The uneasy relationship between Indian hotels and Online Travel Agencies (OTA’s) was recently in the spotlight. The apex hospitality industry body, Federation of Hotel and Restaurant Associations of India (FHRAI) sent a notice to leading OTA’s regarding their business practices. The letter addressed grievances from member associations about the distortion of market prices, demand for exorbitant commissions and listing illegal and unlicensed properties on their sites. This episode brings us back to the question about whether hotels should utilise OTA’s as part of their distribution strategy.
Despite the prevailing negative perception about OTA’s, there are valuable advantages for a hotel—particularly a new property not yet operating via word of mouth, or with a repeat clientele, or lacking an advertising budget—opting to list on an OTA’s. The first and foremost benefit for hotels is that OTA’s offer online visibility for your hotel and increases the potential of more people finding out about your services. Second, OTA’s offer you the flexibility to change your rates subject to demand and seasonality. This is important for hotels that are looking to sell rooms during off-peak periods. Another benefit of working with OTA’s is that hotels only have to pay commissions for rooms sold rather than a fixed cost. OTA’s invest significant amount of money to attract visitors to their platform, which increases the exposure and reach for hotels across multiple channels / geographies. After shortlisting a hotel on an OTA’s, customers tend to visit the hotel website to learn more about the hotel’s services, location, etc that increases the possibility of direct bookings on hotel website.
Compared to the major markets like US (46%), European Union (41%) and China (25-30%), online penetration in hotels in India is significantly low at 10%-15%. This number will increase in the coming years as customers become more comfortable with online booking due to ease of access to smartphones and high speed internet. Hotels should work with revenue management experts like Revnomix Hotel Data Analytics to devise an optimal distribution strategy that includes direct bookings and OTA’s business.
Most hotels, especially independent hotels, lack the resources or knowledge to accurately position the property on OTA’s to generate optimum occupancy and revenue. As part of the online revenue optimisation service offered by Revnomix, our dedicated hotel data analyst will work with the hotel to implement and execute pricing, positioning and performance monitoring processes on a daily basis. The Hotel Data Analyst will:
1. Daily hotel, market and competitor data analysis
2. Provide pricing recommendation for a 90 day period and implement dynamic pricing
3. Maintain rate parity across all OTA’s channels and the hotel website
4. Periodically update hotel information and pictures on OTA’s channels to improve the hotel ranking
5. Monitor hotel’s booking pace for a 90 day period
6. Analyse hotel’s performance and provide details reports to the hotel senior management to take informed decisions.
To summarise, a carefully devised distribution strategy will enable hotels to extract maximum benefit from OTA’s.
Contact us via our website to schedule a demo and discuss how our services can improve online occupancy and revenue growth for your hotel.