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By far the most interesting supply chain in hotel industry is the development of the Online Travel Agents (OTA). As the competition is increasing, the OTA’s are continuous looking into ways how to improve business. The first start happened with preferred listings, which resulted in a higher commission charge to the hotels. Hotels could improve their ranking on the website, by paying a higher commission rate. Higher on the list, could results in more bookings.

Recently, OTA’s have been offering free booking engine, or low cost booking engines to use on the hotel’s own website. It will make updating of rates and allocations easier, as you will have to manage one extranet. As hotel’s are focusing on cost control, they should be aware that these models can push more business to the OTA website and results in more and higher commission payments. Alternatively, the hotel could sign up with a channel manager to create a solution to the distribution of all the Extranets. As the OTA has no strong commitment informs of investment, they will not have the real interest to sell you particular hotel, just any which will sign up. More can be learned at our page on Web marketing, how you can effectively market your website.

The latest trend to capture the interest of online shoppers would be to offer the complete package. Expedia, Orbits and Travelocity, have already long lasting relationships with the Airline industry and selling tickets online (even combined with the best hotels deals) As this has proven to be successful in the long haul market, Expedia has teamed up with Air Asia and selling also Air Asia flights in a very strong Asian market.  Also their biggest competitor in Asia, AGODA has entered into a partnership with Cathay Holidays Limited, the travel agency arm of Cathay Pacific Airways, through which Cathay Holidays will distribute agoda.com’s hotel product.

With the deal, travelers booking a ticket through CathayPacific.com will now have access to agoda’s worldwide instantly-confirmable inventory, while Cathay Holidays will be able to provide up-to-the-minute rates and promotions in more than 100 countries.

This will be the only beginning, as OTA’s have a very customer friendly business model, the classical travel agent is currently booking rooms via the OTA and soon they will book tickets as well. This would be the service of a travel agent to those travelers, who have no experience to book their trips on the internet.

This Video interview with the founder and CEO of Revpar Guru, explains the dynamic of the online travel agents in nowadays market.

Being top ranked on a OTA website, might not always be good for your Revpar. A carefull analysis of the positioning related to your property star ranking and pricing helps in order to optimize your revenues.

Have a look at this 11 min video and learn more about the importance of online travel agents and how they work. Understand how your customer is search the web to find the best deal and how revenue management assists you to let this customer book at your property.

Click for the link to the Video here

In an earlier blog, I have written about the Bill Board effect of the OTA (Online travel Agent) towards the Hotels. By having a representation on the OTA website, it will boost your room revenue and bookings because it works as an advertisement medium, stimulating the direct market on your own website.

In the recent press release of the largest American Hotel Owners Association, AAHOA, they have successfully  registered 10,000 members to appose against the strategies of the OTA’s.  The current involvement of an OTA is getting to strong o a Hotel owner has little control over it rate and allotments. In order to get business from companies as Expedia.com, Travelocity.com, Priceline, Lastminute.com, Hotwire, Orbitz, Lodging.com, etc. you have to give up a certain amount of freedom. They all will push you for rate parity, best rates and sufficient allotment to sell your property on a high ranking on their website. Leaving the hotel operators no choice, hence no influence in the own website rate to generate a steady occupancy.

AAHOA is therefore trying to persuade its members not to commit heavily with OTA’s as they become discounted shops, offering cheap rates. As competition is rising among the OTA’s, the hotel owner is left no space to handover the important decisions in order to flow with the rest of the market and their competition. The OTA is becoming almost a competitor it self, and not longer the competition is only the neighboring hotels in the area. The AAHOA is informing their members not give all control of rates and allotment in the hands of the OTA, as they will start controlling your business plan.

Two main points the AAHOA is stating in their press release, that they are against the control of the ATO over the last room availability. In many ways, they demand heavily discounted prices. While looking at the airliner industry, when it comes to closure, the rates are going up. Second, AAHOA is strongly against the control regulation a ATO is putting on hotels to not undersell the rooms on the hotels own website. By pushing for rate parity they would demand absolute rate control, even when a client is booking online with the hotel directly.

Where the traditional Wholesalers and travel agents have already lost market because of the upcoming .com industry, it seems that the Hoteliers have to unite to gain control over their own property.