OTAs: Good for Business or Bad Businesses? – Part Deux
June 6, 2016 11:43am
By Jean Francois Mourier
Last week, I wrote an article about how hotels hate the OTAs because of the huge commissions charged by the sites. Today, I want to examine the other major reason that some hoteliers hate the OTAs: the huge amount of work that it takes to manage their listings on each and every site. (Can you say exhausting, frustrating and time-consuming?!)
Being a revenue manager is such a time-consuming but highly important job; between strategy meetings, data analysis, competitive analysis, manually updating prices across all OTAs, and all of the other day-to-day revenue management tasks, most revenue managers cannot effectively manage more than four to six channels manually. If they do take on more, things start to fall through the cracks – pricing is not updated on a regular basis and money is lost. And let’s not even mention the increased risk of human error when RMs are overworked.
But here’s the Catch-22: if one OTA earns you additional revenue, then being listed on more than one OTA will earn you even MORE money. Even if guests don’t book through the OTA, the billboard effect alone make the OTAs valuable for a property; the billboard effect says that some consumers will initially find your hotel on an OTA site and then book directly through the hotel’s website. If that hotel didn’t have a presence on OTAs, the guest would never have found and booked with that property.
While recent articles have called the billboard effect a myth propagated by the OTAs to justify their high costs, The Online Travel Shopper’s Journey study published by the AH&LA Consumer Innovation Forum still showed that there is “a slight likelihood (7 percent) that a consumer will visit an OTA and then return to brand.com to book”. In my opinion, even a 7 percent boost is valuable, given that you don’t pay commissions to the OTAs unless bookings are made through the sites.
But many hoteliers and revenue managers don’t think that way. They think about all of the work involved with the job - the time spent strategizing, collecting and analyzing data, and then manually updating the rates on all of the different websites - and most want to run away to a Caribbean island and drink pina colodas all day.
But what if you could list your property with 10 or 20 or even 100 OTAs, without dropping the (pricing) ball? What if your property’s incomes could increase 10 or 20 or even 100 times, without you having to move into your office 24/7 to manually update the rates?
That, my friend, is where technology comes in. Technology can manage your rates automatically, 24/7. Technology can increase your property’s ADR, your occupancy and your RevPAR drastically within days. In short, technology can make your hotel money… lots of money!
But that doesn’t mean that revenue managers will be obsolete. Revenue management software is designed to assist revenue mangers, to make them more effective – not to replace them. It gives revenue managers the ability to focus their attention on what humans do best – strategizing, planning, overseeing staff, etc. – rather than mindless, never-ending analysis and updates (a task which technology can handle more quickly and with less margin for error than a human ever could!).
So go crazy! List your property on 10 or 20 or 200 OTAs, as many as you can, and get on the technology bandwagon. Make your property earn more money… without driving your revenue manager over the deep end. It just makes good business sense (and cents)!
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Jean Francois Mourier is CEO and Founder of REVPAR GURU, a company that provides hotels around the world with an alternative revenue management software system designed to deliver maximum bookings and profits. You can reach Jean Francois by calling 1.786.478.3500.
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