The only way to describe the relationship between Online Travel Agencies (OTAs) and hotels is as “frenemies.” OTAs offer a steady source of hotel bookings which doesn’t require too much effort from the hotels themselves however, the problem with this approach is that it comes at a cost - that is up to 30% commission on each booking made through an OTA.The commissions hotels pay to OTAs can be written off as a marketing cost, a price they would pay to generate demand regardless, but whatever way you look at it, the fact is that these commissions are one of the biggest expenses for hotels. In fact, according to Hotel Tech Report, hotel revenue management primarily focuses on decreasing reliance on OTAs through smart budgeting and pricing strategy.
This "frenemy" battle is referred to by many in the hospitality industry as the “direct bookings war,” and is something that needs to be tackled by hotels if they want to thrive in the coming years - especially after the shut down that most (if not all) hotels experienced in 2020.
Just like all "frenemies", the relationship between the two is codependent as well as complicated, and before we dive into how hotels can beat the OTAs in 2021, it is important we understand what OTAs are, and the issues that arise because of the relationship between the two.
What are Online Travel Agencies?
An Online Travel Agency, or OTA, refers to a travel agency that is primarily online, where consumers are able to research and book travel without the assistance of a third party or traditional travel agent. OTAs have quickly become one of the most important avenues for hotel room sales and bookings in the industry. While large and well-known hotel groups have been able to lower reliance on OTAs for bookings (as they have become booking engines on their own), most hotels, especially independent hotels, rely on OTAs for all of their bookings.
The Issues Hotels Experience because of OTAs
Many hoteliers feel as if they are being squeezed for every last cent they have by OTAs, and their concerns are growing, especially in the COVID-19 era.
The concerns hoteliers have regarding OTAs include:
- Commissions: OTAs have more pricing power because of market concentration and this power has resulted in rising commissions. According to Hotel Tech Report, commissions have jumped 45% since 2015 and are on the rise. This is especially concerning for smaller hotel groups with less leverage than their more well known counterparts.
- Underbooking and Overbooking: Inventory needs to be updated on each OTA channel individually so as to avoid double bookings. This can quickly lead to overbookings because this is a time consuming process that can end in human error, not to mention it takes a lot of overhead to manage all of these channels. And as most OTAs have lenient policies for cancellations, hotels deal with high cancelation rates which decrease revenue significantly.
- Loss of Brand Identity: Hotels have little to no control over how their properties are displayed on OTA sites because they have to comply with each platform's specific look, feel and standards. This leads to customer confusion and frustration - which in turn leads to loss of clientele and increased cancellations.
- Intermediation: OTAs place themselves between the guest and the supplier - and work as the middle man. This makes it difficult for hotels to create long term relationships with past guests as they receive little to no data regarding their guests. OTAs have a vested interest in refusing to share this data as they do not want to lose their customers through direct bookings with a hotel.
How Hotels can Beat the OTAs in 2021
Hotels have technology on their side when it comes to beating the OTAs. With digital marketing, Customer Relationship Management software, marketing automation and digital lead generation - they are able to reach their audience without the help of OTAs - and nurture relationships with leads and previous guests through these tactics.
There is a way you can keep up with or beat OTAs without breaking the bank in 2021 and that is through licensing a marketing automation platform . This platform will allow your hotel to begin tracking and behaving like an OTA when targeting guest bookings - and it also offers a place for in-depth data collection at the same time.
Marketing Automation for Hotels in 2021
Marketing automation refers to software platforms or technologies that are designed for organisations to effectively market on multiple online channels and automate repetitive tasks such as email marketing, social media posting, SEO and ad campaigns. Marketing automation software also has the ability to provide a personalised experience for leads and customers - ensuring lead generation, lead nurturing, customer retention, and ultimately brand loyalty - ideal for the hotel industry.
In order for hotels to beat OTAs, they need to have a strategy in place to gain direct bookings. Marketing automation software such as HubSpot, combine software and strategy to send high quality, personalised and relevant content to the right audience, at the right time - through the right channel. This kind of system creates more engagement with guests and potential guests, which leads to more bookings and revenue for the hotel.
By rolling out a strong marketing automation strategy, hotels direct potential guests to their personal website, and gain direct bookings - as opposed to hoping guests find your hotel through OTAs.
Data Collection through Marketing Automation Software
Before we delve into how marketing automation tactics such as email campaigns and social media advertising work to beat the OTAs, we need to understand the importance of data collection. We live in the age of instant information and as a consequence, we have access to more data than ever before. Therefore, it is becoming increasingly important that hotel owners recognise this and market their hotels to the data driven generation.
