On the surface, it would seem that online travel agencies (OTAs) directly compete with independent hoteliers — but the reality is they often become a valuable partner.
Independent hoteliers must create partnerships with OTAs that require them to pay commissions when their rooms are sold, but they appreciate that their properties would not be discovered without the incredible visibility of the OTAs.
OTAs have massive marketing budgets, and they dominate the search engine results page for just about any travel-related keyword. You can’t beat the OTAs at the online marketing game, so independent hoteliers opt to work with them as a distribution partner.
This might leave you wondering, what do independent hoteliers really think of OTAs? Do they resent these third party distribution agents, or do they appreciate the relationship that develops?
Recent Phocuswright research, co-sponsored by SiteMinder, reveals the true feelings behind this love-hate relationship.
Independent hoteliers in Europe
In Europe, independent hoteliers and corporate hotel chains have one thing in common: both types of hotel properties rely heavily on OTAs to drive bookings.
- Independent hoteliers in Europe have a slightly higher reliance on OTAs than their chain counterparts (27% vs. 23%).
- In 2015, 71% of online bookings in Europe independent hotels were from OTAs. Around a quarter of bookings come from the independent hotel’s website, and many of these were mobile bookings.
- Booking.com represents roughly half (49%) of all independent properties’ OTA business in Europe. TripAdvisor ranks as the third most effective channel for all European properties, with 62% placing it in their top two.
This proves that the OTA relationship is necessary, particularly in Europe, but that doesn’t mean that independent hoteliers have to like it.
Independent hoteliers in Europe told the Phocuswright researchers that they had to form distribution partnerships with OTAs to remain visible online and increase their bookings. However, many of them reported that they do not trust OTAs and that they feel resentful about the commissions that they have to pay to these booking giants to stay relevant online.
Independent hoteliers in the United States
Among independent hotels in the United States, OTAs are an important player in the online travel market:
- 52% of gross online bookings are expected to come from OTAs by the end of 2017.
- Independent hoteliers in the US are far more reliant on OTAs than chain hotels – the data revealed a 25% vs. 15% split.
- Online distribution via OTAs among independent hoteliers in the United States is split across Expedia, Booking.com, and Orbitz.
This reliance leads independent hoteliers to be frustrated by the dynamic with OTAs. Many of them report that the lack of control, as well as the cost of distribution, makes OTAs difficult to work with on a regular basis.
As a result, independent hoteliers in the United States are making increased efforts to drive direct bookings, and place their own websites as the most important distribution channel that they have. About 67% plan to increase their direct distribution in the next two years.
The verdict? It’s all about balance
Independent hoteliers can’t solely rely on OTAs, just as they can’t focus simply on their own direct booking strategy.
While direct bookings are clearly worth striving for, having a holistic mix of distribution channels is the healthiest way to tackle distribution.
You can also access our eBook on your evolving direct booking strategy by targeting future guests: