Doing business with OTAs has become a necessary evil in today’s travel industry landscape.

February 9, 2020

In Europe and America three OTAs control the market. They control a quarter of overnight bookings
and the share looks to continue growing. The monopoly or fragile oligopoly in the travel industry
has shifted the balance of power away from hotels in particular independent hotels. This unfair
dominance is becoming a disaster waiting to happen in the travel industry with profit draining
commissions stopping hotels from investing. We know that investment in better hotels leads to
happier guests and better long term prospects. The average commissions range between 18% and
25% which cuts deep into profit and lowers the likelihood of investment. Usually there is no
negotiation on commissions creating more inequality in the industry.

Moreover, there is no room to showcase hotels offers. OTAs are more interested in who’s price is
the cheapest and fail to offer users the opportunity to consider other factors. Hotels risk losing their
unique selling points as these features aren’t rewarded through OTAs. If you’re not willing to drop
your prices you’re at a disadvantage. OTAs now control accommodation providers backing many
hoteliers into an uncomfortable and small corner.

How can hotels adapt or even better strengthen their position in the online bookings industry?
It seems a daunting task to think about how businesses can lessen their dependence on OTAs given
how rapid their growth has been. However, accommodation providers shouldn’t lose sight of their
strengths. Customers can get the best deals directly with better perks. The benefits of booking
direct are not advertised enough, but they should be with both happy guests and businesses being
the outcome. Now the question is how to get this message out to the world. The first thing is that
hotels need their own strong distribution channels. Managing a functional and well designed
website with a well-integrated booking engine doesn’t need to be difficult and often works out
cheaper than paying out OTA commissions. More still it brings back control to the accommodation
providers. The next step is a modern and well-crafted marketing campaign that showcases the
wonderful facilities, offers and selling points of hotels directing people back to the hotel website.

Being integrated online is a necessity for modern businesses, but it should be on their terms not OTAs. Hotels can make a difference and should be encouraged to do so!

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