A Steal of a Deal. Really?

HSMAI’s Digital Marketing Council recently discussed the Tnooz article that asks, “Are OTA commissions actually a steal of a deal?” The Council agreed that, while the article itself seriously oversimplifies the issues involved in hotel distribution today, as with most things, there’s a time and a place for OTAs (and other distribution partners). Their overarching advice is to use all partners carefully and strategically, or your “Deal” could easily turn into a “Steal.”

Balance Acquisition & Retention

  • We consider ourselves channel agnostic these days and value the business that the OTAs bring our properties. It’s our responsibility to wow the customer once they arrive at our hotels, convert them to using our rewards program, and treat them like we would treat any other guest – all while trying to influence their buying behavior to book direct on .com for their next stay. 
  • OTAs can be incredibly helpful for a hotel that is taking off from a standing start – like one that is brand new or reflagged and didn’t carry over an email database. An initial injection of business from an OTA can make sense.
  • OTAs are also really good for extending your reach – especially in destinations where a single hotel can’t realistically reach guests on their own.
  • Think about the cost of acquisition of a guest versus the lifetime value of a guest. If you can shift them out of the third-party channel – by providing a compelling value proposition to book on your website – your future costs of acquisition go down for those repeat guests.
  • While OTAs can/should be part of your acquisition strategy, you must determine what the right channel mix is for your property and integrate it with a solid marketing/digital marketing plan.

Know What it Costs You

  • The reality is that the cost/benefit equation can change quickly: sometimes you don’t want to put anything out there because you can demand such a high rate…and some days, like when you lose a big piece of group business, you’ll take anything you can get.
  • Think about measuring your cancellation percentage per channel, and using that as a KPI when planning and evaluating your strategies.
  • You have to know what it’s costing you to acquire your business no matter the channel. It doesn’t make sense to pay high commissions when you could be driving more revenue directly to the hotel through your own website.

Are We Missing the Forest for the Trees?

  • Hotels spend so much time talking/complaining about OTAs that they could be missing a bigger threat to profitability: While currently localized and pronounced in gateway cities (like New York, Miami, San Francisco), which is where OTAs got their foothold, we should expect a similar spreading pattern into all markets.

Whether it is OTAs or Airbnb or other competitors to hotels, as long as the economy remains strong, there seems to be enough market share for everyone; therefore, “All boats will float.” Make sure you’re prepared for when the economy changes and the competition becomes more fierce.

About HSMAI’s Digital Marketing Council

HSMAI’s Digital Marketing Council connects travel marketers in a way that leverages interactive customer engagement as a marketing medium while increasing the awareness of emerging issues, opportunities and trends. This is accomplished through a wide range of information sharing, networking and educational opportunities. 2016-2017 members include:

  • CHAIR: Holly Zoba, CHDM, Senior Vice President of Hospitality Sales, Signature Worldwide
  • VICE CHAIR: Shawn Paley, CHDM, Director, Global eCommerce & Digital Services, Marriott International
  • Shaun Aukland, Senior Account Executive, Google
  • Aimee Cheek, CHDM, Director of eCommerce, OTO Development
  • Robert Cole, Founder-CEO, RockCheetah
  • Chris Copp, VP, Global Digital Marketing, IHG
  • Erica Eyring, CHDM, Director, Account Management, Expedia Media Solutions
  • Isaac Gerstenzang, CHDM, Assistant Vice President, Corporate E-commerce, Destination Hotels
  • Loren Gray, CHDM, Founder, Hospitality Digital Marketing
  • Jamie Hansen, CHDM, Director, Marketing, Best Western Hotels & Resorts
  • Carolyn Hosna, CHDM, Sr. Corp. Director, Marketing & Distribution, White Lodging
  • Jay Hubbs, III, CHDM, Senior Vice President, eCommerce, Remington Hotels
  • Michael Innocentin, Vice President, E-Commerce & Digital NCA Region, AccorHotels
  • John Jimenez, CHDM, Portfolio Director of eCommerce, Interstate Hotels & Resorts
  • Chris LaRose, VP, eCommerce Americas, Hilton Worldwide
  • Sarita Mallinger, Regional Director, Digital Marketing, Kimpton Hotels & Restaurants
  • Delana Meyer, CHDM, Corporate Director of eCommerce and Marketing, Crescent Hotels & Resorts
  • Amy Mierzwinski, CHDM, Director, Horwath HTL
  • Anna Paccone, CHDM, eCommerce Director, Second Wave Marketing / Aimbridge Hospitality
  • Donna Quadri-Felitti, CHDM,PHD, Director and Associate Professor, Pennsylvania State University
  • Chris Rockett, SVP Sales, Milestone Internet Marketing
  • Darlene Rondeau, Vp, Best Practices, Online Merchandising, Leonardo
  • Mariana Safer, CHDM, Senior Vice President, Marketing, HeBS Digital
  • Kevin Scholl, CHDM, Director of Digital Marketing, Red Roof Inn
  • Dave Spector, Partner, Tambourine
  • Dan Wacksman, CHDM, Senior Vice President, Global Distribution, Outrigger Resorts
  • Christine Beuchert Williams, Sr. Director of Marketing & Ecommerce Strategy, Marcus Hotels & Resorts


Categories: Marketing, Direct, Revenue Management
Insight Type: Articles