Op-Ed: Drive direct bookings & dethrone the OTA monopoly
Matt Taylor Co-Founder of Cherry, on the battle that's been raging for many years between OTAs and accommodation providers
As internet connection transitioned from being ‘nice to have’ to a mainstream utility in homes during the late 1990s, online travel agencies (OTAs) established themselves as new and exciting booking channels, revolutionising travel by allowing consumers to book accommodation, flights and tours at the touch of a button.
Properties embraced this development, due to its impact on simplifying distribution networks and allowing them to reach a wider audience and attract potential guests. Little did they know that years later they would come to rue the decision to support these channels in such a big way, with commissions now often a property’s largest expense after labour.
In the early days, Wotif was the dominant player in the Australian market with a promise of increasing bookings by providing consumers with last-minute, deal-based reservation options with a commission rate of 10 percent. It was a small price to pay for properties to drive traffic and thus was embraced by operators. As time went on, however, consolidation happened and two main players emerged – Booking Holdings and Expedia Group.
What came next has become the current state of play: properties locked in a cycle of dependency that dampens profitability and dismantles customer relationships. Commissions charged by OTAs reached eye-watering heights of up to 30 percent, and properties were hit with restrictions around rate parity and last room availability, as well as losing control over their published content and how the OTA algorithms would feature their properties.
Properties also lost control of the relationship with their customers, diminishing their ability to drive loyalty and repeat bookings.
This resulted in a battle that has been raging for many years between OTAs and accommodation providers as they strive to drive more direct bookings and create a more sustainable future for their business.
In order for properties to be successful in attracting direct bookings and dethroning the online travel agency monopoly, numerous strategies must work in unison. One of the key elements which many properties must improve and embrace is enhancing the functionality of their website and booking engine to offer customers the same effortless booking process that they have become accustomed to on OTA sites.
With consumers invariably seeking to access the best possible deal on accommodation, operators must adopt smart pricing strategies that don’t put them out of rate parity but provide an incentive to book direct. Over the years the OTAs have created a perception that they offer the best deal, however, this narrative needs to change as it is almost always possible to access better rates on a property’s direct website, often with the inclusion of additional benefits such as breakfast or experiences.
To see a dramatic shift to direct bookings, hotels need to find new and creative ways to attract more people to their direct websites. This often seems like an impossible task, however, as Expedia Group and Booking Holdings spend billions in combined advertising dollars each year to sustain and advance Google search engine optimisation.
Whilst properties should engage their own direct marketing to compete against these OTA campaigns, they also must be conscious of the amount they are spending and the return each channel is delivering. The last thing a property wants to happen is that their direct booking campaigns cost more than the commissions they would have paid to the OTA.
To be successful in this battle with the OTAs will require some different thinking by properties and the industry in general.
Already we are seeing new technology emerge, which will enable properties to intercept users searching on an OTA and turn them into a direct guest. Through the adoption of such innovations and a dedicated focus on the direct booking experience, it is certainly possible to win the booking battle and reclaim customer relationships.
Matt Taylor, Co-Founder of Cherry
Matt Taylor, CEO of reZme & Cherry.
Matt is a marketing leader, hotel Direct Booking specialist & co-founder of Cherry. He is an innovative leader with a passion for marketing and technology and has played an integral role in transforming businesses across retail, telecommunications, travel, hospitality and franchising over the past 16 years.
