The hospitality industry is regularly changing and hotel booking websites are no exception. Observing the current changes in the OTA market can give us a clue on what will it look like in the future.
What are OTAs?
By now, most hoteliers have interacted with at least one, if not multiple OTAs. Online travel agents are essentially hotel booking websites. They gather details of hotels from around the world (or on some occasions, one of its regions) and place them on one platform. Users of the platforms can then choose a destination and dates, as well as other factors that matter to them, like the price, free parking and more. Then, available hotels appear on the result page, and the customer can choose one of them. The idea is simple, but it is not without obstacles.
So what makes OTAs a controversial subject in the hotel industry? The commission. It is the biggest reason for disagreements between hotel booking websites and the hotels themselves. Customers do choose to book via OTAs more often now than ever. Therefore, to increase their own chances of receiving bookings, hoteliers feel like they have no other choice but to advertise their properties on those platforms. In return, they pay a commission from each successful booking. At first, the commissions were reasonably low, which drew hoteliers in. But as the popularity of these hotel booking websites grew, so did the costs for property owners. Today, the commission can reach levels of up to 20%. That is one-fifth of a hotelier’s potential revenue going to a third party. Together with harmful rate parity clauses and brand hijacking, it makes hoteliers rebel against the OTAs.
Recent years did, however, bring significant changes to the functioning of the OTA market. Hoteliers started to fight against what they considered were bad practices. Many petitions have been signed by thousands to stop rate parity clauses and brand hijacking. Articles are written in the hospitality industry media about the unfairness of some OTAs. People speak out about the commission and how it is becoming a problem. After all, all the hoteliers want is to offer a good quality service and therefore get a certain revenue. When said revenue is being cut by 20%, it does affect them.
Recently, new companies, including new hotel booking websites, have come into play. Platforms such as Bidroom.com offer a new approach by proposing a commission-free booking website, that instead only charge the hoteliers a small one-time activation fee.
Companies like SiteMinder offer new solutions, with better website designs and easy-to-use booking buttons, to encourage guests to book directly with the hotels.
Another change occuring in the market is building a community within a travel brand. Whether it is an OTA, a metasearch engine or even a hotel chain, it is becoming more common to involve customers with projects of the company. This allows hotels and guests to interact with each other, as well as offer a 24/7 contact with customer service.
Lastly, companies within the travel industry, similarly to many other markets, will have to personalize their offers and communication. Customers are no longer satisfied with automatic answers and a lack of empathy. They seek human interactions and a sense of special treatment. That is why personalizing websites, social media and the offers itself is starting to be a key to the success of a company.
While a few very large OTAs currently monopolize the market, many argue that it will not last forever. As new solutions enter the stage, it is very likely that they will slowly but surely take over a large chunk of the market. While I do believe that we are far from seeing the largest OTAs go into a decline, I do believe that other models will eventually gain in popularity and disrupt the market. The no-commission platforms are currently becoming widely used by the hoteliers, making them the next big thing for the hospitality sector. Coupled with personalized offers and the opening of new channels to give hoteliers more direct interaction with guests, the industry is in for a shake up.