Demise of the OTA
The online travel agents (OTAs) seem to have not changed any of their practices and I fear the latest bad publicity is another nail in their coffin.
Like other large corporates such as Tesco, you can get a bit big for your boots and feel invincible - until it all starts crashing around you. There was a time when OTAs were taking over the whole booking scene but with the recent demise of several OTAs such as LateRooms it’s clear their day has been had.
The campaign for guests to #BookDirect is massive and includes famous hotel groups as well as tiny B&Bs. The more consumers are educated, the more they use the likes of Booking .com as a search engine only, going to the accommodation provider's own website to actually book so that they get the best deal. There will come a point where most people know they’re better off by booking direct and so their only purpose is like that of Google.
OTAs are currently running scared - you can see their desperation tactics in undercutting each other by sacrificing commission for sales. As B&Bs, we all know where that gets you - just look at the likes of Blackpool. A successful business cannot survive on sales and racing to the bottom. Watch this space. My prediction is that Booking .com won't even exist in 5 years time.
The important thing as B&B owners is that you understand the OTAs and how to play them so you get business on your terms. You want to attract new business and don’t mind paying some commission but you don’t want too many so that you’re paying commission on rooms you could have filled yourselves. You don’t want to take part in extra discounts or offers unless you’ve fully costed your lowest sale price to still be making a profit. And for every OTA booking, persuading them to return even once will halve your commission rate between the two bookings, now making it a much more palatable amount.
Knowing which payment methods to accept so that they can’t undercut your own prices is important. You always want to appear with the best deal whenever prospective guests are comparing your site to OTAs. You want to be part of incentives like Genius on Booking .com without actually giving anything away, and you only want to be a preferred partner if there’s a reason to be. Your photos need to include your website somewhere and descriptions need to lead the guest to come to you wanting to know more information before booking.
If OTAs do disappear within the next few years, or radically change their modelling then you need a contingency plan if your business relies on them. For us, the proportion of OTA bookings is so reduced now that we could survive without them, and we only have Booking .com left anyway.
Unfortunately, Booking .com’s latest attempt to increase business is probably harming them even more. They’ve added literally anyone who rents accommodation so the likes of Joe Blogs who rents out his spare bedroom at £15 a night at a weekend is on there. Whilst they may feel this has worked for Airbnb, all it does is make their search engine less useful. I was looking for accommodation recently and you now have to add lots of filters just to be able to get back to “normal” accommodation. Giving me more choice when the 60% you’ve added are irrelevant to me is actually giving me less choice as I can no longer see what I wanted. When there’s so much choice, I may as well go back to a Google search instead.
Likewise, Google are trying to get in on the act by adding more detailed hotel information including availability but if I’m searching for something specific it’s just adding noise I don’t need. I personally don’t think it will take off fully.
In summary, use OTAs, but use them to your advantage. Most importantly, don’t rely on them. If your business would be in trouble if they all went bust tomorrow then you need to be doing something about it now. You need other ways to attract business. Your website needs to be amazing. You need to take control and manage your own business sources.
If you’re just starting out, then book onto my next training course where we discuss getting the best out of OTAs in detail. If you’re an established B&B or hotel, why not ask me to do some consulting for you? I can look at your business as a whole and help you reaslise a future without OTA dependence.