What makes the disruptive innovation of OTAs so fascinating is that they are simultaneously the hotels’ biggest competitor, and potentially their largest online sales channel (for all but the largest chains). The OTAs and the hotels clearly need each other.

Accepting this fact, how can hospitality brands make the most of their online friends-cum-enemies? Most hotels now list on OTAs and profit from that relationship. At the very least they benefit from the Billboard Effect, a phenomenon coined by Cornell’s Chris Anderson that shows how hotels listed on an OTA see a rise in direct sales on their own sites. This rise averaged 14%, a significant amount.

At the other end of the spectrum, some hotels, particularly smaller properties, may choose to completely outsource their Internet presence to an OTA. Booking.com offers free websites to hotels, taking a percentage of all the bookings coming through the site. Agoda takes this idea a step further, with a free website and no charges made through the site (although bookings through Agoda.com itself carry the normal, much higher charges).

In the middle sit the vast majority of hotels, which actively engage with the OTAs and enjoy a fruitful relationship. There are a few things to bear in mind to get the balance right:

1. Parity, at least, on your own site. Wherever possible, consumers should not be able to find a cheaper price on another site. Parity is the fallback.
2. Don’t treat OTA guests like second-class citizens. Some hotels are tempted to give worse rooms and service to guests who booked through an OTA. This is short-sighted, as the guest will reasonably blame the hotel rather than the OTA, and may never return.
3. Don’t become too reliant on one OTA. The market is still rapidly changing, and this year’s front runner may not be leading the race in 12 months’ time. Dealing with several OTAs is a hedge and also gives leverage in negotiations.
4. Don’t use too many OTAs. If you sign up to all the available OTAs, you will find it difficult to monitor and manage what is happening. Pick a few and cultivate them.
5. Use blackout dates wisely. At peak times, stopping OTAs from selling your rooms may allow you to sell at a higher margin.
6. Make sure the photos on OTAs are your best. Descriptive text should be factual and to the point, consumer centred. Make sure your own website provides a great experience for consumers and is easy to book.
7. Stress that the hotel website is the ‘Official site’. This, along with price guarantees and clear cancellation policies will build confidence for consumers.
8. Devote resources to online marketing, whether that’s a skilled person in-house or external expertise.

Elsewhere:
Strange Bedfellows – A look under the sheets at the ever-evolving relationship between hotels and OTAs.

This first appeared in Status QUO Issue 3, July 2014

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