Hoteliers have come forth to express disgruntled sentiments about hostile treatment from ever-expanding OTAs’ growing presence, and their desire to reduce their reliance on the digital booking platforms.
This paints a different picture from their relationship in early 2001, when OTAs first emerged as a “new opportunity” for hoteliers to deviate from wholesalers who were “dictating the rates”, said Claude Sauter, general manager, The Surin Phuket.
Some hotels like The Fullerton Hotel Singapore & The Fullerton Bay Hotel Singapore have adopted a “defensive” approach, making use of OTAs for their “billboard effect” to guarantee visibility and capture guest awareness, shared Jeff Crowe, the hotel’s executive assistant manager, sales & marketing, at the Direct Booking Summit in Singapore last week.
However, a large number of hoteliers has grown dependent on OTAs for a majority of their bookings. Michael Belanger, vice president revenue & distribution, GCP Hospitality, admitted: “The trouble is that we are too often over-reliant on a single source, whether it’s OTAs in general or a single OTA. That’s when it becomes dangerous.”
A “healthy” percentage of room reservations coming from OTAs should be about 50 per cent, with the other half from direct bookings. However, some hotels – in particular smaller independent hotels – attribute 90 per cent of their bookings to OTAs, observed Adrian Caruso, founder and managing director of Fastrack Group.
Leaning too heavily on OTAs has resulted in some hotels being taken advantage of, lamented Ayudh Nakaprasit, owner of Eastiny Pattaya.
Nakaprasit said: “My relationship with OTAs is not the best. At the moment, the commission rate that I pay is roughly between 15 to 17 per cent, but taking into account the amount of abuse and harassment – I probably get it every other day – it is not good.”
According to a poll at the summit, the average OTA commission rate can range from 10 to 20 per cent. Sauter chimed in that “it’s very hard to negotiate, but we need them”.
To counter this treatment and protect their rate parity, hospitality players have developed various defence mechanisms. For example, as part of Triptease’s programme, its hotel clients have implemented a “three-strikes policy” before cutting off hostile OTAs.
This strategy has reduced the hotels’ rate of being undercut to 4.1 per cent, and raised the average daily rate up by 12 per cent, and website bookings by 22 per cent.
Some hotels have also taken steps to diversify.
Belanger explained: “For independent hotels, we need to learn to diversify our portfolios in terms of drawing corporates, MICE, other OTAs and direct channels. Once you have a very diverse portfolio, you can pick and choose, and go back to the ones that aren’t playing fair and dictate what you want.
“What the hotel companies have to realise is that we’re not great at technology, so we need to partner with the right providers or invest tons of money,” he noted.
“We’ve been very, very slow at doing that, and that’s where the OTA model has been much more rapid in terms of evolving. It’s going to continue to evolve, and it has (come down to) whether hoteliers can recognise that and stay ahead of that curve by investing in a similar fashion.”