Insights from Thadani: Combating the issues stemming from the dominance of OTAs

In ‘Finding the balance between OTAs and Hotels’ based on ‘The Ultimate Indian Travel & Hospitality Report’ provided by Hotelivate to Hotelier India, in which Manav Thadani of Hotelivate published his insights – ‘The Mighty (OTAs) and the Influential (Hotels): Finding Their Balance’, we talked about the fierce battle between OTAs and hotels for a higher share of the consumer’s wallet. In ‘When OTAs took over from hotels’ we discussed how hotels started to feel the pinch as OTAs grew stronger. Here, we look at Thadani’s insight in combating the issues stemming from the dominance of OTAs.

Some of the traditional hotel chains have launched aggressive marketing campaigns to reclaim room bookings. First among them was Marriott with its “it pays to book direct” campaign that started in 2015. Subsequently, Hilton launched its largest marketing campaign ever – “stop clicking around” – in 2016, offering benefits for booking direct, such as reward points that can be used for free room nights, complimentary Wi-Fi, room selection via a digital floor plan and a digital key through the brand’s mobile app. IHG followed suite, promoting “your rate”, a special direct booking rate for the chain’s loyalty program members. Hyatt too introduced exclusive discounts for loyalty program members who booked directly with the company’s website or App. Simultaneously, almost every major hotel chain in the world revamped its loyalty program aimed at offering more value to the customer.

The key to a peaceful coexistence lies in achieving a healthy balance. Some fundamental points to consider in this regard are:

Focus more on customer loyalty than on customer acquisition: Hotel chains do benefit from direct bookings; however, marketing campaigns to enable the same require huge investments, and in that area, OTAs surpass hotels by a substantial margin. Hence, instead of focusing on getting the customer to book on ‘brand.com’ the very first time itself, hotels should aim at getting them to book directly in the future as well.
Embrace technology with open arms: OTAs are far ahead of hotels when it comes to adoption and innovation of technology. In fact, most of the disruptions seen in this sector of late are technology led. Even with more robust data analysis, cloud technology, better integration between various sources of customer data and more advanced customer-facing touchpoints, such as the brand website, mobile App etc., hotels still have a lot of catching-up to do.
Improve the direct booking experience: Keep the website updated and simple right from the type of rooms offered and their pricing to the navigation, images and amount of information sought. The more complex, confusing and time consuming it is for a customer to make a booking, the lower is the conversion rate.
Use social media more actively: Rather than getting into a price war with the OTA, innovative packages, discounts and promotions should be offered to members/followers on Facebook, Twitter and the like
Dynamic pricing: This refers to modifying the price of the room in real-time based on factors such as demand and availability of inventory. Typically, when demand is low, the price is lowered to attract guests, and when the demand is higher, the price increases. OTAs enable dynamic pricing strategies of hoteliers.

Online travel agencies are a great source for a new customers as well as those who simply prefer to use them irrespective of what the branded hotel has to offer. Hotels have leveraged this scale in the past, and should continue doing so to achieve the optimal business mix.