I explained the relationship between hotels and online travel agencies (OTA) and broke down their contractual agreements in this previous post. When it comes to negotiating agreements with online travel agencies they don’t allow much room for movement when it comes to commission and rates which can make it difficult to maximize hotel revenue. You might be able to get them to budge a little but you should focus more on the number of rooms they are allocated to sell each day (their room block). Ultimately the best way to maximize hotel revenue when OTA agreements are in place is to encourage guests to use what is known in the industry as direct booking. This when a guest contacts the hotel directly either by phone or the hotel’s official website to make their booking. Recently, some hotels have even taken the bold move of building a marketing campaign that encourages direct booking much to the disdain of online travel agencies.
Ways to Maximize Hotel Revenue with OTA Agreements in Place
- Try and get the number of daily rooms allocated down by 2 or 3 and vary it depending on season, weekend and weekdays.
- If a potential guest says they can book the room cheaper online then instruct your staff to match the price. If someone phones the hotel and says they can see a $200 room online for $160, good management will empower their staff to match the $160. This way you are able to maximize hotel revenue of $160 for that booking instead of $98 due to paying $42 commission to another corporation. You will not be violating the agreement that states the OTA gets to sell the rooms at 30% – 40% below the hotel’s best available rate because the rate of $160 given to the guest is not advertised.
- When OTA bookings are made online and sent to the hotel’s property management system (PMS) the only guest information that appears is their name. The reason being that online websites don’t want hotels to be able to contact these guests directly. Therefore management should instruct front desk staff to obtain the contact information of every guest that checks in with a 3rd party booking. Building an email list is a great tool to maximize hotel revenue by creating a rapport with guests who have the potential to return.
- Encourage guests to join loyalty programs. Loyalty and rewards points should only be obtainable when booking directly with the hotel which makes them a great incentive for guests and a great way to maximize hotel revenue.
- Hotels can offer small incentives for direct bookings such as a late check out or free breakfast if it isn’t already included.
- Hotels can do promotions for when a guest finds a better online rate within 24 hours of booking directly. These can be $50 gift cards or price beating the lower rate by another 10%. This way you maximize hotel revenue by encouraging repeat business with the gift card and non-cancellation with the additional 10% discount.
Service Outweighs Everything
There is a trend amongst the hotel industry to look down upon guests who check in with an OTA booking. Some hotel management encourage staff to allocate these guests to less desirable rooms and are less likely to accommodate special requests. This is completely the wrong attitude and approach to have. Good hotel management looks at guests who use online travel agencies similar to someone test driving a new car – they’re test driving your hotel. They might not have ever visited your hotel if they had to pay the best available rate and the only reason they’re here is because they saw a great deal online. But, show them the best experience possible and leave them with a personal connection so when they decide to return they’ll book directly through you.
Good management recognizes when they’re most effectively used to maximize hotel revenue and are able to utilize them to a hotel’s advantage. You won’t always be able to give them less commission, less discounts and smaller room allocations so you need to find other ways to make the arrangement work more favourably towards the hotel.
Don’t be afraid to be creative and think outside the box. You may not be able to control what’s in the agreement but you can control everything else about your hotel. If the service, housekeeping and amenities are great then most guests won’t be bothered by the rate they paid and will be more likely to return.
Thanks for reading
- What are some ways you could maximize hotel revenue with online travel agencies?
- Do you see a future where hotels move away from online travel agencies or will the relationships become stronger?