Rise of the giants
A huge amount of internet change is currently impacting independent accommodation providers.
Online travel agent (OTA) consolidation puts the vast majority of bookings into the hands of just 2 or 3 players. Together they dominate the online space through aggressive marketing and huge pay per click spends with Google and other high volume websites. This continues to make it increasingly challenging for independent accommodation owners trying to maintain the same volume of direct bookings.
| If you find yourself in this situation the best strategy is to avoid over reliance on a single OTA as that level of dominance creates obvious business risks, no business wants all its eggs in one basket. So make sure you have a spread of booking sources and always be on the look out for new, more efficient ways to distribute. | Don’t be afraid to invest in technology that improves your direct commission free bookings and also enables you to diversify your booking sources i.e. a channel manager and booking engine that connects to all three big players…Booking.com, Expedia and TripAdvisor. |
Remaining fiercely independent and open to multiple sources of bookings becomes more crucial as the dominance of the biggest grows. In other words the most successful strategy will be diversified and independent – keep your eggs in baskets you can trust.
We’re a small guest lodge and thinking about signing up with Expedia (we currently use TripAdvisor and Booking.com). Wondering if you have a blog – or a discussion group – where FreetoBook clients have discussed the pros and cons of joining with Expedia vs. Booking.com (or other OTAs). Many thanks.
We don’t have one just now but you could join our linkedin group for confidential discussions with other property owners. https://www.linkedin.com/grp/home?gid=5116495
Further to our telephone conversation a week or so ago, we write in response to your e-mail regarding the huge OTA threat to small businesses.
We were of the impression that Freetobook was all about promoting direct bookings via our own website, and we were very surprised by your e-mail promoting the three online giants.
Whether we advertise with just Booking.com or all three as you suggest, this leaves us with between 15% and 20% commission to pay on every booking. As far as we see it, these companies have created a middle man where none was needed in the first place and they just cream off most the profits to be made by smaller businesses such as ours, who, unlike the larger hotels, have no bar or restaurant facilities and therefore no opportunity to up-sell in order to increase profits in that way.
Could we suggest please that you conduct a pole asking your client base whether they would prefer more direct bookings or more bookings from the OTAs. This would then perhaps give you an idea of the strength of feeling out there.
Is there any way you are able to help to promote direct sales for us rather than us being exploited by the big players in this way please? We feel that ultimately this should help both your business and ours because if we go out of business, then possibly so might you.
This is a good point, we do support direct bookings. As a family run business who cares about the needs of our customers we do acutely sense much of the negative feeling there is for the large corporations acting as middlemen. I think the blog talks about using multiple OTAs for a position of strength. Many of our customers rely on the OTAs and there is no strength in their negotiating position if they have only one OTA. If that single OTA decides to do take actions they disagree with they have no position to bargain from if they have only one. That said I agree the message is a bit mixed, on the one hand more OTAs for strength and the other fewer OTA bookings to pay less commission. It is possible to use more OTAs and also get more direct bookings but perhaps we should separate these messages. Thanks for your support and feedback.