Boutique Hotels and OTAs: Love Affair or Fatal Attraction?

July 7, 2017

Many boutique hotels have a challenge when it comes to OTAs (Online Travel Agents). We often get the request to stimulate direct bookings, that boutique owners do not want OTA business. Big mistake. Huge. In this piece, I’m going to explore and implore the reasons why it is vital to embrace the OTA and how best to use their advertising to leverage bookings and, ultimately, lifetime loyalty to your boutique property.

  • Every hospitality business attempted to block OTAs from becoming the standard they are today.
    • Flag hotel groups, Destination Marketing Organizations and many others rallied against the emerging OTAs in the early 2000s. Despite withholding inventory, by suing the OTAs at the state level and other methods of dissuading OTA growth, they not only prevailed but they won over the marketplace. In the earlier days of online purchasing, travelers were wary of parting with their credit card information. Hotels were laggards in providing a safe, SSL booking engine solution. Trust was gained by OTAs like Travelocity, Priceline and Expedia due to the massive advertising spend communicating security, ease of use and low prices. When TripAdvisor debuted in the marketplace, it disrupted how travelers discover places to go. Today, TripAdvisor is used as a native search engine for travel, as well as a high-performing OTA.
  • Use other people’s money to increase your occupancy.
    • The facts are that the OTAs are the largest advertisers on the web, second to Amazon, spending a whopping $7 billion in online advertising.

A specific property search yields the Google engine serving OTA fees (notice this is not hotel direct):

  • With all this ad spend on both the destination and property level, it’s worth considering joining the 800-pound gorilla.
    • The commissions are more favorable than the advertising expense of converting the first-time booker.
    • Average OTA commissions in 2017 are 7 to 12 percent, much more favorable than the cost of a first-time guest acquisition cost, sitting at 20 percent in 2017.
  • Focus on guest loyalty and the operational experience.
    • Once a traveler falls in love with your brand and the experience, they are much more likely (seven times more likely, in fact) to book directly with you and join loyalty programs.
    • Reviews also impact both loyalty and customer acquisition, so a shift from worrying about an OTA to concentrating on incentivizing reviews and fostering loyalty is time better spent.

In conclusion, there are myriad outstanding factors that should persuade you that boutique hotels have a stronger opportunity by playing with the OTAs and shifting the focus to brand experience. At Commit, we work with many boutiques around the country that profit from a strong customer-centric strategy, capitalizing on the moments between moments and surrendering to the connection economy’s trends.