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The jig is up — whether you like it or not, OTAs are here to stay. Every year they've gained ground and clawed a little bit more market share away from direct channels. Now with Google and Amazon throwing their hats into the ring, as Expedia and The Priceline Group continue to expand, things are about to get interesting. And while the future does not look perfectly clear yet, one thing is for sure — it's time to stop whining about OTAs and start thinking how you can utilize them to drive your business.
First, a few stats
Online bookings are taking off and OTAs are dominating the shopping phase. According to Phocuswright research, 72% of consumers used an OTA to shop for hotels. The good news is that the vast majority of those consumers still chose to book direct. However, before you get too excited, you should know that the gap is closing and OTAs are definitely making a play for the market. Phocuswight's European and Global report found a 16% jump in OTA gross bookings in 2012 and expects it to hit double-digit growth this year.
Travelers do and will book through OTAs
One thing is clear: OTAs are not going anywhere and even the most gorgeous hotel websites — the ones designed with love, blood, sweat and tears — will continue to be passed up in favor of OTAs at least a part of the time. The reasoning behind this is complex, although according to the latest research, it comes down to perceptions of trust, ease of use, hotel options and price.
When you consider the recent spate of acquisitions and the bold moves made by industry heavyweights like TripAdvisor, Amazon and Google, you can expect for things to get more intense in the near future. But chin up; this is good news: whenever a revolution (or evolution) happens it brings opportunity. Embrace and take advantage of the market upheaval, position yourself right and you're likely to come out on top.
Stop thinking of OTAs as competition
Yes, OTAs can and will steal some of your direct business. It is inevitable. They will also charge you a commission, which can severely cut into your RevPAR. However, if used correctly, they can also be a powerful acquisition and marketing tool for your hotel.
The truth is that times have changed and you can no longer afford to hang onto grievances and view OTAs as straight competitors. A successful revenue management strategy going forward will rely on your knowledge of the industry and its players and your ability to play the OTAs to your best advantage. You'll have to be more tactical, especially when it comes to OTA engagement, investment and relationships.
Speaking at the Hotel Equity & Lender Perspectives Conference in April, executive vice president of asset management for The Chartres Lodging Group, Maxine Taylor, said that knowledge was power and the best tactic for the future. While you can't manage or control acquisitions, she said, you can invest time in understanding them, their benefits and their costs in what is sure to be a complicated road ahead.
So rather than put your energy towards plotting the ultimate OTA demise, get analytical, view them as a tool to be used and figure out which features you can best exploit — and how —to achieve success.
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