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Hotels + OTAs: A Love-Hate Relationship That Needs to Change – Image Credit Cendyn
Online travel agents (OTAs) have been made the arch-enemy of hotel direct bookings – a narrative we’ve seen across the sector due to the volume of bookings and high commission costs they command. But if hotels can reframe their thinking, OTAs are a powerful and positive part of the Find, Book, and Grow strategy.
Hoteliers have sought to improve their direct booking performance for years. The advancement of OTAs took the rug from under direct bookings, and yet today the ideal distribution mix – according to hoteliers – places two-thirds of bookings from direct channels.
Despite hoteliers making efforts to capture direct bookings – through digital marketing, loyalty programs, and investing in direct booking technology – many travelers continue to book via OTAs.
Since OTAs will continue to be a core part of travelers’ booking process, hotels are missing a trick if they consider them adversaries. There is a smarter way to genuinely secure a stronger future and improve the OTA partner relationship.
The influence of OTAs
According to the h2c Hotel Direct Booking study, 36% of hotel room bookings were made via an OTA in 2023 versus 21% directly via a hotel’s Internet Booking Engine (IBE). The proportion of OTA bookings has remained higher than IBE bookings since 2019, indicating that OTA booking rates won’t decline any time soon.
There are other reasons why OTAs aren’t going anywhere. New DMA legislation is giving OTAs greater prominence, especially in Europe, due to their deep market budgets. Research also shows that 70% of travelers would book via an OTA instead of directly on a hotel website if the price was the same, due to the security, convenience, loyalty discounts, and credible online reviews available. Furthermore, a study by Expedia found that four out of five online bookers visit an OTA at some point before booking, even if they actually book elsewhere.
According to hoteliers, OTA competition remains the top barrier to hotels achieving direct sales – and this sentiment was the same in studies done in both 2020 and 2024.
But what if hotels stopped viewing OTAs as competitors?
OTAs get guests through the door
Compared to hotels, OTA budgets for marketing, promotions, and gaining visibility on Google are incomparable. In 2023 alone, Expedia Group and Booking Holdings reported the highest figures, spending roughly US$6.9 billion and US$6.8 billion on marketing, respectively. Hotels tend to spend 5 to 15% of their total revenue on marketing – which rarely reaches anywhere near the heights of these OTAs.
OTAs also have the budgets to invest in getting the customer booking journey absolutely right, making it fluid and slick. And they have deep enough pockets to continually invest in the latest AI developments to support the guest booking journey.
Evidence suggests hotel direct bookings are increasing over the coming years. Therefore hotels cannot negate a direct strategy – enabling and capturing direct bookings, particularly from travellers preferring direct bookings and from returning guests, will make all the difference in profitability.
After all, hotels will struggle to make a serious investment that’s on par with the OTAs. The key though, is to leverage OTAs to get guests through the door to your hotel. And then maximize every opportunity to convert them into guests who book directly in the future.
Shift your marketing effort
This shift in focus requires a good creative strategy – finding a narrative that resonates with your audience to connect with them on a deeper level. And it demands a focused data-informed digital marketing strategy, powering up your tools to develop a full-funnel audience engagement strategy that works for your hotel’s unique digital roadmap. This should incorporate remarketing to guests originally acquired through OTAs.
Investment in technology to support seamless direct bookings is key for being on the front foot when it comes to emerging trends. These include the strong role of mobile bookings and the need for excellent user experience on mobiles, especially since 70% of hotel traffic now comes from mobiles. The use of AI in hotel IBEs is expected to roughly double over the next few years, with the highest growth potential clearly in the area of personalized bookings.
Finally, there’s a need for more collaborative working between revenue, commercial, and marketing teams to ensure the relevant skillsets are applied to the growing technology and data-focused approach needed for improving profitability.
Hotels can outperform OTAs
Crucially, none of this requires the multi-billion dollar budgets the OTAs have. This is a smarter strategy that necessitates joined-up thinking and delivering exceptional hospitality on-property. After all, OTAs will never have a comparable opportunity to connect on a human level like hotels do.
The days of viewing OTAs as opponents are numbered. By making OTAs a part of the strategy instead, hoteliers can initially Find customers through OTAs. They can improve their direct booking capabilities to capture the future Book stage of the journey. And they can nurture the customer relationship once they’ve been acquired from the OTA, in order to Grow future loyalty and profitability. After all, even the former CEO of Expedia Group once said: “If they come back to us again, shame on you.”
Nicola Graham
Nicola is the Chief Marketing Officer at Cendyn. With over 14 years’ experience in the public relations and marketing fields, Nicola has refined her marketing expertise in the hospitality technology industry over the past seven years. In her role at Cendyn, she leads the marketing and sales development team to drive demand generation, awareness and maintain presence as the leading CRM, sales and revenue strategy provider for the hospitality industry. Prior to her time at Cendyn, she managed accounts at global public relations agencies Weber Shandwick and Cohn & Wolfe. Following her time there, she led marketing efforts for hotel customer relationship management (CRM) platform Guestfolio, until its acquisition by Cendyn in 2016. Connect with Nicola on LinkedIn.
About Cendyn
Cendyn is the leading innovative cloud software and services provider for the hospitality industry. Their software solutions drive sales, marketing, and revenue performance for tens of thousands of hotels across the globe with a focus on integrated hotel CRM, hotel sales, and revenue strategy technology platforms. The Cendyn Hospitality Cloud offers a complete set of software services for the industry, aligning marketing, sales, and revenue teams to optimize their strategies and drive performance and loyalty across their business units. With office headquarters in Boca Raton, FL, USA, and offices around the globe in Germany, Singapore, Thailand, and Japan, Cendyn proudly serves customers in 143 countries. Their software solutions deliver billions of data-driven, personalized communications on behalf of their customers every year. For more information on Cendyn, visit cendyn.com.
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