If you control the cloud on the horizon ... is it still a cloud?

Photo by: Photograph by Arco Images/Alamy; 

Credit: National Geographic Wall Paper

In a recent article for Business First Online, Howard Hastings, MD of Hastings Hotels, identified 3 clouds onthe horizon in 2012 for the NI hospitality industry.  The first two - energy and food costs - are broadly outside the control of a hospitality business, no matter how sustainable and self sufficient they try to be.  The third, however, was “the increasing dominance of commission hungry Online Travel Agencies (OTAs), which extract a significant proportion of room rates that have already been trimmed in the face of weak demand.” This strikes me as rather an odd complaint. The hotel has complete control of where and for how much it sells its rooms so why let these OTA’s be a cloud?

Is it because they have greater distribution than your business? They may have; however, guests do shop around and visit various websites in their buying process, frequently including the hotels own. There is an argument that you use 3rd party sites for what is termed the “Billboard Effect” that is to let potential guests know you are there, however, rates and availability should be carefully managed. You also need to have a strategy to convert the guests likely to return to booking through your own website in the future.
See Cornell Center for Hospitality Research report for more info on the billboard effect-
http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-15540.html

Is it because customers always go for the cheapest price? Well most hotels operate Best Price Guarantee on their own site. After all you are better off being equal or slightly lower on your own site rather than loose 10-30% in commission.

Is it because the OTAs offer a better shopping experience on their site? Better bundling with other travel goods? More local information? Honest reviews – the good, the bad and the ugly? Genuine user photos rather than airbrushed promo shots? Better confirmation, pre and post stay communication? It has to be said that this is more likely (though Hastings are generally excellent at all this stuff due to the input of Niall McKeown and theteam at ION Online Marketing)

The question is; if businesses spent a fraction of what they lose to Online Travel Agents on creating a compelling brand proposition aimed at a market willing to pay for that proposition; then invested in creating an integrated on and offline marketing campaign communicating that brand proposition utilising relevant social media; and finally their website, online booking process, pre visit, visit and post visit experiences reflect the proposition ... there would be one less cloud on the horizon.

The problem is that to do so you need upfront spend whereas the money lost on commission is either taken off room rates or paid at a later date. Saving on marketing and losing on room rate and commissions may look attractive in a budget but looks less attractive in operation.

Invest in your brand proposition and its online experience. If you want to take control of your own weather it is an investment worth making.