Why Managing OTAs Will Be Key to Early Hotel Recovery

As guests start to trickle in the doors again, one thing is becoming clear: OTAs are in a prime spot to capture early returning demand.

OTAs are popular with driving travelers and those looking for value, both key sources of demand for roadside hotels that are experiencing the first upticks in business. Metasearch is a popular option for value-seekers as well, and OTAs tend to outspend their supplier counterparts in this channel.

Simultaneously, alternative accommodations and short-term bookings are on the rise as travelers try their best to maintain social distancing guidelines. OTAs will undoubtedly provide a key source of near term bookings and hoteliers will find themselves in similar situations as they were post-9/11 and post 2008 financial crash: relying on distribution partners to fill hotel rooms. Armed with the right information this time around, though, hoteliers are capable of learning from past mistakes and developing better working relationships with their distribution partners.

“There are going to be segments taking bigger hits than others, and OTAs are seeing the same. They have marketing power, but it’s still the same story that demand is down,” says Johnathan Capps, VP of Revenue at Charlestowne Hotels. “Looking around the industry, we will all admit that during the last downturn we gave too much to OTAs, and now there’s an opportunity to learn from history and say we’re not going to repeat that again. It doesn’t make sense to offer up a sale to Expedia at 35% off and bring the rate $100 below market. Demand will still be dictated by the consumer’s want to travel.”

At the 61-room Long Beach Lodge Resort in Tofino, British Columbia, Director of Revenue Management Heather Riddick has been ramping her property to reopen after more than two months. Riddick says that, because Long Beach Lodge is a destination resort, she has the luxury of waiting until midsummer before turning to OTA channels, currently only taking about 10% of her business through distribution partners.

EVOLVING DISTRIBUTION DECISIONS

Recently, we’ve seen some hospitality revenue leaders suggest that improved distribution agreements
are just one component of a more comprehensive commercial strategy, and that revenue and marketing should report to a commercial or revenue officer, who is informed by data and can set collaborative strategies among the departments.

In this environment, distribution specialists could be more focused on the role of drip marketing strategies and omnichannel marketing efforts that will drive direct business, says Mike Medsker, president and co-founder of Focal Revenue Solutions.

“We can expect to see the traditional boundaries between sales, marketing and revenue optimization blur as hoteliers realize that generating new demand will require a more holistic approach to their business,” he says.

A key role for whoever oversees distribution is measuring return on promotions, and a more holistic view of distribution requires moving away from a last-click attribution model that fails to track the complexity of the customer booking journey, Medsker says.

BUILDING SMART OTA PARTNERSHIPS

Medsker put it succinctly: “Hotels should offer the same rates and availability to the OTAs that they are selling directly, period. With very few compression dates anticipated in 2020, staying in good standing with your OTA partners far outweighs the small incremental benefit of holding back availability or breaking rate parity clauses.”

He also suggests hoteliers be extremely wary of opaque channels and packaged inventory, saying some OTAs have taken steps to reduce the opacity of these rates, leaving customers the ability to know which hotel they will receive before booking.

“This erodes retail pricing credibility and leads to rate leakage, as customers who might have booked your hotel directly find they can do so more cheaply on Priceline or Expedia,” Medsker says. “The best way to fight back against the OTAs is to decline to participate on these paths.”

At Choice Hotels, VP of Revenue Management Douglas Lisi agrees that an important way for hotels to build and reinforce guest relationships is by maintaining rate parity and price integrity. Hotels should have consistent room rates no matter what method the guest is using to book – phone, website, etc. – or what website is being used, he says.

“Maintaining rate parity is a consistent challenge across the industry, and one that Choice Hotels’ revenue managers and general managers work every day to align,” Lisi says.

This article is excerpted with permission from “Special Report: A Clean Start to Hotel Distribution Post COVID-19,” published by CLE Content and Hotel Recovery 2020. In this new report, leading hotel revenue, marketing and distribution experts from across the industry talk about the short- and long-term prospects for hotel distribution. The report is available here for free download (registration required).

A former newspaper journalist, Jason Freed began learning and writing about hospitality in 2007, spending a decade at various hotel trade publications before helping launch Duetto’s content marketing program. Jason brings unique perspectives to help hotel owners and operators solve challenges and capitalize on opportunities. In early 2020, he launched CLE Content to help more innovative hoteliers tell their stories and share strategies to drive hospitality forward. He is also editor of Hotel Recover 2020, dedicated to helping hoteliers survive COVID-19 by staying informed.