OTAs are consumers' favorites for so many reasons. They allow potential customers to compare different prices, locations, room options and dates in order to pick the most suitable and convenient option. They also offer honest unpaid reviews by previous guests who are willing to share their honest opinions for free. Moreover, they offer a culturally aware online experience with currencies conversions and various languages available.
Hotelanalyst says "Hotels in large chains on average rely on OTAs for about a quarter to a third of their online bookings or 10% to 15% of total bookings. Meanwhile, independent hotels, particularly those located outside major urban destinations, might rely on OTAs for as much as 70% of their total bookings".
OTAs are essential especially for small hotels too. They help you increase your hotel visibility and facilitate the access of markets that might have been very difficult to target and penetrate using other traditional ways. However, it is not all rainbows and butterflies when it comes to partnering with OTAs, especially if you are running a small hotel property.
While OTAs help you reach different customers around the world while increasing your visibility and income, you will have to pay a significant commission for every reservation made through an OTA. This might be too much especially for small hotels that naturally struggle with keeping steady revenue in times of fluctuating demand. Hotels will pay a commission that ranges between 15% to 40% depending on the location of the hotel, the number of rooms available and the degree of competition. In areas with high competition, high seasons, popular tourists' attractions or when the hotel is trying to improve its ranking, the commission can be significantly high.
How to Choose OTAs for Small Hotel Property?
Any hotel channel manager will be intrigued to partner with the biggest players in the game. However, there are some tips that can help you make the best of the experience. Following these basic guidelines will help you choose the best OTA for your small hotel property:
- Booking.com is the number one OTA to consider if you want to increase your global visibility. With more than 40 languages available, you will be visible to customers wherever they are. The site will charge 15% commission for every reservation made but you will not have to pay a monthly fee to list your property. You will pay only after you have started to make money.
- Airbnb is the one to target especially if you have your hotel outside the main hotel districts. Guests who search for rooms on Airbnb are people who actually want to live like the locals. Since the website is global in nature you will be able to cover the 3% charge the site will charge as commission once you have a booking.
- TripAdvisor allows hotel channel managers to manage their business listings. They will have the opportunity to respond to reviews and even cut down all the OTA fees thanks to their Pay-Per-Click advertising model.
How to Make OTAs Work Better for You?
In order to make sure that OTAs are working for you, you need to make sure that you have a reliable hotel PMS. It is mainly designed to deliver a seamless guest experience. Hotel managers will be able to manage hotel bookings, reservations and guests check-ins and check-outs. This means that a reliable hotel PMS is essential to increase your revenues and help you avoid the high, sometimes unaffordable, OTA fees.
- Increase your chance of direct booking, in what is known as the billboard effect. Guests might have found you through an OTA but might still decide to click the link to your hotel and directly book with you. You will have to build a reliable and user-friendly online booking website up by high-quality hotel check-in software that will enable your guests to pick the right room for them.
- Make sure that your website is responsive so that guests can access it from their favorite mobile device. Most of the online reservations will be made through a mobile device and not a PC.
- Don't list all your rooms on the OTA. You can definitely keep some of the options available for direct bookings and walk-ins. You can collaborate with other players in the industry, like wedding planners, to promote and market your most special options; like honeymoon suites. This will ensure that customers will have to go to your website to make a reservation.
- Build customers' loyalty. Make sure that your customers will be back for more, making a direct booking this time even if they made their first reservation through an OTA. Offers that include an extra night or a complimentary dinner on a subsequent stay will definitely increase the rate of your direct bookings.
While the internet can seem like a scary place especially for small businesses, the right tools and techniques can definitely help you survive and excel. Just know who to collaborate with and try to make the best of it.
ABOUT THE AUTHOR
Deepak Chauhan (VP, Cloud Solutions) is responsible for marketing and positioning of "mycloud" platform and is a veteran in the hotel software industry with over 25 years' experience giving him a strong understanding of the product requirements in the industry. He has a very rare mix of working in operations of various hotels and chains for over 10 years and then co-founding a software product and service company, servicing 5-star hotels and chains for 14 years.