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Why Hotels Should Embrace OTAs, Not Fight Against Them

by Michael McCartan, Managing Director, EMEA |

Michael McCartan, managing director EMEA for Duetto Research, aims to make peace between the OTAs and hoteliers at this year’s Annual Hotel Conference in Manchester. Here’s a sneak preview of some of the issues he hopes to bring to the table for candid discussion during his Day 2 panel discussion.

It’s time to bring hoteliers and OTAs to the table. Long has the war raged over rates, commissions and availability. And in the middle of it all, the guest has been left behind. Oneupmanship is not good for business. It is certainly not driving profit or garnering loyalty amongst the world’s travellers.

At this year’s Annual Hotel Conference I’ll be talking to Thomas Magnuson of Magnuson Hotels, James Osmond of Triptease, Ryan Pearson of Booking.com and David Taylor of glh Hotels in a panel discussion that aims to bring some accord between the parties.

Some of the questions I hope to put to the panel are:

  • What practices from OTAs do hotels consider not conducive to a wholesome partnership?
  • What are the OTAs looking for from hotels?
  • If hotels begin to drive a little more of their business direct, what changes in the hotel-OTA relationship? What stays the same?
  • How should OTAs and hotels share data and collaborate to deliver the best guest experience?
  • With rate parity rules weakening in many markets, in what ways can hotels and OTAs cooperate for their mutual benefit?

OTAs – Friend or Foe?

Hoteliers need to recognise that the OTAs are not the enemy, even though historically there may have been some practices and fee structures that were not as balanced as they should have been.

The OTAs have massive marketing reach. They can tap into markets that hotels can’t reach. They offer huge choice and convenience to the consumer and for that reason customers will continue to use them. For hoteliers to continue to class them as the villain is wrong; they have to recognise the value and opportunities they do bring and work with them more in partnership rather than an adversarial fashion.

Hotels can spend every waking hour trying to compete with the OTAs and they will never see the same ROI, whether through discounting or competing on marketing spend. That is also a detrimental zero-end game for the hotels. They need to recognise the middle ground is the right approach.

How Hotels Should Use OTAs

What hotels should be doing is using the OTAs to attract that top end of the funnel customer, those not loyal to a brand or just looking for a one-off trip. Trying to attract that customer directly and retain them, in this instance, is a futile exercise. That’s where the OTAs are very beneficial.

Once the OTAs have driven traffic to a hotel it is up to them to start using data about that person to drive a much richer and more customised experience for the guest when they plan their next stay.

It doesn’t have to be price driven, even though we have seen from the book direct campaigns from Hilton, Marriott, etc., that if you give people the incentive to book direct via a discount then they will. These incentives can easily move beyond price if hotels start understanding the guest and present to them during that search and discovery process something that is unique to that guest and closely matches what that person is looking for in terms or experience, price and availability. That will drive more loyalty that a mere price discount.

The Middle Ground

OTAs want the best price. Hotels want reduced commissions. Both are fair business practices. So, are we reaching a period of happy co-existence?

Hotels often complain that OTAs effectively hold a gun to their heads in terms of rate parity compliance, but do not reward them with lower commissions for being good citizens. They have their cake and eat it, too.

OTAs argue that they spend so much money marketing the hotel on a highly effective channel that it really is good business for hotels.

Hoteliers need to realise that consumers do want to book with Booking.com – it’s convenient. But on the other hand, OTAs need to consider what is a fair commission for the service they offer and conducive to a healthy long-term relationship.

What’s Next For OTAs?

How much more can the OTAs grow? Have they not reached a point where they have to work more closely with hotels and give them more favourable terms? Have they reached a point where they can no longer sustain the growth they have so far enjoyed?

We can see them starting to look at other areas of the hospitality industry, such as the sharing economy and vacation rentals. How long before they become hotel operators? Or have we reached a plateau where naturally the OTA/hotel relationship hits more of an even keel?

I’m hoping my panel discussion offers a little contention and that not everyone is in agreement. As an industry, we are trying to find harmony, but we are not there yet. Coming together and discussing our issues is the best way to find resolve.

I look forward to seeing you at AHC and to continuing the discussion!

The Annual Hotel Conference takes place 11-12 October at the Hilton Hotel, Deansgate, Manchester. This year’s theme will be: ‘Embracing Change, Seizing Opportunities’. To find out more or to register, visit: https://www.theahc.co.uk/

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Michael McCartan, Managing Director, EMEA

Michael McCartan, Managing Director, EMEA

Managing Director, EMEA at Duetto
Michael joined Duetto as Managing Director for Europe, the Middle East and Africa in 2014 to spearhead the rollout of the Revenue Strategy technology company throughout the region. Before joining Duetto, he served as CEO of eRevMax. Michael has an engineering degree from the University of Cape Town and a business degree from the Open University.
Michael McCartan, Managing Director, EMEA

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Michael McCartan, Managing Director, EMEA

Michael joined Duetto as Managing Director for Europe, the Middle East and Africa in 2014 to spearhead the rollout of the Revenue Strategy technology company throughout the region. Before joining Duetto, he served as CEO of eRevMax. Michael has an engineering degree from the University of Cape Town and a business degree from the Open University.