Why OTAs are going to be on the ropes and hotels are going to be the winners after COVID-19
During these unprecedented times many hoteliers have been forced to suspend their operations, watch cash-flow, furlough where possible, and look and wait on governments to determine when they can resume business. But even when the green-light is given, the costs of starting up the hotel machine and taking those first tentative steps, are filled with risk, and come with no guarantee that rooms, F&B outlets or even events spaces will see business returning immediately.
It’s not all bad news though because industry reports such as STR, are starting to indicate that the luxury and high-end travel segments may be seeing the first signs of recovery with forward looking 12-month bookings showing green shoots [link].
But what of the big revenue drivers for the hotel, the elephant in the room for all hotel revenue managers, driving the lion’s share of online bookings while asking, requesting and sometimes even demanding the lowest online room rate plus an 18% - 24% commission?
The Online Travel Agents (OTAs) are in very uncomfortable position, Booking.com recently asked the Dutch government for financial support to pay its 5,500 workers [link]. While other leading industry players are cutting back on their ad-spending. When we see OTAs switching off competing hotel brand campaigns, it sends some pretty strong signals about how much they are hurting right now.
What’s worse for the OTAs is that COVID-19 presents a very unique obstacle for their affiliation model – it’s one thing to be able to communicate the best price and to drive people to book using scarcity messaging (‘only one room remaining at this price’) but it is another to be able to communicate a hotel cleaning policy that will satisfy and respond to the needs of the booker on an OTA.
COVID-19 has shown that the type of response from governments and the interpretation of the level of that threat has been different from country to country (a nationalized/localized response). An OTA is in the business of selling rooms to people from all over the world, so how exactly do they convince a person from the UK, that wants to book a room for a hotel in Thailand, what that hotel has done to make things safe for their stay?
The short answer is that OTAs can’t do it.
What’s more, using this example, if the Thai government issued a COVID certification for a hotel that an OTA could show on the hotels listings page, would that mean anything to a guest booking from the UK? Possibly, but would that booker want to double-check the hotel first? Almost certainly.
Leaving aside the fact that these certifications don’t even exist yet, trying to communicate hotel cleanliness and safety, while keeping the click-to-buy formula format that OTAs rely on, makes it an almost impossible task.
IT IS FINALLY TIME TO WELCOME BACK THE HOTEL TO THE ONLINE CHANNEL
In the short-medium term vacuum created by COVID-19, hotels need to get ready because there is going to be a golden opportunity for direct business that simply wasn’t there before.
Hotels are already communicating with their guests and online publics their closure policies, and working at the operational level on what needs to be done to comply with any local level policies to allow the business to open.
But now is the time to look beyond at how the demand market will change, and the methods and creative assets that will be needed to convince a guest to book on the other side of COVID-19.
IMPACT: DIRECT CHANNEL IS GOING TO SKYROCKET
Because OTAs will fail in the near-term to reassure people what hotels are doing to make their premises safe, hoteliers needs to ensure that all those guests that come to check their hotel website (maybe having first visited an OTA to get the price) are in a position to convert those guests to direct-bookers.
Hotels are going to have a golden opportunity to own more direct revenue and shouldn’t miss it.
Even if it doesn’t feel like the time to celebrate, know that the future is brighter than you might be thinking at this time.
Our multichannel solutions cover PPC, social media marketing and in-situ website conversion mechanisms. Their timing and positioning make it almost impossible for a guest not to want to book directly with a hotel. Our Clients are already benefiting from our forward-looking approaches beyond COVID-19, and are making themselves ready for this new demand landscape.
If you are a hotelier with a closed hotel, there are things you can be doing to win business on the other side of this crisis. We’re already helping our Clients to do just that.
About the Author
Glyn Spencer Hopkins is the owner of Internet Affected and has been working exclusively with hotels for over a decade.
Internet Affected provides web marketing services tailored to the individual personalities of hotels; a complete range of digital services designed to help them take back ownership of their hotel brand from the OTAs. Specialized marketing solutions to increase guest loyalty, food & beverage bookings, events and wedding inquiries, clearly reported in straightforward language.
