The Cost and Benefits of Direct Hotel Booking vs OTA’s
December 23, 2016
Distributing hotel rates and packages is becoming increasingly complex. Since their invention two decades ago, online travel agents (OTA) have greatly contributed to increased bookings for most hotels -- but at a cost.
Exposure: OTA vs. Direct Hotel Booking
No one doubts that OTA provide smaller properties and independent hotel brands a stronger marketing channel than they could build themselves. The huge marketing budgets of most OTA translate into a wide consumer reach. The brand recognition of websites like Priceline and Expedia invariably place their links at the top of Google search engine results page. For most hotels, a listing on a major OTA will expose the property to millions of potential guests throughout the globe.
Revenue: OTAs vs. Direct Hotel Booking
But this enormous exposure comes with a high price. OTA can take anywhere from 15 to 30 percent of the revenue for each booking. Though paying such a hefty commission is warranted when capturing a new guest, it makes less sense to pay the same rate to handle a return booking especially if they are returning for the third, fourth or fifth visit. Hotels can avoid paying commissions for returning guests by providing a loyalty program and other incentive to encourage your repeat customer to book directly with you, not an OTA.
Drive Traffic: OTA vs Direct Hotel Booking
This strategy is surprisingly easy to implement. One little-known benefit of OTA is that they can actually drive traffic to the hotel website. According to a study conducted by Google, 52% of travelers visit the hotel website after seeing the room listed on an OTA. If your website lists the same promotional rates as the OTA (and all other factors, such as ease of payment, being equal), the guest will be certain to book directly instead of navigating back to the OTA site.
Using an OTA to attract new guests quickly fill vacant rooms is a cost effective marketing strategy. However, your goal should be to attract repeat guests or careful shoppers to book on your own site to maximize revenue from each booking.