Question

What is the biggest challenge for Hotels who use an OTA strategy to drive increased room occupancy?

Answer 1

Top three challenges that hoteliers can expect to encounter when working with OTAs -

1. Exorbitant commission

OTAs charge anywhere between 15%-35% commissions on bookings, which is borne by the hotel. In other words, you – the hotelier- end up spending quite a bit on OTA commissions. Several big brands have initiated marketing campaigns encouraging travelers to book directly with them in order to cut this cost.

Smaller hotels need to start studying their data to understand if their returns from OTAs is working out. Many hotels neither realize nor exploit the potential that direct bookings present to them. This data is crucial to small and mid-sized hotels as they could be spending a bit too much on OTAs. Instead, they could redirect a part of that amount towards their marketing budget to market their property on the right channels, in an attempt to promote direct bookings. A penny saved is a penny earned, they say. True in this case, wouldn’t you agree?

2. Too much manual effort

Many hoteliers make the mistake of assuming that by simply listing themselves on OTAs, they can expect bookings to come flooding in. What they miss out on is that the real magic happens when you integrate your PMS with a channel manager. Without a PMS or a channel manager, you not only end up spending money but also numerous man-hours on a task that can easily be automated.

There’s nothing “wrong” with this arrangement except that it is extremely laborious, and you cannot ignore the fact that there is immense scope for errors or negligence. Let’s say you get busy and forget to update the OTAs when a walk-in guest gets checked into a room. Chances of overbooking or double booking are very high. And you do not want that. It is embarrassing and can potentially ruin your online reputation.

However, when you invest in a PMS and integrate with a channel manager this will no longer be a concern. It is all automated, and in real-time. As in, the channel manager acts as a liaison between the OTAs and the PMS, updating inventory and prices to and from them both in real-time, automatically. So, effort to distribute rates and inventory as well as scope for error- zero.

3. Inaccessible guest data

In this day and age of customer experience, you will have to put your best foot forward at every touch point. What this translates to, for the hotel industry is engaging with your guests at every stage of their journey with you. When a guest makes a booking with you, it pays to reach out to them and tell them you are looking forward to hosting them, etc., even before they arrive at your property. Pre-arrival guest experience is a huge factor in determining the overall experience of your guests.

But OTAs don’t share guest data with hotels putting them at a huge loss. When guest data is not available, hotels have no means to get in touch with their guests before they arrive. Apart from closing all doors leading towards pre-arrival guest experience, it also implies that hotels have to wait until the guest arrives at their property to understand if they have any special requests, customizations or preferences!