Rub your eyes and smell the percolator.
Why pay your OTA (online travel agent) 100% of their commission fees?…
…when there is a perfectly moral and legal hack that can get you as much as 33% off – immediately!
In fact, why not eventually get your OTA to pay you to be on their platform?
Enter: The Billboard Effect.
Now, I agree…
The title of this post is a little provocative, but I stress even now if you’re in any doubt…don’t be.
It is what it says.
You really are about to learn how to reduce your OTA fee by 33% (without disturbing your bookings pipeline).
In fact, you’re about to learn how to do MORE than that.
The eventual ROI on the strategy below will exceed 100%!
In other words,
The OTAs will pay you to be on their platform.
Again, totally legitimate, moral and not in anyway messing with your terms and conditions.
So, here it is…
Your current OTA situation
So, if you are in the holiday hospitality industry as a hotel owner/operator, B&B, cottage, even campsite business etc.
You’re most probably signed up with an online travel agent (OTA) who gives your business some online exposure.
This also is most probably where you’re getting most of your sales.
The great thing about being signed up to an aggregator OTA is the user base.
They’ve got a large volume of your potential market demand in one single place.
This means upon signing up you immediately tap into a ready supply of bookings – from day 1.
Well, as you already know…
…OTA subscription is bitter sweet.
You get access to the market, but it comes at a grave cost to your business profits (in some cases as much as 30% per booking), leaving you almost no gross margin at all.
So, what’s the alternative?
Do-it-yourself marketing, perhaps?
Not many hospitality businesses have the bravery to go it alone on the marketing front.
Huge upfront cost, no guarantee of bookings, time cost to manage, require in-house expertise or agency involvement.
But is there a happy medium?
You could always go with a few OTAs, spread the commission to bring down the overall average – and limit the cost damage.
Is there a better way?
The Billboard Effect
Now, for the close.
(And the best part it’s super simple.)
Cornell University research shows that large hotel brands experienced a 33% uptick of direct bookings by being listed with an OTA.
“[Because] about 75 percent of consumers who made reservations with a major hotel brand had visited an OTA in advance of booking directly with the brand.”
Chris K. Anderson, an associate professor at the Cornell School of Hotel Administration goes on to explain:
“Even though many guests book directly with the hotel brand, this study’s findings are similar to those of earlier studies which showed that being listed on an OTA site increased reservations through the hotel brand’s site. The findings in the report presented here underscored consumers’ reliance on websites when researching and booking their rooms, although non-direct channels still have some influence in lodging purchase decisions. In determining which web-based marketing efforts produce the best results, hotel operators should make sure their online presence is easy to find, is attractive, and stands up to the competition.”
So, in short – the professional advice is:
- Sign up with an OTA.
- BUT – heavily discount your commission costs, by converting your hotel website into a 1st class direct bookings engine.
(The OTA website literally acts as a online super-sized advert directing prospects to your hotel website. Your job is to make sure that when they hit your site, the book with you – rather than bouncing back to the OTA.)
Do this and sve instantly as much as 33% commission.
And having captured guest bookings directly, build a database for subsequent marketing promotion to further widen your margin and narrow down the OTA margin.