During a road trip that I was taking a few years back in Thailand, I started to think about the hotel industry and the current state that it is right now. The trip I took started in Phuket and I also went to other regions as well because I was attending a worldwide conference.
This drive took me to a variety of locations, and I went to numerous hotels where I stayed a single night. For some of these I booked via the OTAs, while others were pre-booked. All of these hotels ranged between 3-4 star properties, and I chose all of them to be close to the highway, in order to make a connection to the city with ease, while avoiding the busy city life so that I could relax.
Since I am a revenue manager, I always do my best to check the rates online before I book via OTA, and at the same time I also contact the hotel in a direct fashion to check if they can beat the value posted online. It might seem strange, but there are numerous hotels in Thailand that offer better prices if you contact them directly. Not only that, but when I began my career I always told people in my reservations team to offer the best possible rate to the customer. Not being afraid to offer lower rates is better for the company, since it adds a great incentive and at the same time it encourages the customer to contact the hotel directly, while also getting some nice perks such as free parking, airport transfer or breakfast.
While I was performing the trip in Thailand I saw that I am one of the minorities when it comes to the revenue management strategy that I was using. Many might think that is counter intuitive to offer a discount on a booking strategy even if the customer will pay full price for it online, but on the other hand this provides higher return value for the customers and makes them ongoing clients, something that any business needs in order to achieve a success.
The math you can find behind this is quite simple. You have to elect a discount that comes with the direct booking, or lose more money if you allow clients to book via the OTA, sometimes even 30%. Higher prices might not appeal to customers, and because of that, you might encounter the risk of not being able to book your property at all, which would be a shame.
On the OTAs there are numerous competitors that might bring similar prices to you, but some people still prefer to call so do not avoid their calls, instead answer and behave professionally.
So, why does any hotel give money to the OTAs? And more importantly, why are the hotels constantly placing blame on the OTAs for the increased costs of acquisition when they don’t perform a good way to enable customers to book directly? Not to mention that many hotels have reluctance when it comes to performing such a change, because it’s a money saver. We would like to see what you think about this situation and to see why the hotels are following this very costly strategy. Leave your opinions in the comments section, we look forward to see what you think about this!
