For almost thirty years the power and reach of Online Travel Agents has grown, as more and more people have become familiar with, and adept at using the internet. OTAs such as Expedia, Booking.com, Tripadvisor, and Airbnb established themselves as the go-to and trusted sites to search for holiday packages and hotel bookings. And as these brands have developed, hotels of all sizes have benefitted from the massive ‘footprint’ of OTA dominance. What are OTAs? - They’re a very valuable way of hotels being searched for and seen from any part of the world. However there are also downsides from the point of view of hotels, as we shall see in this article. Now a new balance is being found between the OTA route, and the improved operational effectiveness that hotels are able to access through vastly improved technologies.

What is an online travel agency?

There’s little doubt that OTAs can provide a highly efficient one stop shop for searchers on the internet, where all travel-related services can be found in one place: including car rental, cruises, flights, and of course accommodation. The largest Online Travel Agents handle millions of searches and bookings every day for both leisure and business travellers worldwide. Booking.com - the third largest of the OTAs after Airbnb and Expedia, (although all the biggest OTAs are constantly jockeying for position) - was responsible for over 550 million bookings in September 2023 alone. OTAs provide an excellent way for people to compare and contrast the offerings of different hotels because each OTA has standardised formats, and rules for the businesses they promote, so it’s easy for potential guests to spot differences, and similarities. Searching for OTA travel, or a hotel in a particular area? Then an OTA site will comprehensively show the options, and rank them in order of cost, services or style, according to filters selected by the guest. What could be easier? In contrast, browsing the websites of individual hotels takes far more time, and is then sometimes a case of ‘comparing apples with oranges’ because each website tells a somewhat different story.

Advantages for hotels working with OTAs

Hotels can find working with Online Travel Agents extremely easy, because they simply fit into a ready-made methodology. An extremely large variety of types and sizes of accommodations can sign up worldwide with OTAs, with the registration and advertising typically being free. The benefits of working with OTAs include:

• A good customer journey: If your target audience is not a very specific niche that you can reach otherwise, then using OTAs is a big bonus. The simplified booking processes and improved user experience through continuous optimisation and customer focus ensures engagement. Relevant content is displayed clearly in an easy-to-use format.

• OTAs are ‘across the technology’ with smoothly functioning and seamless operation for desktop, laptop and mobile applications, with a high functionality that smaller hotels have to date found hard to match.
• Additional benefits such as offers and discounts to customers can also be generated by the OTAs, providing guests with a wider range of opportunities and incentives.
• The ‘reach’ of the OTAs is usually global, and multilingual, so that it is easy for anyone, anywhere to look for and make a specific hotel choice. What are OTAs? - They’re the gateway to a whole world of travel and accommodation opportunities.
• OTAs can provide more flexibility in allowing changes or cancellations, which helps increase the trust of clients. People put their faith in the reputation of Online Travel Agents.
• OTAs are also geared up to share authentic reviews and feedback based on past guest experiences - a hugely powerful tool given the world of instant social media that we now populate.

OTAs give access to a wider market

So, with this kind of ‘muscle’ available, it’s not entirely surprising that hotels have increasingly adopted the attitude of, ‘If you can’t beat them, join them.’ The advantages of accessing a wider market through the OTAs’ greater spend on marketing and advertising means greater reach to more potential guests, so what’s not to like?
Another great power of the OTAs is that they are into Big Data, big time. Through their data mining algorithms they know in granular detail about the needs and wants of the market, often far more than any individual hotel has been able to analyse. Many hoteliers have no idea what a huge amount of data OTAs own. You can get information about competitors' quality scores, the booking window, and in some cases even their average prices. This information can also be key in assisting the development of a hotel’s pricing strategy.

The disadvantages of working with OTAs?

The OTA earns its income from commission paid by the hotel for every single booking made through the OTA’s channel, or by the OTA being the recipient of the initial guest payment, which is then passed on to the hotel, minus the handling fee. Commission payments are usually settled monthly, representing a predetermined sum of between 10-30% of the total room booking value. But as well as ‘skimming off’ this commission, which impacts the hotel's bottom line, there can be other significant downsides to relying on Online Travel Agencies:

