Selling through online travel agents
What to consider when using online accommodation booking websites to sell your accommodation services for hotels, hostels, guesthouses and bed and breakfasts
The way customers book their travel and accommodation has changed. There is a shift towards booking every aspect of the journey online.
Consumers are drawn to online travel agents and hotel booking websites like Booking.com and Expedia. These websites and mobile apps offer customers a variety of options for planning their journeys. Customers can easily filter and compare a range of accommodation options from one site.
Because of how popular these sites are, it has become almost essential for accommodation providers to use them to remain competitive. These sites could put your business in front of a large global audience. However, the commission they charge could reduce your profit margins.
This guide highlights the advantages and disadvantages of selling through online travel agents. It outlines how to choose an online travel agent to work with. The guide includes top tips for selling through online travel agents.
Advantages and disadvantages of online travel agents
For accommodation businesses like hotels and B&Bs, there are pros and cons to using online travel agents (OTAs) to sell your facilities. OTAs include online accommodation booking sites like Hotels.com and Trivago.
Advantages of online travel agents
Ultimately, OTAs give you instant access to a large number of potential customers. Possible advantages of using an online travel agent to sell your service include:
- It's a low cost way to list your property and its rooms.
- Reductions in your online marketing spend. OTAs will invest in marketing and advertising to attract potential international customers.
- A reduction in your website costs. OTAs are keen to provide a positive online experience for customers through good website design and functionality.
- Online travel sites are popular with customers who like to compare accommodation costs and the services offered by individual providers.
- Impartial reviews on online travel sites may give new customers the confidence to book.
Disadvantages of online travel agents
There may be some disadvantages to using online travel agents. These include:
- Online travel agents can charge commission on every sale. This can range between 10-20 per cent of the gross cost.
- There may be restrictive terms and conditions imposed by OTAs such as guest cancellation and automatic room reselling policies.
- You may need to find a way of managing room availability across a range of OTAs, your own website, front desk and telephone sales. This can be time consuming and labour intensive. There are software options to help you manage this.
- Using OTAs does not reduce the need to have your own website with booking engine.
- You may still need to invest in a balanced multi-channel marketing strategy.
Although online travel agents can help you fill rooms, it is important to maximise your most profitable revenues through sales on your own website. You should continually work on your search engine optimisation tactics and other digital marketing techniques. Focus on customer retention tactics. Directly target your existing customers (including those gained through OTAs) through email and direct marketing. See grow a tourism business with digital marketing.
Choose an online travel agent to work with
The important factors you should consider when deciding to work with an online travel agent or hotel booking website to sell rooms at your accommodation business
Consider the differences between various online travel agents and hotel booking websites and what they can offer your business. Here is a list of factors that may affect your decision in terms of who you choose:
- Is there a minimum contract length?
- What are the contract options (eg partnership, affiliate, reseller etc)?
- What are the commission rates, set-up costs and payment terms?
- How do you rate their website (eg design, layout and target audience)?
- What countries do they market to?
- What booking platforms do they use (eg website, phone, mobile site, mobile app, affiliates)?
- What customer payment options do they offer (eg payment terms, booking fee, multicurrency payments, cancellation policies and options)
- Types of rate and offers (eg room only, packages with meals, advance purchase)
- Will their booking systems integrate with your systems?
- What languages do they offer?
- Do they provide an online reporting system?
- Will the provide training on their systems? What marketing channels do they use (eg online, outdoor, radio, press, social media etc)?
- What are their customer communication channels (eg newsletter, social media, app, affiliates etc)?
Remember that you do not need to work with every online travel agent or booking website. Choose the providers that will work best with your business and marketing strategy.
Top tips for selling through online travel agents
Online travel agents and accommodation booking websites can help you attract new customers, but could also reduce your profit margins. Here are some tips on how you can get the most from using online travel agents (OTAs) and take opportunities to increase revenue through other channels.
1. Set clear goals
Decide what you want to achieve before you start working with OTAs and aim to build a good relationship with them. Be clear about what your goals and objectives are and communicate these to the OTA to get the best service.
2. Choose the right OTAs
Evaluate OTAs to ensure they will deliver the right type of customer, within your target market. OTAs should primarily be used to attract business that you would not have got through other (more cost effective) means. Ideally, using an OTA will lead to return direct business with customers who originally found you through an OTA. You do not need to work with every single OTA, so choose the ones that work best for your business. See things to consider when selecting an online travel agent.
3. Manage commission rates
Be careful about the commission you are being charged. Ensure that you only agree to a commission that is profitable. Commission is typically 10-20 per cent, but you may have the opportunity to negotiate. High commissions will only be worth it if the travel agent is delivering a high number of sales. Some OTAs will offer you "preferred" status for higher commission, giving you extra promotion above other clients. This may be worth considering if you have a lot of competition but ensure that the OTA can prove the value of this partnership.
4. Don't over allocate
Avoid allocating too many rooms to OTAs. Ensure that you have enough vacancies to sell through other more profitable channels.
5. Offer discounts to specific groups
Because of rate parity agreements, you won't be able to offer cheaper rates on your own website from those you offer through the OTAs. You should take advantage of being able to offer special rates to your "closed group" customers. These include; returning customers, social media followers and those who have registered to receive email newsletters. Another option is to offer special package rates that include add-ons such as concert tickets, spa treatments or restaurant vouchers and are only available on your own website. See manage your customer database.
6. Black-out dates
Larger hotels may be able to negotiate black-out dates. If you are confident that you will be fully booked on a certain date without much marketing investment, for example if you are located near a major event that attracts many visitors, you could ban OTAs from selling on those dates to maximise revenues.