3 Simple Steps Your Hotel Must Take to Overcome its OTA Addiction

According to a recent article in the Wall Street Journal, Expedia CEO Dara Khosrowshahi's pay reached nearly $95 million in 2015. That's top among all S&P 500 CEOs. And it makes sense considering the record $6.7 billion in revenue that Expedia raked in last year - up a staggering 100% since 2010. It seems OTA addiction amongst hotels is at an all-time high.

Business is booming. In fact, it's booming in the midst of hotel lobbies around the world, where the OTA juggernaut derives 70% of its revenue. The hotel booking division is the company's most profitable, with margins exceeding 20%. So what can hotel managers do to take back market share and beef up the bottom line?

6 SIGNS YOUR HOTEL IS HOOKED

1) Too many OTA bookings

Finding the ideal mix of OTA and direct bookings is important. While the exact ratio will vary from one hotel to another, if more than 35% of your online reservations come through OTAs, you may be leaving money on the table.

2) Failure to connect with in-house guests

Just because a guest booked through an OTA, that doesn't mean you can't control the relationship moving forward. If you're not collecting guest information and building relationships, you're wasting a valuable opportunity.

3) Lackluster online presence

If occasionally updating your website is the extent of your online activity, that's a problem. It's critical that you leverage a variety of online channels to boost brand awareness and drive website traffic.

4) No incentive to book direct

Check your website analytics. Look at the bounce rate. If visitors leave your site after viewing only one page, you're losing money. Rethink your unique selling point and do a better job of communicating it.

5) You think this is the cost of doing business

You've given up and believe this is the new normal. Don't fall into that trap! Yes, online booking sites are very effective at boosting occupancy. But it doesn't have to be at the expense of your bottom line.

6) You don't even know how much money is leaking out

This is the biggest problem of all. If you don't know how bad the situation is, how can you hope to improve it? Knowing is half the battle.

3 WAYS TO BREAK FREE

1) Mind your metrics

Get clear on exactly how much revenue you're leaking each month. Remember, you're essentially paying OTAs to market your property and acquire customers. Use MCPB (Marketing Cost Per Booking) to determine the cost of OTA bookings. If you paid $30,000 to OTAs in exchange for 300 bookings, that's an MCPB of $100. How does that compare to your other marketing channels?

2) Get intimate with your guests

Collect emails and contact info at check-in. Engage with guests through hotel social media accounts. Look for opportunities to personalize the guest experience beyond what OTAs can offer.

3) Upgrade your online presence

Ensure that your website effectively communicates the value of booking direct. Add guest reviews to your site, thereby eliminating the need to seek additional information elsewhere (OTAs are great at this). Next, use social media to boost brand awareness and drive website traffic. Studies show that social media activity can increase hotel occupancy two-fold. Furthermore, always respond to guest reviews on sites such as TripAdvisor. The more visible you are, the better.

TAKEAWAY

OTAs have a place in hotel marketing. They can serve as valuable partners. But relying on OTAs too heavily can negatively impact your bottom line. These 3 simple steps will ensure that your hotel is realizing its profit potential while maintaining a healthy balance of OTA bookings.