REPORT FROM THE U.S.—Hoteliers should leverage online travel agencies to grow rates, representatives from OTAs and other experts said during “The role of OTAs in your distribution strategy,” a webinar presented by HSMAI, HotelNewsNow.com and STR.
Hotel companies should work cooperatively with websites such as Expedia, Priceline and Travelocity to grow not only occupancy but also revenue per available room and average daily rate, said Bobby Bowers, senior VP at STR.
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Bobby Bowers |
While occupancy rose approximately 4% during 2010 (as of October 2010), ADR dropped 1.4% from October 2009 to October 2010, according to STR data. “The absolute ADR will not recover for at least two years,” Bowers said.
Hoteliers often blame OTAs for putting downward pressure on ADRs, but OTA representatives said that is not necessarily the case. “Those folks in 2010 that had a greater portion of their rooms … on discount and value-adds saw much greater room value growth in 2010 than those that did not. In addition, the higher the discount, the more the room growth rate was,” said Jake Stein, director of global strategic accounts, Expedia Partner Services Group.
In addition, travelers who purchase packages with OTAs—such as hotel plus car or hotel plus air—stay twice as long as those who do not purchase packages, according to Stein.
OTA executives said they want to work closer with hoteliers to boost ADR and increase promotions. “You can use … value-adds such as parking and breakfast—anything that will get customers to book at those higher rates,” said Jason Sciarillo, director of Hotwire.com’s advertising sales team.
Distribution management
Hoteliers, in turn, have a vested interest in improving their relationship with OTAs. Thirty-eight percent of hotel reservations are booked through OTAs, according to 2010 PhoCusWright data. In addition, 3% of hotel reservations will shift from offline to online reservations by 2012, according to PhoCusWright.
“It is really important to understand how to manage your channel mix. The first and biggest thing is making sure you have the content and inventory to answer all types of customers,” said Louis Bouchayer, senior director, e-distribution, Wyndham Hotel Group.
To that end, Wyndham ensures its message is consistent and inventory is intact across various distribution channels. “If we look at the studies, consumers are shopping a lot of different websites—as many as three to seven—before making a purchasing decision,” Bouchayer said.
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Jay Hubbs |
Wyndham develops relationships with various OTAs and travel websites to cater to travelers who are not brand loyal. “We have relationships with the metasearch websites such as Kayak.com and also affiliate networks that have the more regional websites. These lead aggregators are going to allow us to create new customers and bring existing customers back to us,” Bouchayer said.
Corporate travel agents also are shifting more to online booking tools, so Bouchayer recommends hoteliers “take loading information into GDSs very seriously. The GDS has to meet their needs and be located in the right area.”
To fully capitalize on OTA distribution, OTA representatives encouraged hoteliers to work closely with their staff on promotional programs and strategy. “Roughly 30% of our hotel partners produce 70% of our business. They are on the phone most with our market management team and we are building long-term plans based on their needs,” Stein said.
Using relatively new forms of marketing with OTAs also is essential to boost sales, OTA executives said. “Hotwire launched its application a few months ago … as did Priceline. We see the searches increasing,” said Jay Hubbs, director of hotel supplier relationships for Hotwire.com. “It is fundamental for hotels to understand how these different models work.”
Advertising strategy
OTA executives recommended a variety of strategies for advertising hotel deals. One way is through travel e-newsletters. “Travelzoo and Travel Ticker now have more than 30 million people who follow their e-newsletters,” Sciarillo said.
To ensure your deals on OTAs are most effective, Sciarillo suggested the following:
- Use attention-grabbing headlines that gets travelers interested.
- Offer a lot of flexibility in booking time when forming the deal (60 days is optimal).
- Ensure the content of hotels’ offers is “newsworthy.”
“The ‘wow’ deals work best,” Sciarillo said. “They have to be attention-grabbing, such as day one of a big sale, a new build, or anything that is really interesting.”