You have never set up a profile on Agoda, but you are receiving bookings from that channel.
The price on the reservation confirmation doesn’t quite match your standard rate, the customer information is incomplete, the payment model is different, and you wonder who you should contact in case of cancellation or reduction to the number of stay nights.
It is a minefield, and it is frustrating right?
This article aims to clarify why this happens and present some tools to help you better control your hotel distribution and listings.
First, I am all for balance. I am not going to tell you to remove your OTA profiles. They form an important part of your distribution strategy.
I am however, going to help you to understand more so you can better manage them and take back control. This article will also go through a few strategies to help you drive more direct bookings to your site.
Back in the good old days somewhere in the mid-2000´s I remember connecting my backpacker’s hostel in southern Chile to Booking. I was super excited about the opportunities this global distribution channel would bring and could see the rationale of the way in which Booking determined where my property would show up in the search results.
Back then it was all about quality of review ratings, number of responses to reviews, % cancellations versus reservations, consistency of availability, and rate parity.
Today however, these criteria seem to have morphed into a more opaque world where participation in Partner status programmes, mobile rates, geotargeting, or Genius discounts heavily influence where you show up in the listings.
Why are OTAs like Booking doing this?
Let’s take a moment to remember that Booking is a just another business.
A huge one admittedly, but it has done what all forward-looking businesses do. It has reacted to opportunities within the market to offer greater visibility for their listed properties, and to encourage the user searching for a hotel to stay on their site.
Also, they are reacting to increased competition.
Google’s own travel metasearch engine, Google Travel, is the OTAs biggest competitor.
In the last few years, Google has made it easier for property owners to get more visibility, even for free, and it has also become much more intuitive as a customer facing platform for users who are not just browsing hotels, but who are seeking information at every stage of their travel making process.
While this intensified competition does not of course justify OTAs undercutting rates, it should also not mean that we have to jump ship.
Empirical research conducted in Belgium in 2019 investigated the added value of OTA participation for hotel properties and in particular its impact on bottom-line profitability.
The findings “clearly demonstrate a statistically positive effect on profitability for hotels that participated in Booking.com compared to those that did not”. ¹ It even concluded that the positive association is stronger as the size of the property decreases.
Today’s reality is that people use OTAs as a research and comparison tool.
There are different reasons why some people stay on the site and book there, while others Google the name of the hotel and see if they can do the booking direct or find an alternative route to a) finding out the information they need, and b) moving on to deciding to book.
Gaps are often detected in the “a) finding out the information they need” part, that contribute to driving the user back to the “familiar” OTA, but we will come back to that later.
First, it is important to understand the model under which the OTAs work.
Booking.com itself, (not the affiliate companies that belong to Booking Holdings), functions as an Agency model.
This mean that it acts as a broker between the guest and property and payment happens at the hotel. Commissions are then invoiced as contractually agreed. With this model it is harder to generate price disparities with client paying direct to the hotel.
However, Agoda.com for example, follows the Merchant model.
This means that it buys rooms in bulk, wholesale, and can sell at discounted prices, usually shown before tax. The guest pays Agoda and Agoda pays the property.
Companies that form part of this affiliate network can redistribute your rooms and rates more freely, and this sometimes means that your rates can be found cheaper on their site because they happen to form part of a promotion that that site is running at any given time. This is just one example of why this can happen, there are many others.
As for Expedia.com, it actually functions with both models because traditionally Expedia sold hotels, flights, and business to business operations. However, if your hotel is listed on Expedia.com and you receive payment from Expedia bookers at your property, then that is an example of the Agency model like with Booking.com.
A question I hear a lot is, “Can I opt out of appearing on affiliate partner websites?”.
This is not unfortunately possible as it is written into your contract. Let’s take Booking as an example.
It does however state the following in regard to updating errors or outdated information on an affiliate website:
While that may not be satisfactory if you find yourself having to battle with a third-party affiliate directly, at least you know that calling Booking is not going to get you anywhere, unless the error was found on Agoda or Priceline.
Moving on, we cannot talk about this topic without addressing price parity.
