By Doug Kennedy
December 15, 2010

As a veteran hotelier who started in the industry long before there were OTA’s and the proliferation of “opaque” third party distributers, I remember well the days when hotel controllers would complain about having to pay the “exorbitant” travel agent commissions that then were running 10%.  I was a bellman back then and since it was my job to walk the outgoing mail from accounting to the front desk I could always tell it was the day to run travel agent checks by the weight of the outgoing mail bag.

Maybe if today’s hotel managers had to actually print and sign monthly commission checks to their OTA’s and other online distribution partners the industry would never have relinquished so much control over its distribution to these external partners? 

This is not to say that hotels should not work with their vendor-partners such as the OTA’s and opaque websites, but when I see countless hotels relying more on these channels to fill their hotels than their own direct channels something seems terribly out of balance. 

In recent weeks I have been watching the new Southwest Airlines television commercial that reminds the viewers that there is only one place on the entire world wide web where you can purchase Southwest tickets, which of course is www.southwest.com.  What a clever ad campaign to simply ask ordinary people this question and then to have them state the website address. 

As I watch the ad I cannot help but wonder what went wrong with our industry that we ended up paying such exorbitant distribution costs, on top of what most properties are already paying for brand/franchise flags or affiliation/membership groups.  How did it become that for many hotels, the transient contribution from third party channels has outpaced  direct channels? 

While it’s nice to look back, to wonder, and to reflect on what went wrong, more importantly today we as an industry should start thinking more and more about what we can do to win back the loyalty of our own customers.  Fortunately, travel marketing technology continues to evolve and hotel managers have more tools than ever to reach out and connect directly with guests and prospects. 

I concur with another recent hospitality industry columnist who wrote an article asking why it is that at least one of the major hotel brands has not had to confidence to take back control of its own distribution channels such as Southwest does.  If only a fraction of the funds currently spent on OTA commissions were invested in marketing of direct channels, it would seem to me that at least one of the  hotel brands could make this transition.  Some of the savings in commissions could even be passed along to the consumers in terms of lower-tiered and “well-fenced” rates, that while still being less than current selling rates on OTAs would still result in a larger “net” revenue per booking. 

Until then, smaller brands, independent properties, and even branded or franchised properties can take some steps towards taking-back control of their distribution channels and thus minimizing the use of OTA’s and opaque websites.  Here are some suggestions:

• Continue to build your online community through social networking websites.  Although many hoteliers I know have not yet seem much of an ROI yet, remain committed to a presence in places like Twitter and Facebook, especially since the very new redesign of Facebook.  These are other terrific channels to offer "fenced" rates not otherwise available to the public. 

• Strive to offer a best rate guarantee at your own website.  Consider special discount  offers for those who are members of the new OTA's "frequency" programs for booking directly with you. 

• Make sure everyone who answers the phone is aware of "channel conversion" opportunities.  These days even those who mostly book online sometimes still call to double-check the rate offer; others have found they receive a better room location/view by booking directly.  When callers who are online pick up the phone, make sure your front desk, switchboard,

• Look for "channel conversion" opportunities from in-house guests.  Corporate hotels, for example, can train the front desk team to offer return reservations for those guests who check-out in person to get their zero-balance receipt, thus eliminating distribution costs. 

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Doug Kennedy, President of the Kennedy Training Network, has been a fixture on the hospitality and tourism industry conference circuit since 1989, having presented over 1,000 conference keynote sessions, educational break-out seminars, or customized, on-premise training workshops for diverse audiences representing every segment of the lodging industry. Ee-mail Doug at: [email protected]

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