Impact of OTA on Hotel Business

Impact of OTA on Hotel Business

The rise of OTAs has restructured the hotel industry and presented new opportunities and challenges for hotels. These platforms have provided increased visibility, ease of booking processes and data-driven pricing strategies.

While OTAs have certainly brought many benefits to both travelers and hotels. In this blog post, we’ll explore the impact of OTAs on the hotel industry and look at the opportunities and challenges they present.

What is an online travel agency?

An OTA (Online Travel Agency) is a medium that allows travelers to book flights, accommodations, cabs and other travel-related services online. OTAs act as intermediaries between travelers and hotels. It is a platform where travelers can search for affordable deals, compare prices and services, read reviews and then book. OTAs collect information from various hotels and compare then present it in a user-friendly manner for travelers.

Hotels partner with Online Travel Agencies to reach a wider audience and grow their online visibility. By listing their hotels on OTAs, they can attract more guests and increase their booking rates. OTAs often charge hotels a commission or fee for every booking made through their platforms.

Whereas OTAs offer a wide selection of comfort and hotel options for travelers. These may also have some impact on hotels. Sometimes Hotels have to compete with other hotels on price and offer lower rates on OTAs, which can impact their profits and clients.

Overall, OTAs play an important role in the hotel industry. By connecting travelers with the best hotel deals and simplifying the hotel booking process through their online platform.

Positive Impact: Driving Bookings and Increasing Exposure

One of the benefits of OTAs is their ability to connect hotels with a huge pool of potential customers. This increased exposure has allowed hotels to reach a wider audience, attracting more bookings and revenue.

Additionally, Online Travel Agencies (OTAs) usually provide valuable features such as real customer reviews and ratings, which can improve a hotel’s prominence, reputation and credibility.

Negative Impact: Limited pricing control and commission fee

Unfortunately, the positive aspects of Online Travel Agencies come at a cost. Typically, these platforms charge hotels a commission of 10% to 30% of the booking value. For smaller hotels, this commission can be a significant burden, impacting their already limited revenue sources. As a result, it becomes difficult for them to improve infrastructure or invest in other areas that can enhance the guest experience.

Add to this the fact that OTAs often set the price of hotel rooms on their platforms, giving hotels limited control over their pricing strategies. This lack of autonomy further cuts into hotels’ profit margins.

Better Efficiency

Moving away from OTAs increases efficiency. It helps build better relationships with guests, and equips hoteliers with data to improve and enhance their service offerings. For example, through direct booking, hotels are able to offer special packages to guests, promote unique experiences, and include additional amenities and add-ons. This will not be possible through OTA. By implementing hotel management software like marketing automation, channel managers, website design, digital marketing services, and 360-degree booking engines, hoteliers can streamline their operations, automate tasks, and upsell relevant extras.

For example, with a platform like Profit Room, the connections between the website, booking engine, and other tools are seamless, meaning hotel teams don’t have to waste time uploading data to multiple different platforms. They can create information in the suite and it will update seamlessly, saving time and money. This allows staff to focus on providing the guest experience.

Additionally, leveraging customer relationship management (CRM) systems helps hotels collect guest data, preferences and feedback, enabling personalized and tailored interactions. With access to comprehensive data, hotels can analyze trends, identify areas for improvement and make informed decisions to enhance their service offering and exceed guests’ expectations.