Price parity used to be an essential component of contractual agreements between hotels and Booking or Expedia.
Until 2015.
France’s Macron Law – passed in 2015 - explicitly bans rate parity clauses, granting hotels the right to price rooms as they please, including below the rates given to distribution partners. In response, both Expedia and Booking eliminated the offending parity clauses in contracts with hotels throughout Europe. Many other European countries have followed suit over the last few years.
It is important to find out if you are bound by price parity clauses. The following information relates to Booking. As you can see in the image below, your location is the determining factor. You can also see here that there are now three types of Price Parity regimes on Booking.
Follow these steps on Booking to locate your GDTs:
Further concessions have been made by the OTAs for hotel chains. An example is Hilton Worldwide and Marriott International have successfully negotiated the ability to break parity with special offers to loyal customers. These are important steps proving that the price parity battle has entered into a most just territory.
This could also, in part, explain why we have recently observed cheaper prices available online for our properties in recent years, as the OTAs work to gain back some of that competitive advantage, and as their current Agency models don’t leave much wiggle room, the Merchant models of their affiliate members seemingly do.
So, with all that said, what can you do to protect your prices online?
Many actions, as well as variables, come together to create the perfect master plan to protect your prices online. This is heavily influenced by your location, target markets, local tourism uptake, and the balance of your traditional distribution strategy, among many other factors.
These ideas are intended to encourage action and further exploration of what is the best way forward for your property and circumstances. They are by no means exhaustive.
1. Choose wisely – quality over quantity.
Let’s not demonise the OTAs. They continue to be valuable and powerful distribution partners, but it is a good idea to choose wisely which OTAs to work with. Siteminder’s annual report that details the Top 12 sources of hotel bookings for 21 countries is a great place to start.
Study which channels are the go-to sources for your country or region, and get curious about the Newcomers, the High Risers, and the Ones to Watch to see if they are a good fit for you, and vice versa. There are many regional and national OTAs who are looking to take centre stage and they may just be who you need to be working with to bridge that yawning gap between the main OTA duopoly and – in particular - your local markets.
Find out more here in this blog:
2. Increase your OTA rates.
While I do not advocate this if you are not having problems with undercut pricing online, if you are, it is a powerful way to make a statement.
We have all either experienced first-hand or heard stories from countless hoteliers who are wasting hours trying to understand discounted pricing and get to the actual source of a booking that has come in. Trying to contact an affiliate company with whom you do not manage an active profile is as painful as getting children to eat broccoli.
So, take the time, annoying as it is, to log your erroneous bookings, log any related email and phone contact, and log the unsatisfactory resolution of the problem. Increase the prices on your OTA channels, and if the OTA wants to know why, you will have a complete log of unresolved problems to show them.
Please do check your T&Cs (as detailed above in the small print example from Booking) before taking this action though. If you are bound by a price parity clause then this action could have a negative impact on your property listing.
3. Limit offers that stack incrementally.
I will take the example of Genius rates plus mobile discounts on Booking.
Do you really want to be offering up to 30% discount on your standard rate before commission and tax?
If you do participate in Genius, possibly the most important action is to limit rate sharing of those discounted rates to Booking.com only. The default allows your Genius rates to be shared on all their affiliate channels. You can manage this in your Extranet by going to your Extranet > Opportunities > Genius Partner Programme > Manage your audience.
4. Improve the UX of your website.
One thing the OTAs do undeniably well is to provide a fast, convenient, reliable, and user-friendly online user experience. Offering the best online experience possible for your website visitors does not have to cost the earth and is easily achieved with the right combination of factors.
Among other factors to consider, do your website visitors understand the value of your offer within seconds of landing on your page? Are your CTAs attractive and crafted in a way that move users through the process of finding the answers to what they want to know before guiding them seamlessly into an optimised booking process? Is your page optimised for mobile?
Spending time looking at your site from the eyes of a user is a half hour extremely well invested.
5. Get clued up on Google.
Did you know that Google spontaneously and periodically validates the price and room type your user sees by navigating through to see what happens on your final booking page?
