The relationship between OTAs and hotels has always been complicated. Ever since the launch of the first online travel agency — Travelocity — all the way back in 1996, hotel owners and managers have experienced both the big benefits and deep pitfalls of listing their properties on these massive websites.
Early on, hoteliers all over the world — from small, independent property owners to managers of global brands — recognized the power of the web and realized that OTAs provided a fantastic way to get in front of potential new guests and ensure room occupancy remained high.
However, as time went on, the dynamic between hotels and OTAs shifted and, in many ways, grew more acrimonious.
Today, many hotels are declaring their independence from the OTA industry and taking more direct control of their marketing and guest booking initiatives.
In 2018, OTAs accounted for 51 percent of all online gross bookings in the American hospitality industry. However, due to a variety of factors, such as hotels investing heavily in their own websites and changing consumer behavior due to the COVID-19 pandemic, today’s trends show that this may have been the OTA industry's zenith.
At first glance, the clawing back of one percent of online gross bookings through direct channels may not seem like a sea change. But make no mistake, this is a watershed moment.
Why Some Hotels Are Abandoning OTAs Altogether
As the OTA industry expanded and evolved, hotels that relied on them slowly but surely lost control of certain aspects of their business and were forced into faustian bargains.
Throughout the first two decades of the 21st century, it is true that OTAs continued to provide a scalable way to ensure travelers found a hotelier's property. But at what cost?
There are three main pain points that hotels experience when working with OTAs.
OTAs take a cut of revenue for every room that is booked through their service. Generally this commission is between 15 and 30 percent of the total cost of the room.
The practice of price parity, which most OTAs enforce on the hotels they list, requires that property owners and managers display the exact same price point on their websites that is shown on the OTA. No discounts or special pricing allowed.
Most OTAs prevent hotels from collecting valuable guest data (e.g., email address, phone numbers, etc.) during the booking process. This makes it much more difficult for hotels to create guest loyalty programs and forge personal bonds with their patrons.
In an industry that has been rocked by COVID-19 like almost no other, some hoteliers have now decided that the time is right to remove themselves from OTAs and take back full control over the entire guest journey — from reservation to checkout.
Currently, the move away from OTAs is strongest amongst luxury properties, as they often have unique selling propositions and offers that consumers directly seek out. However, it will be interesting to see if other types of hotels find innovative ways to follow suit in the coming years.
How Are Hotels Attracting & Engaging With Guests Without OTAs?
Hotels and resorts that remove themselves from these massive online listing services are taking a variety of steps to ensure rooms remain full. Many report investing heavily in their own digital presence across the web.
Here are just a few examples of where hoteliers are deploying their efforts to attract guests sans OTAs:
Websites are being updated to offer a streamlined booking process.
Blogs are being built to help boost organic search engine optimization (SEO) and ensure properties are found on search engine results pages (SERPs).
Hotels across the world are claiming their Google Business Profiles to ensure they appear in local search and Maps results.
Property owners and managers are leveraging new technology like contactless check-in to streamline the guest journey and collect valuable personal information.
And many properties have made ample investments in social media profiles and pay-per-click ad campaigns.
How a Luxury Resort in the California Desert Deserted OTAs
To see how this transition away from OTAs is playing out in the real world, the Canary team reached out to Danny Min, Director of Operations at Two Bunch Palms Resort and Spa.
Min recently made the decision to completely remove Two Bunch Palms from all online travel agencies and was happy to share his experience.
Below is the conversation we had with Min about Two Bunch Palms’ journey. This interview has been lightly edited for clarity.
When was Two Bunch Palms founded?
“Two bunch palms was founded in 1940 as a resort known for its mineral spring waters.”
When did Two Bunch Palms start using OTAs to attract guests?
“Two Bunch Palms started using OTAs in the mid 2000’s as it became “normal” for all properties to partner with OTAs.”
When did Two Bunch Palms get off of OTAs?
“We have been off of OTA’s since March 2021.”
What prompted this decision?
“We made a concerted effort to engage with our guests to discover how they found us. We realized that many repeat guests were searching solely for our property on all reservation platforms. Even our first time guests — who were directed to us by previous guests — were searching specifically for our property when using OTA platforms.”
What were you hoping to achieve by getting off of OTAs?
“We had two main goals when the decision was made to get off OTAs. First, we wanted to allow our guests and staff to have the ability to modify reservations without the run around. When last minute date changes or modifications to rooms were made, we often needed to get the third-party partner involved. This caused an added frustration for guests who correlate the entire reservation process with Two Bunch Palms. Secondly, the amount of revenue lost via commissions was adding up to the total revenue of our smallest outlets. Being a smaller boutique property with 65 rooms, our rates were higher compared to my previous places of employment.”
Since getting off OTAs, what are the main channels through which Two Bunch Palms books reservations from guests?
“Two Bunch Palms sole channel for booking is now our website, www.twobunchpalms.com. We’ve made it streamlined for our guests to book directly with us by adding a chatbox to the site and utilizing text messaging to engage with guests directly.”
How has the decision to get off of OTAs benefited Two Bunch Palms?
“We have seen increased positive feedback from our guests due to the ease of booking a room, as well as higher levels of revenues. It also alleviated the staff from monitoring multiple extranets for incoming reservations from various OTA channels.”
What do you think enabled your property to make this transition successfully?
“I think the challenge is truly understanding your guests. We are fortunate to have unique amenities that our guests seek. We also are not in a ‘corridor’ or area with other properties that provide the same level of service and amenities. Providing an unique product has been a big factor in our successful transition away from OTAs. Lastly, we have a tremendous team who exemplify true personalized service with great knowledge of the property and anticipate the guests’ needs which has been a vital piece of our success.”
Are there any benefits from OTAs you miss?
“I believe in some areas OTAs are still a necessity — especially if you are in an area with other properties that provide a similar level of service or features. Having said that, I don’t think I can think of anything. I wouldn’t say there are any real benefits we miss out on now that we are off of OTAs.”
What would you say to other properties that are thinking of getting off of OTAs?
“I would say engage with your guests to see how they heard about you. And see if there are any incentives that OTAs offer them. If they do, you may want to consider implementing a program that mimics that offer.”
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