• Most of the big OTAs are giants in the hospitality industry, which means that smaller hotels may feel oppressed and left without support. Some of the complaints raised by hotels are legitimate and cause for concern.
• Overbookings, unsolicited cancellations, constant availability and pricing updates between all connected OTAs can be a problem, and may even lead to overbooking. In addition, OTAs can sometimes force hotels to accept cancellations that result in a potential loss of revenue.
• Lack of control is also something of an issue, since the hotel must fit into a pre-packaged format which sometimes isn’t able to properly reflect the uniqueness of its offering. The tendency is for OTA templates to produce a ‘one size fits all’ look. It’s easier for customers searching, but doesn’t always offer the best representation of the hotel. 
• And then there’s that commission… Ah, yes, it’s great to have a giant doing the heavy lifting of marketing, advertising and social media curation, but then comes that hefty slice of monthly commission. That can feel disproportionate when all an OTA appears to be doing is essentially just supplying a standardised shop window.

Finding the middle way

Big data, massive reach, a multi-lingual and always-on 24-7 platform: these are just some of the strong advantages for a hotel partnering with an OTA. And yet… What can be lost is the individual or even unique approach of a hotel’s own branding and marketing, and - for sure - that slice of commission that is automatically deducted by the OTA. In the recent past that’s just the way it was - ‘Can’t live with them, can’t live without them.’ However that has changed dramatically with the advent of powerful Property Management Systems. Now a hotel with a modern PMS can do many of the things previously only possible through the OTAs. This includes dynamic pricing to offer the best room rates to customers, at the best profit to the hotel. Bookings can be made by a guest through the hotel’s system, and paid directly through a payment gateway. All communication can be automated, but look personalised, from the initial booking confirmation, throughout a guest’s stay, and onwards through post-stay. What’s more, with the increasing use of chatbots on hotel websites, it’s easy and accurate to communicate with guests in a very wide variety of languages. That means a more user-friendly experience, and far fewer errors in registration details.

Building trust, enhancing reputation

A smoothly functioning PMS also frees up hotel staff to be much more customer-facing, while hugely speeding up repetitive processes such as check in. This all helps build trust with guests, and enhances the hotel’s reputation for efficiency and effectiveness. And as we know, people like to tell their friends and families of their experiences through a wide variety of social media. A great stay in a hotel leads to great guest reviews, and something which in the past was mainly curated by the OTAs can now be managed by hoteliers themselves.

And as for Big Data? Well, it’s all available to a hotel using a modern PMS, in just as much detail as only the largest OTAs were previously able to access and analyse.

A hybrid approach to OTAs

Let’s be clear, we’re not against using OTAs to attract business for hotels. The OTA ecosystem is trusted by guests, and is very well established. The ‘billboard effect’ is now well-documented, where guests do their ‘window shopping’ quickly and efficiently through OTA channels, but then revert to direct booking with their hotel of choice. Now the ‘muscle’ that only OTAs could previously flex can also be used very effectively by individual hotels. The smart thing to do is to continue exploiting the OTAs by linking the OTA and PM systems through integrations that facilitate seamless communication and data exchange between the platforms. Most PMS systems have a Channel Manager feature that acts as a bridge between the hotel's PMS and the various OTAs. This connectivity is crucial for efficient hotel operations and effective distribution of room inventory. By building up the strength and effectiveness of the hotel’s own operations, direct bookings can be taken efficiently, speedily and effectively. This means attending to and maintaining:

• A great, up to date website that is user friendly, shows your hotel in the best light, and appeals to your niche audience. (And if you don’t know who your niche audience is, that’s the number one priority to discover!)
• Having a chatbot - preferably one that communicates voice-to-voice - in a range of world languages, 24/7.
• Using a modern Property Management System which smoothly automates processes across every aspect of hotel operations, providing a swift, super-efficient but personalised experience for guests.
• Adding a suite of apps and other functionalities to the PMS to provide a huge range of other guest-oriented options from virtual concierge-type services, through touchless check in and check out, keyless room access, and in-room control of facilities and communication.
  

  We know what we're talking about

  From small beginnings some thirty years ago, OTA travel and hospitality channels have grown and sustained the hospitality market, providing ‘reach’ that could only be achieved by the largest of chains. That has now changed, with incredibly powerful Property Management Systems being available to hotels of all sizes, coupled with add-on Smart Solutions. We know this, because we are SabeeApp, makers of a cloud-based PMS designed exclusively for the hospitality industry. We have over ten years of global experience, and we’d really like to show you how that racks up, with a free, no obligation demo of our system. OTAs are here to stay, and that’s a good thing, but hotels can also become much more efficient and more profitable with a seamless PMS.