Carol Verret Consulting and Training Consulting Training Seminars |
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September 28, 2011 OTA bashing is a fashionable sport – they
only want low
rates, they charge too much commission, they have too much power in how
hotels
manage inventory and rates (did I miss any?)– the list goes on and on. It is a situation where you don’t want to
live with them BUT you can’t live without them. The simple fact of the matter is that every
hotel needs
them. They are a large part of an
integrated online marketing strategy. Not
only do these channels drive rooms and revenue but
they provide a
level of exposure that it is difficult to measure in dollars and cents
–
especially for independents that don’t have the larger franchise
marketing
budgets. OTA Myth #1 – OTA customers are just looking for the lowest rate. Fact: The Expedia ADR for hotels increasing at a faster rate than the ADR of hotels at large. “The average daily rate (ADR) for U.S. hotels booked on Expedia in the first half of 2011 was 6.2% higher vs. the same period last year, the story says, citing Expedia's figures. That’s more than the 2.4% ADR hike recently projected for the full year by PKF Hotel Horizons, and more than the actual 3.4% ADR increase seen by Smith Travel Research during the first half of this year, the story says”. (USA Today, 8/30/2011 quoting from Hotel Management Magazine) Part of the OTA ‘bash’ is that people only go there for low
rates.
Au contraire, there are many reasons travelers use them and one is to
scope out
which hotels are in the market at what price points. Many
then go the hotel’s web site for
enhanced descriptions of the Property and then convert to booking on
the
site. It is this perception of low rates
versus value that compels hoteliers to only put their lowest rated
rooms on
these distribution channels when in fact according to Amy Severson,
Expedia's director of strategic accounts and industry
relations.
“…over half
the customers booked rooms in the mid-to-high range of available rates
vs. the
lowest-available rate.” (same reference as above) OTA
Myth #2 – They
charge too much commission. The
commission that most of them charge is in addition to
the
commissions and marketing fees that Franchises typically charge. In that situation, franchised hotels should
use
them judiciously. However, for
independents and boutiques that don’t labor under franchise contracts
the total
fees are equal to or less than they would pay if the hotel was a
franchise in
most cases. Hotel room nights booked through OTAs
accounted for
9.8% percent of total U.S. demand during 2010, said Steve Hood, senior
VP of
research for STR. Brand.com was the most
dominant booking channel, accounting for 17% of all room nights booked,
followed by voice/central reservation system (13.7%), the
aforementioned OTAs,
and GDS (7.9%), among others. (Hotel News Now, 8/04/11). Hotels
need to be focused on the cost of
reservations from all channels and open and close them according to
demand. In addition, many of the distribution
channels can be
negotiated with in terms of the discount and the commission rate. Don’t just accept what they are telling
you
they must have, push back – what does the hotel have to lose? OTA
Myth #3 -- They have too
much power in how hotels manage inventory and rates. Not if you don’t give them the power! Hotels can control the amount of inventory by
room types that the OTAs can sell. Hotels
can open and close room types and availability on
the extranets. Rates should be in
parity across all channels
including the OTAs and the web site. Not
to do so not only violates your customers’ trust in the hotel’s rate
integrity
but also risks sending them out onto the internet in search of a better
rate
and/or another hotel. In general, the OTA’s and most distribution
channel’s
customers (Opaques notwithstanding) are convertible. That is, they can
be
converted t o loyal guests through service and the quality of the
facility. Once they are impressed, they
can then be persuaded to book directly through the hotel web site. This is not to say that the OTAs don’t have
to be managed -
they absolutely do just like all distribution platforms.
The point is that all of the above are
important in the mix of occupancy and rate.
Does this make the Revenue Manager’s job more complex –
yes it does but
if the hotel is to maximize opportunities, this is how the game must be
played! The rewards are high, especially
for
independents trying to compete in a franchise world. Looking for assistance with the complexities
of Revenue
Management? Click on the link below for
more info on real simple Remote Revenue Management -- an option for
small
independents and boutique hotels at an affordable price
point. http://www.carolverret.net/index1.php?ln=en&pg=Remote_Revenue_Management
Carol Verret and Associates Consulting and Training offers training services and consulting in the areas of sales, revenue management and customer service primarily but not exclusively to the hospitality industry. To find out more about the company click on www.carolverret.net. To contact Carol send her an email at [email protected] or she can be reached by cell phone (303) 618-4065. Visit www.hotelsalesblog.com. |
Carol Verret 5910 S. University #C-18, PMB 374 Greenwood Village, CO 80121 Telephone: (303) 618-4065 [email protected] Web Site: http://www.carolverret.com/ Email: [email protected] |