Last week, I wrote an article about how hotels hate online travel agencies (OTAs) because of the commissions charged by the sites for each and every booking; Today, I want to talk about the other major reason that hoteliers hate OTAs: the time and work that it takes to manage them. (Can you say never-ending?!)
– Jean Francois Mourier, Do You Hate the OTAs? Part Deux
Jean Francois is the CEO of RevPARGuru, a program that will help revenue managers control their rates across OTAs. The program looks pretty slick, and would be useful for larger hotels or revenue managers in control of multiple hotels. It allows someone to change the rate and have it effect all the rates across the OTAs. The application has a mobile part to it that allows revenue managers to change the rates through a desktop computer or from their iPad.
All of this great, but it still doesn’t solve the larger problem of the strangle hold OTAs have on hotels. Increasing rates on OTAs is negated by the commissions that are in place, plus the fees paid to RevPARGuru.
For example, Expedia generally takes a 25% commission, the CRS has a fee, then RevPARGuru would have a fee (not sure what it is, but I’ll guess 2%).
| $165.00 | $175.00 | $185.00 | |
| Minus 25% | $123.75 | $131.25 | $138.75 |
| – RevPAR Guru Fee | $121.28 | $128.63 | $135.98 |
| – CRS Fee | $117.33 | $124.68 | $132.03 |
| Difference from RACK | $47.67 | $50.32 | $52.97 |
At first glance, yes, the hotels are pulling in more revenue, but you can’t overlook the costs associated with getting that room revenue.
Is it worthwhile to lose $50 to earn $125?
I am not so sure, which is why I try to limit the amount of inventory available to OTAs and focus my effort on driving more traffic to the website and capturing those reservations. The costs associated with bookings through a website are much cheaper, especially if your PMS has a booking engine included within the setup costs, as InnQuest’s roomMaster does.
So while putting some focus on how well OTAs are performing for you is good in the short term, it is not a good longterm goal to improve upon the success you have with them. Every dollar you invest to promote yourself on the OTAs is only doing them a favour, not you.
A better solution is to put more focus in keeping your website up to date, involve inbound marketing techniques like a blog and newsletter, and make sure your presentation of the hotel online is of high a standard as you hold when the guest first enters the property.
Very important articleHowever what are the step revenue managers should take to minimize OTA.
I would more emphasis on driving traffic to your website through social media, blog posts, and getting writers to write about your hotel on their websites, which will improve your search ranking. Keep on top of your hotel’s profiles on TripAdvisor or other review sites, and keep your profiles up to date in Google Places, Facebook Places, etc.
Very interesting article James. Thanks for sharing your viewpoint! One small note – REVPAR GURU does not charge transaction fees for their software solution. Just wanted to make sure that you had the correct info. 🙂
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