Sites like Booking.com and Expedia often get a bad rep in the tourism industry. While they help connect travelers to hotels, tours, restaurants, and more, they also take a portion of the profits directly from these properties. While this portion might not be a big deal to a major hotel chain, they can represent a large percentage of a smaller property’s overall profits.
Like it or not, OTAs are here to stay. But learning how to co-exist with them, with a little help from a Utah hospitality management company like Vibrant Management, can help you to shift your perception and make the most of these sites.
Keep reading as we explore what OTAs are, and why we think it’s time to change your perception of them.
What are OTAs?
OTAs, or other travel agencies, are travel booking platforms that allow travelers to search, book, and review everything from hotel and vacation rental stays to tours and holiday packages. Some of the most popular OTPs are Booking.com, Expedia, TripAdvisor, and Hotels.com. OTAs account for 24 percent of all hotel bookings. Expedia and Booking, 2 of the largest OTAs, account for 93 percent of all OTA bookings.
Many hotel and vacation property owners see OTAs as a nuisance. While guests can use these sites to book a stay, the OTA keeps a portion of that booking, often calculated as a percentage of the total booking price. This means fewer profits per booking for that property.
Changing the Perception of OTAs
The reality is that every property has 2 options. The first is to allow their site to be listed on OTAs and commit to giving up a percentage of profits from bookings through these sites. The second is to lose out on a large pool of potential bookings. Rather than earning a booking that’s slightly less than what you get when a guest books directly, you’ll receive no booking at all.
Odds are that the guest that would have booked your property on the OTA will choose a different property, rather than search for your property’s website and book directly. Many guests are loyal to specific OTAs, either because of loyalty programs (like Hotels.com’s special that allows guests to book 10 nights and get the 11th free) or because those sites are what they’re familiar with and used to booking through.
As a property owner or manager, it’s important to shift your perception of OTAs. Rather than viewing them as a source of competition and a drain on your profits, view them as a marketing resource, and a necessity that you simply can’t avoid.
For instance, say that you lose 15 percent on a booking when a guest books their stay through a site like Hotels.com. If a booking costs $200, you’ll see $170 in revenue. However, getting that $170 booking cost you nothing. You didn’t have to pay for ads on social media, or even technically spend money to improve your website. Instead, the OTA did the heavy lifting for you. They marketed your property, so much so that a guest chose your property over other options. Now, rather than a loss, that 15 percent fee from the OTA becomes a marketing cost.
Co-Existing With OTAs
Rather than fighting back against the existence of OTAs, businesses in the tourism industry need to learn how best to co-exist with them. This starts with learning the rules of working with OTAs.
How Much Do OTAs Charge?
OTAs take a percentage of the total cost of each booking. This fee is usually between 15 and 30 percent of the booking. It will vary from one site to another, and can even vary from one vacation property to the next, as some OTAs set their fees on a case-by-case basis.
Can You Negotiate Your OTA Fees?
One thing that many new property owners want to know is whether they can negotiate their OTA fees. You can technically negotiate your OTA rate. But this isn’t an easy process or a guarantee. After all, the OTA holds the power; they can simply choose not to list your property, and you’ll automatically lose out on any bookings you might have made through them.
However, some OTAs will negotiate their rate with properties. This can help to lower the percentage of each booking that you lose when guests book through a travel agency site. OTAs are only likely to negotiate with large properties or those that are a part of a larger travel collective.
How Can a Utah Hospitality Management Company Help?
If you’re struggling to convert a high number of OTA bookings into direct bookings and wondering what to do, a Utah hospitality management company can help.
At Vibrant Management, we understand that OTAs are a marketing resource, rather than a drain on profits. The properties that we manage average around 12 percent OTA bookings. We find that newer properties often see a higher percentage of OTA bookings. This is a result of organic marketing efforts, through SEO and other tactics on the property’s website, are still in development. Guests may have an easier time finding new properties through booking sites, which have a larger budget and resources for marketing properties and helping guests find the right one for them.
However, we also understand the desire to increase direct bookings as much as possible. We offer a variety of services to help you boost your website visits, lower bounce rates, and increase your direct bookings. We can help you build a beautiful, effective website, decrease bounce rates with stunning photography and hotel video marketing, and boost your site’s ranking and visits through organic and inorganic strategies. Our hotel social media management services are a great option for nurturing your relationship with previous guests, helping you to keep the connection strong until they’re ready to start planning their next visit.
Ready to see for yourself how our Utah hospitality management company can help you co-exist with OTAs? Contact us today to set up a free consultation to learn more.
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