In any industry, a lack of competition can come with a decline in innovation and an increase in price. Because of this, there is nothing to incentivize OTAs to keep commission rates low. There is no need for them to introduce new products and services to the market. With only two major players left in the OTA space, Expedia and Priceline can make and play by their own rules.
Their almost complete dominance of this space can make it extremely difficult for new players to enter the field and remain competitive. They can’t outspend these giants for ad space, so gaining attention and acquiring customers through traditional marketing avenues can be challenging. This leaves the niche markets available, but companies like HotelsTonight and HotelsByDay are still having to compete against the billions of dollars in advertising power of Expedia and Priceline. So who can?
It’s going to take some very large players to disrupt the Duopoly that is Expedia and Priceline, and there aren’t many companies already poised to enter the field and make an impact.
The best course of action for any independent hotel is to focus on local marketing and drive guests to their direct channels. Reducing the overall dependency on these OTAs is important at any commission rate. Utilize the tools that already exist, but have been forgotten.
Regardless of how a guest books their first stay, how they book their next is still up for grabs. Seize this opportunity by building stronger relationships with your guests. Ask questions during their stay and find out who they are and why they are there. Guests celebrating an anniversary or a birthday are going to be doing the same thing next year and leaves the door open for a direct booking. Train the desk staff to take notes about the guests and ask for email addresses.
Don’t look at just the numbers from this time last year, look at the reservations too. Find out who was there and why, not just how much they spend. Use this information to develop packages and discounts tailored to specifically to your guests and their needs. This kind of information can be invaluable for the hotelier and something that the OTAs don’t have access to.
Taking the time to develop and maintain guest relationships is the best tool any hotelier has against the OTAs. If handled successfully, the commissions paid to the OTAs can be a one time customer acquisition fee and the hotel now owns the relationship and any future reservations from that guest.