OTAs gain from Bali’s rate war

View of Uluwatu, Bali — Credit: Banyan Tree Hotels & Resorts

BALI’S hefty room supply is altering the way hotels regard their relationship with OTAs, with many saying the online distribution channel is now a means to drive occupancy rather than yield and that price cuts to secure more bookings are symptomatic of this trend.

Bali Rani general manager, Anton Adijaya, who had counted 10 new hotels opening on the same street as his hotel last year, told TTG Asia e-Daily: “Competition is really fierce. The number of new hotels coming up in Bali has outstripped the increase in arrivals to the destination. OTAs were once used to increase yield (but) newcomers are all now using (this channel) to grab volume instead of growing yield.”

Illustrating OTAs’ effective market reach, Sun Island Bali Hotels & Resorts director, Ismullah Lahsin, said an online promotion blast for sister hotel, Sun Island Legian, on December 10 succeeded in snagging bookings for its opening five days later.

“The fact is, hotels with the lowest price will be placed at the top of the OTA’s list. The challenge therefore is to maintain a volume-yield balance. For us, as long as our GOP is achieved, it is fine,” said Ismullah.

Santika Indonesia Hotels & Resorts general manager, corporate sales and marketing, Guido Andriano, blamed the price war in Bali on both the tough competition among hotels and OTAs’ persistent push for low rates to maintain their own market share in the online distribution arena.

This, he said, has left a bad taste in the mouth of traditional travel agencies who are stuck with contracted room rates.

Read the full story in TTG Official Show Daily – ATF 2014

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