Filipino hoteliers are looking to renegotiate the commission of OTAs for a period of six months to one year so they can recoup certain losses from Covid-19, but the idea has been met with resistance by online agencies.
Hotel Sales and Marketing Association (HSMA) president Christine Urbanozo-Ibarreta said OTAs “stand by their commission rates” which run as high as 25 per cent, even though HSMA requested for a temporary reduction to at least a maximum of 15 per cent “as (our members) are also trying to get back the clients”.
As part of the lockdown in the Philippines, all hotels and resorts have been closed since mid-March, except for certain properties having existing long-stay guests and those who were approved to host medical frontliners and returning overseas Filipino workers on quarantine at minimum rates.
Urbanozo-Ibarreta said HSMA, which represents over 120 hotels and resorts, has started the negotiations with selected OTAs “who will cooperate and work (with us) during the recovery stage”.
She noted that OTAs are affected by the fortunes of hotels, as the agencies receive commission fees from the hotels they sell via their platform.
OTA themselves determine the commission that they get from hotels and resorts. They have a wider scope of selling hotel keys and promoting the hotels to targeted markets, and typically spend five to 10 per cent of the fund on marketing activities.
In contrast, traditional travel agencies get a 10 per cent commission, but they have contracted rates with hotels. For example, a rack rate of 7,500 pesos (roughly $150) per room is extended to traditional travel agencies for 3,600 pesos for FITs, and 3,200 pesos for groups of 10 rooms or more.
There are a handful of hotels and resorts that don’t work with OTAs which Urbanozo-Ibarreta said is a business decision made by management, but she said that OTAs “are useful for lean dates on which they pick up bookings for us hoteliers and they market to a wider audience”.