Online travel agencies are a viable distribution channel that isn’t going away and Hoteliers must continuously evolve their strategies to best take advantage. It concerns many aspects: channel management, booking behavior, data issues and how the relationship has hurt and helped hoteliers. Nowadays each hotel decides for itself but the truth is the Hotels Can’t live with them and Can’t live without them…
Due to the difficult economic situation the demand for the OTA rises, therefore leading OTAs to increase the commissions
Example : “In the past, OTAs would allow hotels to choose to participate on 10% commission retail basis, and they would access rates and availability from GDS,” said Adele Gutman, VP of sales and marketing at HKHotels, a New York City boutique hotel operator that does not offer inventory on merchant model OTAs. “At some point a few years ago, some OTAs put their foot down and said they would not promote our hotels unless we switched to a merchant model basis where we would give a deeply discounted net rate and then they would mark it up significantly.”
Paul Brown Hilton Worldwide HOLLYWOOD, Florida—Hilton Worldwide will take calculated steps and provide amplified resources in 2012 to assure its product is represented and sold appropriately across all channels, said Paul Brown, president of global brands and commercial services for Hilton Therefore, Brown said Hilton has formulated a four-pronged approach to distribution: 1) Direct channels must be ultimate truth and offer the best rates; 2) the entire portfolio of hotels must operate as a single system, otherwise the brand will appear schizophrenic; 3) suppliers can’t be “pennywise and pound foolish” about channel economics; and 4) third parties will be given inventory “once the hotel has its own house in order.”
To accomplish this distribution strategy successfully, Hilton will embark on some new initiatives in 2012. The company will increase spend on direct channels by more than US$100 million.
Hilton is in the process of rolling out a corporately funded field-based revenue management team of about 250 employees to assist individual properties with revenue management. The goal, Brown said, is to take the bonus off operators to navigate a complex set of distribution channels and instead let them focus on providing great hospitality. Admittedly, Brown said the program will closely resemble the internal market management group he helped build at Expedia ( he was he was president of the North American division before )
OTAs should be considered a supplemental revenue driver and smart hoteliers can manipulate the availability and price of rooms to ensure a third party doesn’t steal the customer.
It is advised the hotels take a balanced approach—get no more than 10% of annual occupancy from OTAs and attract as much customers as possible to the domestic websites. And it never hurts to focus on the basics: great customer service!