The most significant challenge for hotel distribution today is finding the right balance between direct channels and OTAs. Surprisingly, the answer to this predicament may lie with sales agents.
Although OTAs are useful for extra exposure, they can be inconvenient for the supplier. This is for a number of reasons, including the distribution of their marketing efforts; the ungovernable nature of their business models; and their ownership of customer data. Therefore, more companies are focusing on direct channels and building relationships with traditional sales agents to bolster revenue.
Why OTAs present challenges
Although OTAs can be convenient for the customer, they present obstacles to suppliers. These include:
1. They focus marketing efforts on their own brand
OTAs invest a large amount in digital marketing. This creates a ‘billboard effect’ where consumers associate the entire industry with a few hyper-visible brands. Although the majority of travelers will trawl through the enormous list of hotels presented by OTAs, they rarely familiarize themselves with the individual brands. As such, OTA brands become the most recognized trademarks as opposed to hoteliers who sell through them.
2. They can change the rules
As the market expands and transforms, OTAs alter their business model. According to Hotelogix, OTAs were offering large hotel chains lower booking commissions while smaller independent hotels were paying higher rates. The reasoning behind this maneuver was that the larger hotels had more rooms, thus enabling them to pay higher commission to the OTA by volume. This leaves smaller hoteliers at a disadvantage, especially as the more commission the hotel pays, the higher up the OTA ranking the property will appear.
3. Suppliers do not own their customer data
Last year, hotel room aggregator Booking.com stated that they will no longer provide hotels with customer contact information. This information is crucial to smaller businesses as often the best relationships are formed before the guest checks in. For instance, offering directions, a list of services, or special offers in advance of their stay can be central to a positive customer experience. Therefore, losing control of the customer’s data means losing the personalized service that is unique to independent hoteliers.
How sales agents can increase direct bookings
Large hotel brands such as Hilton and Marriott have begun investing in campaigns to recuperate some of the market share from OTAs. These marketing campaigns aim to remind travelers that they can benefit from brand loyalty. As a result, one of the most powerful ways to encourage direct bookings is to launch a loyalty program. By enticing customers on to the hotel’s website with exclusive offers, clients can be drawn away from OTAs and towards a hotel’s direct channels.
However, there is one route to direct bookings that is making a remarkable comeback – travel sales agents. After an extended period where traditional sales agents were losing a large portion of their business to online booking, these services are enjoying a revival. This is largely because many customers are beginning to find the sheer volume of options online overwhelming. Subsequently, they are forgoing the comparative shopping experience and seeking a customized booking experience.
With a traditional travel agent, the hours trawling endless lists on OTAs are eliminated, saving the customer time and energy. Surprisingly, Millennials – who have previous favored OTAs – are increasingly turning to travel agents. In a recent survey, 34% used a travel agent and an additional 39% planning to use one in the future.
By and large, these travelers are looking for memorable experiences. As such, they are increasingly turning to agents who specialize in a specific niche. These agents are considered market experts, with inside information on the best flights, attractions and accommodation. In fact, 60% of Millennials said they are willing to pay more for expert knowledge, and 83% use agents because of this unique offer.
Connecting with travel agents
Although OTAs remain important to a hotelier’s exposure, it is certain more traditional holiday booking journeys are having a renaissance. Travel agents are increasingly partnering with hospitality providers to offer clientele tailor-made packages at special rates. Through this channel, hotels’ are regaining control of their marketing, business models and customer data. As such, a synthesis of old fashioned customer service and innovative data analysis seems to be the future of hotel distribution strategy.