.
 
There is, however, one type of OTA that is completely necessary for both flagged and independent hotels – opaque OTA channels.
 
When hoteliers hear the words ‘opaque channel’, most think of sites like Priceline and Hotwire, where consumers find out which property they are actually booking only after paying for their reservation. While these sites are traditionally defined as opaque channels, I would suggest that these are not the only opaque channels. In my opinion, opaque channels are also those that offer consumers the ability to book travel packages (air + hotel and air + hotel + rental car) like Expedia’s Vacation Packages, and those like BackBid that offer hotels the ability to offer private pricing tailored to specificconsumers’ travel preferences.
 
Opaque channels (according to my definition) offer many benefits for all hotels. Sites like BackBid don’t undermine a property’s brand like traditional OTAs often do. Opaque channels remove the necessity to adhere to rate parity agreements. Because many opaque channels do not publish rates online (instead they send them directly to a traveler’s inbox), it avoids the issue altogether. And the big benefit – unlike traditional OTAs, opaque channels do not necessitate rash discounting (or any discounting at all!); instead, these channels offer hotels the ability to increase their market share based on offering value, not simply a lower rate.
 
Do you agree or disagree? I would love to hear your thoughts, comments, arguments on the subject, so please contact me at any time at info@backbid.com. Looking forward to discussing the issue further. And if you would like to find out more about BackBid, please visit www.backbid.com.    

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Contact:

Chris Patridge
EVP Marketing and Co-Founder of BackBid.com
info@backbid.com

 


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