Monday, February 16, 2015

OTAs, Friend or Foe? How are They Killing your Direct bookings?



OTAs are dominating online travel booking, in many cases accounting for 76% of hotel bookings online and in some cases a lot more.

In this reality, many hotels rely on OTAs for booking rooms, which raises 2 questions:

What is the cost?
Is there alternative?

-Before answering these questions, for those who don’t know, let’s take a closer look at a some OTA facts:

Booking.com, owned and operated by US based Priceline. 
Booking.com offers online accommodation booking. It claims to have over 540,000 properties globally under contract and that it deals with more than 700,000 room nights reservations per day. In 2013, it accounted for more than two thirds of Priceline’s revenue. Booking.com is available in more than 41 languages [Wikipedia]
Some more figures:
Booking.com’s parent Priceline.com, with a US$ 52.79 Billion market cap, has an estimated annual revenue of US $8.5 Billion for 2014 [businessweek.com]
Expedia: with a US$ 10.56 Billion market cap, has an estimated Estimated annual revenue of US $5.7 Billion for 2014 [businessweek.com]
Orbitz, with a US$ 1.01 Billion market cap, has Estimated Estimated annual revenue of US $937 Million for 2014 [businessweek.com]
-Looking at these numbers, it is clear OTAs are highly specialized and effective online booking machines, backed by the financial strength a few hotels posses. Competing head to head with them on online traffic, at least in most cases, would be in the worst case scenario a suicide, otherwise a sum zero game.

Industry Facts:
Most shoppers BEGIN their shopping for hotel accommodations at the OTAs, who happen to control a substantial percentage of travel and hotel traffic online [=fill top search results] At 85%, PRICE is the most important factor in selecting a hotel.[according to a Google research] 76% of online bookings happen through OTAs leaving only 24% who book directly. [according to a wihp reserch] 52% of shoppers VISIT the Hotel’s website as part of their research, PRIOR to booking [according to a Google research]

Looking at both the OTAs and Industry facts, brings me back to the 2 questions at the top of this post,

Q: What is the cost?
A: OTA’s charge between 15-22% (And sometimes even more) commission for every booking, that translates to a big monthly check hotels cut and send to the likes of Booking.com, Expedia, Orbitz etc.

Q: Is there an alternative? 
A: Yes, Get More Direct Bookings
76% of online bookings happen through OTAs however 52% of shoppers will visit your hotel’s website after seeing you on an OTA and before making their reservation elsewhere. Why not stop them on your website and make them buy directly from you? Why pay commissions to OTAs for indirect booking?

Solution:
BookingDirection’s technology works on your Hotel’s website to increase direct bookings by providing online shoppers the OTA web experience and price transparency they have grown to like — e.g. showing them “all” the prices in the marketplace, and proving that the hotel has the lowest price. In so doing, the need to comparison shop is eliminated.

Bottom line, EARN MORE by, increasing the percentage of website shoppers booking directly with you and reduce commission payout to OTA’s.

We’re in closed beta, helping hoteliers to get more direct bookings. Join the waiting list and we’ll contact you once additional hoteliers are added.

Image by: haley7

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