With a 92% market share, there is no hotel on the planet who can afford to ignore Google.
Learning more about how Google ranks your website is crucial to showing up higher in the search results. This is not an overnight fix; it is a holistic process that will change how you market your property forever.
Take 15 minutes to check out the 7 no-cost, low-tech tips in my free Google Made Easy for Hotels webinar:
6. Encourage more direct bookings and educate how they benefit your destination.
Direct bookings are key to reducing your cost per acquisition and can only successfully be achieved after following tips 4 and 5 above first.
You also need to understand your target customers well enough to present them with the answers to their most pressing questions at the appropriate stage of their research, decision-making, and booking journey. This might sound complicated, but with the right omnichannel marketing strategy that seamlessly integrates branding, messaging, and online and offline touchpoints, it becomes easier to move potential customers down the sales funnel towards that Confirm Reservation button.
When you begin to see this process as an educational opportunity rather than a marketing challenge, your direct booking strategy begins to take on new meaning.
We all know the benefit of being able to spend or reinvest those saved commission dollars in our community, but do your customers?
I believe it to be our inherent responsibility to spread this information as far and wide as we can, and sharing what you do to make life better in your destination provides some great, engaging content too that keeps Google happy when it comes to ranking your property.
7. Create your own customer loyalty programme.
Why let the OTAs have the monopoly on this? Did you know that when a customer books a Preferred Plus Partner hotel on Booking, Booking then gives the customer credit towards a future stay at another property listed on their site? Your increased commission to participate in the Preferred Plus programme just indirectly helped Booking with their own direct marketing strategy.
Take a leaf from their book but make it even better.
While we are excited by the prospect of a discount or free credit, we are more intrinsically motivated to take action when we perceive the actual value of an offer. By that I mean something that really connects with your potential guest.
Because value is inherently subjective in nature, this means that you must follow tip 6 above so that you really understand what your audience wants and needs so you can put it right in front of them. Offering the right value proposition in conjunction with a lowest price guaranteed match promise for direct bookings and you cannot go wrong.
8. Embrace the value of destination wide collaboration.
No one travels to stay 24/7 in their hotel room. There is always a need to interact with the destination whether this is as simple as using the available transport infrastructure or shopping at the local store, to more complex interactions such as multi-night itineraries or tailored activity options.
Post-pandemic travellers, now more than ever, want to know that they are going to be safe at all touchpoints of their trip, and accommodation owners are well placed to assure potential guests of this.
By working in conjunction with other local business owners who offer complementary services to yours, you not only build confidence that your destination is safe, but this unified messaging also further increases your trustworthiness. You become more likeable and credible simply by showcasing that you care about helping others to share a piece of the pie, the only condition is that you must actually do what you say you do.
It also provides you with a whole new level of storytelling content as you begin to weave the stories of those with whom you work into your own content marketing strategy.
In conclusion, you could continue to lament the day you signed up to the big OTAs, or you could take control by taking action on the areas detailed above.
Yes, sometimes the OTAs treat you unfairly, and yes, it is no fun to spend hours explaining your problem for the third time to an unengaged call centre person, but most property owners continue to generate income from the OTAs.
If you don’t, then it is time to leave, but most are not at that point.
It is heavily influenced by market conditions and consumer awareness, but moreover it requires that you embrace the tips detailed above and accept that it is a journey that will change how you market your property.
I believe that one day the current OTA model will not hold hoteliers in such tight a grip as we continue to observe increased customer preference for booking direct.
I believe we will also witness the emergence of more responsible and equitable local OTAs who will begin to gain traction as increased interest and understanding about what it means to travel in a more sustainable way permeates our post-pandemic consciousness.
Have any questions?
Send me a mail here at sarah@responsibletourism.school. I make time to respond to every mail I receive.
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¹ Abdullah, S., Van Cauwenberge, P., Vander Bauwhede, H. and O’Connor, P. (2022), "The indirect distribution dilemma: assessing the financial impact of participation in Booking.com for hotels", Tourism Review, https://doi.org/10.1108/TR-03-2020-0101