Don’t Get Left Out: Benefits and disadvantages associated with OTAs for independent hotels

For some independent hotel operators, the mention of online travel agencies (OTAs) stirs up a mixed bag of emotions.  OTAs provide online marketing and booking technology that help level the competitive playing field for independent hotels, but these tools and increased online exposure come at a price some operators feel is too costly.  With the growing importance of online booking, hoteliers who need to reach more travelers, but aren’t keen on the required financial investment, are faced with challenging decisions when it comes to OTAs.  To help independents analyze their value, here are some benefits and disadvantages to think about:

Benefit: Increased occupancy

“Being connected to OTAs is incredibly important for my hotel. About 50% of my reservations come from OTAs, and innRoad’s connection has been running smoothly.” – Michael Phillips, Island House Hotel

Increased occupancy is the most important reason why independent hotels connect to OTAs.  Without their broad online reach, most independents simply wouldn’t have the resources to sustainably increase occupancy and stimulate revenue growth over the long-term.  As lodging industry competition heats up from chains and home-sharing services, independents must continue to gain ground in the marketplace.  To achieve this, they must be equipped with the tools and technology needed to continuously drive bookings – a task made easier with OTAs.

Disadvantage: Fewer booking channels

Simply put, if travelers can’t find a hotel, they can’t book its rooms.  This is the disadvantage independent hoteliers face when they decide not to list on OTAs.  Listing on OTAs provides independent hotels with more opportunities to interact with travelers who are initially unfamiliar with their property, but discover them via OTA sites like Expedia, Travelocity, and Hotels.com.  Most importantly, OTAs allow independents to capture bookings directly through their site, eliminating the need for travelers to click away and potentially never complete their reservation.

Benefits: Cross-marketing and cross-selling special packages

OTAs provide convenient, one-stop shopping for travelers, allowing them to purchase bundled special packages that include a personalized blend of lodging, flights, rental cars, cruises and local activities.  By cross-marketing and cross-selling related travel services, OTAs create unique booking opportunities for independent hotels that would otherwise be too challenging to craft and offer directly to travelers.  OTAs are designed to make travel planning easier, so businesses like independent hotels can focus their energy on taking care of travelers once they arrive.

Disadvantage: Missed marketing opportunities

Having the ability to efficiently and cost-effectively market room nights is a goal all independent hotels should work towards.  We know that every hotelier defines “efficient” and “cost-effective” differently, so this is why some opt to leverage the marketing power of OTAs and others do not.  However, there is little debate about the marketing abilities of OTAs – unlisted hotels will be hard pressed to achieve the same digital reach without their help.  Strong marketing tactics will always sell hotel room nights, but it’s up to independent hoteliers to determine if the savings from forgoing OTAs outweigh the front-end investment and back-end return from other marketing strategies are worth it.

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