Channel
Surfing
OTAs remain a growing — albeit inordinately expensive — part of the booking equation . How hoteliers navigate these waters — and stay afloat — remains the great challenge of the dot-com domain .
Contributed by Brendan Manley
For some hoteliers , working with online travel agencies ( OTAs ) can seem like cutting a deal with the digital devil , with stakes like rate and brand integrity dangling over the flames . But it doesn ’ t need to be : Hotels can maximize using these necessary distribution evils , without forfeiting one ’ s soul ( a . k . a . brand . com ) in the process .
Although Smith Travel Research ( STR ) says OTAs contributed just 8 % of total U . S . rooms revenue in 2011 , it was still US $ 4.2 billion . Hotels paid OTAs US $ 2.7 billion in commissions in 2010 , according to the recent “ Distribution Channel Analysis ” by STR , the American Hotel & Lodging Association ( AH & LA ) and the HSMAI Foundation , while out-spending hotel brands 2-to-1 in 2010 television ads , and nearly 4-to-1 in paid online search advertising .
A hotel chain ’ s own direct channels ( voice / CRS , brand . com and propertylevel bookings ) still accommodate the lion ’ s share of room nights ( 81 % in 2010 , according to STR / AH & LA ), followed by the GDS , which contributed US $ 6.2 billion in rooms revenue in 2011 , for roundly
12 % of the total , but OTAs clearly have a dedicated and growing user base . Meanwhile , OTA commissions are often as high as 25 %. Contention between hotels and OTAs generally begins there .
“ The industry prides itself as a directdistribution master ,” says Max Starkov , president and CEO of Hospitality eBusiness Strategies , New York City . “ Unfortunately , the Internet happened and hoteliers lost their grip , and that ’ s what allowed powerful online intermediaries to occupy an abnormally high distribution share .”
56 HOTELS April 2012 www . hotelsmag . com