Dear OTA partner… I think we need counselling…
We are in a relationship… and like some relationships one partner was a little more ‘needy’ in the early days and the other partner took advantage. Now the relationship has turned toxic and the fact is that the ‘needy’ one is pushing back; looking at ways to hurt you; empowering themselves and frankly… is contemplating divorce!
So before that happens I offer counselling, so lets start with at the facts.
Way back at the end of the 90’s when the Spice Girls were still cool and Snickers was still called Marathon, we had a recession and Hotels panicked. They were desperate to fill rooms and frankly at any price. Along came OTA’s to save the day. To begin with this seemed like a wonderful idea; the answer to a Hotels RevPar prayers, but like everything that seems too good to be true, it kinda was.
OTA’s also went into this relationship at the beginning thinking only good things. Relationships were built on trust and a desire to work together. They never really thought that they would be the dominant partner, in fact, quite the opposite. They were the new kid on the block and frankly what they offered hotels wasn’t great. Platforms and technology were being built and there were so many to choose from that the OTA’s were just grateful that any hotels wanted to be in a relationship with them at all. They were the geeky kid chasing the College Cheer Leader but when they asked her out on a date, she said yes…
But then like so many relationships, cracks started appearing. The OTA’s started needing more attention and got a little greedy when Hoteliers said yes to everything. There were demands on ‘rate parity’; then came allocation demands; then they wanted to take our name! Over time Hotels became weaker because as we all know, ‘if you don’t stand up for something, you end up falling for everything…’ and they did. Suddenly the OTA’s were using loyalty against us; demanding more commission; giving our hard won business to other hotels; with-holding information about the guests we looked after so well. They then went to the media and started advertising to our guests saying that they had better rates than we did. Basically they took all the good things that we gave openly in this relationship and used them against us.
Hotels then decided to fight back but this decision may have come too late for many. Hotels decided to offer better rates if their guests came directly. They now offer incentives, competitions, upgrades, bottles of wine, even hidden rates to entice their loyal customers back. They are fighting back and for good reason. They know that when you break everything down the facts are clear:
– OTA’s offer only two things: a software platform for people to book and a marketing opportunity.
Hotels in return offer: up to 25% of their hard earned revenue to the OTA’s; An allocation of rooms even when they are full and can’t accept bookings directly themselves; A promise not to undercut or enter price wars; The right to take and use a hotels branded name in whatever way possible; The right to offer their guests a loyalty programme that most independent hotels can never match and an advertising budget both online and offline that is a battle few hotels can ever hope to win.
You see the terms of this relationship have changed and as we all know, once there is a shift in power in one persons favour, the relationship will start to break down.
I don’t know about you all, but I am growing tried of hearing about ‘Book Direct’ strategies – especially as most hotels are failing miserably at even attempting to implement the basics. So what is the answer…
Well in my mind, like in any relationship, I think we need to talk. One partner cannot be dominant and it frankly isn’t fair that hotels offer bricks and mortar; attentive staff; invest heavily in training; invest constantly in their product; lighting, heating; a restaurant; a bar; an experience… Hoteliers are struggling every day to often make less than £6.00 per room when an OTA can take 4 times that for offering just a software platform to book and a marketing opportunity.
So my counsel is this… OTA’s please meet us in the middle and try and re-dress this imbalance. I know you know how toxic the feelings are from the hotels right now and you could so easily improve this relationship. Reduce your commission to 10% (trust me, we would be happy with that) and stop making demands for allocations – they just aren’t fair.
You know what… we would probably be happy with that. We understand your need to advertise and to be in business, but please afford us the same courtesy. Meet us half way, not a compromise where one party inevitably looses but a win:win, where both parties feel they are part of something strong.
You would be part of a healthy relationship, where hoteliers are happy to work with you and the fighting would stop. Both parties would be empowered to work together and more importantly, our customers would be happy. There would be no more mixed messages, no more bombardment with over-zealous sales tat on all of our websites. Customers would be free to choose where and how they booked.
Win:Win for us both. Doesn’t that sound better than divorce?
and for more counselling or for all things revenue firstname.lastname@example.org