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The ever-evolving world of distribution…

There is one thing that you can say about our industry and that is that is always changing… However, as busy hoteliers we aren’t always ready for it and by gosh have we ever made mistakes in the past (allowing OTA dominance is something we will have to live with for a long time) but what is next for us to consider?

Last week I wrote about AirBnB and how they are now actively coming into the hotel space and allowing hotels to distribute through their platform for as little as 3% – 5% commission, definitely one to watch…

However, there was a second announcement last week and that was from Google.  They are expanding their reach on travel sites and simplifying everything for the customer and that change will mostly sit around the mobile experience.

As we know, the Millennials are changing how we all do business, whether that is how we communicate to them; the experience they need when they get to our hotels and if we wind it right back, they expect a different booking process and a different journey through ‘search’, and that is what Google is hoping to capitalise on.

Google are making the whole journey through mobile search much easier by putting all relevant information on one simple ‘swipe and find’ screen.

So should we expect more reservations through Google?  Probably yes, but what about the relationship that Google has with the OTA’s?  After all, booking.com alone pays Google billions of dollars each year to advertise on  their platform (paid with our commission by the way), but by driving more bookings through their own platform, are Google ‘cutting their noses off’ – I doubt it.

And what does this mean for us as hoteliers?  Let’s say, you actively work with Google and the OTA’s start to see a drop in search, clicks and conversion for your hotel, will they de-rank you?  drop you to the bottom of search pages? will they allow hotels that aren’t actively working with Google to rank above you?

To me the facts and the solution are very simple… the OTA’s need to reduce their commission to a sensible amount. I have written widely and often that I feel that for first-time bookings through an OTA, we as an industry should expect to pay double digit commission (let’s say 10%) but that for the very same person who comes back to stay with us a second time, that the commission should be reduced (say to 5%).  After all, that person is not coming back to the hotel because of the great service they got on an OTA, they are coming back because the love you!

The OTA’s offering us marketing and sales in markets we would never reach so of course we should expect to pay for that privilege but wouldn’t we all just get along better and ‘play nice’ if we felt we were working together and not apart?

Look at the words we use to describe OTA’s – aggregators; disrupters – that is hardly language that we we would use if we felt the relationship was equal…

So perhaps it is time for a level playing field, isn’t that the simplest solution for the OTA’s as well?  Surely they would have less to worry about – as in the rise of Google or AirBnB or Blockchain, if they simply played fair?

Let’s see what happens next…

(and for all things revenue, just ask@rightrevenue.wpengine.com)