As most hotels go through OTAs for their bookings, they have limited access to lead and customer data. By investing in marketing automation you are able to gain your own leads and collect data through lead generation forms, social media lead generation campaigns, website tracking - and more.
By investing in data collection technology such as HubSpot, you will quickly gain a distinct advantage over the OTAs as you are able to house your leads in a centralised place, and monitor their engagement with your hotel, qualify your leads and close more sales by understanding the buying cycle in greater detail.
Email Marketing Automation
We all know about email marketing, and this strategy may seem quite overdone and repetitive however, marketing automation has turned email marketing on its head and revitalised this tactic to suit today’s tech savvy audience.
In order for a hotel to achieve success through email marketing, their efforts will require content strategy, personalisation, audience segmentation and automation in order to achieve greater booking results. Marketing automation platforms understand that email recipients only want to receive emails that are relevant to their needs, and they expect businesses to understand the difference between genuine content and irrelevant spammy content. Marketing automation allows you to do just that, by placing your leads into segments, and tracking the buyer journey through their engagement with your social media pages and website pages. By knowing where the lead has come from, and what they are looking for, you are able to categorise and segment this data through the system so that it is usable for marketing purposes - therefore, every email a lead receives speaks directly to where they are in the buying/booking cycle.
By rolling out strategic email campaigns to high quality leads, hotels bypass the middleman - and speak directly to their consumer in a personal, and trusted way.
Content Marketing Automation
The reason users are finding your hotel on OTAs is because they are searching for information online and doing research before deciding to make a booking - and if your website or social media pages do not have the information they are looking for, they will turn to the OTAs in order to find it.
Content is vital for your digital marketing efforts as it helps your website rise up the search engine ranks which in turn, directs more users to your website. Today we refer to content as website text, blogs, images, social media posts, videos and more. Most hotel websites only offer users a few options in regards to content, with the website content being limited to:
- Book now / check availability
- Watch a video / view an image gallery
- Browse other pages of the website (leisure/rooms/about us)
- Subscribe to a newsletter
This kind of "take it or leave it" content stops a user in their tracks - and does not offer any more information that will help them make the decision of whether or not to book with your hotel. If you want to beat the OTAs - you need to create content that builds trust and nurtures relationships as opposed to content that just tries to "sell sell sell."
Going into 2021, every hotel should aim to build relationships with every website visitor because as we know, most visitors will not make a booking the first time they visit a website. For example: if a potential guest visits your website for the first time, and does not make a booking as of yet, you can offer the guest something of value instead. For example: a Guide that can help them plan their holiday getaway. Many travelers would appreciate a guide like this and download it - especially for free - and more importantly, they would be happy to get this guide in exchange for their email address.
Once you have their email address - many opportunities open up for your marketing and sales departments. For example: personalised email communication can now be put in place, which will help strengthen the relationship between your hotel and a possible guest. In addition, the email address can be used to market directly to the guest using platforms such as Social Media and Gmail via list marketing opportunities.
This can all be done through marketing automation tools such as HubSpot, which can be used to unlock revenue opportunities that would otherwise go unnoticed. Marketing Automation software links directly to your website content, social media pages, and email marketing - allowing you a centralised place to store lead data, create and distribute content, nurture leads and market to your customer base.
Outsmart and Outmarket the OTAs
2021 promises to be a challenging yet interesting year for hotel and hospitality marketers. But for the tech savvy among us, and with a variety of new opportunities and technologies available, the process of implementing a strong hotel digital marketing campaign and targeting the right audience is made that much easier through strategy, data, planning and marketing automation.
Right now it is more important than ever for hotels to adapt to the current climate and change the game by taking on the OTAs.
A hotel digital marketing agency since 2005, Nexa has worked with independent hotels and large groups providing an extensive range of digital marketing products, services and expertise.
Our work includes website creation, management and optimisation, email and social media solutions, performance management, campaigns management and overall digital marketing strategy creation and implementation. With over 15 years of experience in the hospitality sector, we've worked with the likes of Hilton Worldwide, Oberoi Hotels & Resorts, Viceroy Hotels & Resorts, One & Only Hotels and Resorts, Jumeirah Group, Premier Inn and Wyndham.
For more information on how we can help your hotel achieve more with hotel digital marketing opportunities and grow direct revenue, please complete the form on this page.