A recent study published by global hotel consultancy HVS revels that the major OTAs; Priceline, Expedia, and such have catapulted their dominance in the market throught acquisitions of regional agents and specialized distribution. Today Priceline controls 62% of the European market and Expedia has approx. 70% of US market. The HVS report cautions that the trends makes Hotels More Vulnerable to Distribution as Hotels reliant on bookings from OTAs may soon have just a couple of these distributors to work with and terms and commissions are likely to get more onerous.
HVS says that “while OTAs offer a number of advantages to hoteliers including a wide, multi-national reach and big marketing budgets, the commission rates of anything from 15% up to 30% are a heavy burden on hotel profit margins.”
HVS also warns that OTAs are also launching their own loyalty programs which will further negatively impact the growing trend to favour hotel website and book direct. This says HVS is “taking them into a head-to-head battle with hotel group loyalty schemes and threatening one of the unique selling points some hotel brands offer their customers.”
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The report concludes that “hotels should aim for a healthy balance between OTA bookings and bookings from their own website, making sure they maximize their website bookings by making their site as up-to-date, attractive and easy-to-use as possible.”
For more on how to enhance hotel direct bookings and build brand loyalty with straetigmessaging and effective sales systems see our previous blog THe move to direct bookings >>>>