5 Suggestions to Maximize a Hotel Relationship with its OTAs

17th Mar 2013

Chris DalyNB: This is an article written By : Chris Daly – President of Daly Gray

Whether it’s your grandparents celebrating their 50th anniversary or Star Wars fans just starting on their journey with Disney, successful relationships are based on making the most of your shared opportunities.  Expedia’s Josh Saunders, director of market management, recommends the following to maximize your hotel’s return with its online travel agency.

The suggestions to maximize a hotel’s relationship with its OTA include:

1.   Make sure you have a strong mobile presence.

Mobile continues to grow and have an impact on the way customers purchase their hotels rooms.  According to PhoCusWright’s “Mobile Hits the Mainstream: Technology and Industry Trends, March 2012,” U.S. leisure/unmanaged business travelers booked nearly $2.6 billion via mobile devices in 2011, representing 2.5 percent of the online travel market.  This year, that share is projected to grow 6.5 percent, when mobile will account for 2.6 percent of all U.S. travel bookings and exceed $8 billion.  The mobile market will grow 208 percent, tripling in size in 2013.

On an anecdotal level, Expedia’s investments in this platform already are showing a strong ROI with the company’s travel app achieving more than 10 million downloads in 180 countries to date and averaging more than four million users each month and a 68 percent average monthly growth in bookings.

This opportunity to gain travelers using their smartphones to book one’s hotel is key.  There is additional revenue to be generated by upselling to higher room categories and offering additional services such as breakfast to generate additional incremental revenue.  According to Expedia’s data, most smartphone hotel bookings are made within a ten mile radius of the user’s current location.  Shoppers who are close to a specific hotel are more likely to book a one night stay.  Similarly, customers who are further away tend to book longer stays.  Expedia’s research found that 81 percent of the mobile bookings from within a 10-mile radius were for one room night.  When shoppers were 50-plus miles away, just 48 percent booked one night.  Conversely, only five percent of people within a 10-mile radius booked stays of 4-plus nights, while 29 percent booked the same length when outside the 50-mile radius.

2.   Grab your share of the international traveler pie.

International travelers are a great source of incremental demand.  In descending order, Canada, Japan, Australia, Mexico, and the United Kingdom are the fastest growing countries by actual production different from last year in terms of U.S. travel based on Expedia bookings.

Beyond the incremental nature of the international traveler, there are several reasons why the international traveler is even more valuable to hotel partners.  First, they have 31 days longer average booking windows.  Additionally, the stays themselves are 40 percent longer than their domestic counterparts.  Hotels also can expect a $7 Average Daily Rate (ADR) increase and should rest easier knowing that these long distance travelers are 66 percent less likely to cancel their reservations.

3.   Content is king.

It is important to invest appropriately in one’s online brochure.  Make sure to have comprehensive room descriptions and plenty of pictures. This helps create more bookings and capture higher ADR.  Simple things like doubling a hotel’s online pictures can result in 4.5 percent take-up and $3.50 higher ADR, while providing a full property description (as opposed to a partial one) can result in a five percent take-up and $3 higher ADR.

According to PhoCusWright’s “Consumer Travel Report (4th edition),” professional photos are used during travel shopping by almost 50 percent of U.S. online travel shoppers. Twenty five percent of U.S. online travel shoppers view professional videos during travel shopping.

4.   Invest in social media.

We are seeing that engagement through our social media channels correlates with a propensity to book,” Saunders noted.  “In one study, we saw that customers who visited Expedia.com and the Expedia.com Facebook page were 107 percent more likely to book.”

The most actionable advice relates to Traveler Opinions/Reviews.  Whenever possible, hotels should encourage guests to comment on their stay on any of the numerous review sites available.  Data from Expedia’s global hotel transactions in September 2011 suggests that doubling a hotel’s number of reviews results in a 3 percent higher take-up, as well as a $2 higher ADR.  According to PhoCusWright’s “Social Media in Travel 2012″ report, the total volume of hotel reviews grew sharply in 2011. More than 1.5 million traveler reviews were posted online in 2011 for the nearly 25,000 U.S. hotel properties covered in their analysis, up 25 percent from 2010, so hotels should make sure they aren’t left behind. Also according to PhoCusWright, OTAs continue to be the most popular websites where travelers post hotel reviews. In 2011, more than 7 of 10 reviews were posted on an OTA.

Also, according to the same study, traveler’s satisfaction with a hotel stay is driven by how much they paid and the quality of the stay, in addition to their expectations. Those who believe they got a good deal may be more positive. Conversely, those who feel they overpaid will rate their experience more poorly. If a hotel wants better reviews, it should make sure it considers value.

Based on PhoCusWright’s “Consumer Travel Report (4th edition)” from 2012, 62 percent of U.S. online travel shoppers use traveler-submitted reviews as part of their planning process.

5.   Work with your market manager to utilize market insight and help build your maximum profitability strategy.

Market managers are fonts of local market information and best practices from around the country, and a savvy hotelier will make the most of their insight.  Market managers can offer reports for a given market and hotel that includes information about how the hotel is performing compared to its competitive set.  They will be aware of upcoming events and compression/need periods and have a keen understanding of distribution and promotional strategy.  For example, when developing packages, market managers will be aware of decreased air capacity into a destination and the accompanying increase in airfare that is likely.  Armed with that information, smart hoteliers can input package path rates that will offer a compelling option that meets the traveler’s total budget requirements.

For example, Saunders recommends increasing inventory in the package path for some of his hotel partners that wanted to minimize the pressure to offer last minute discounts.  This a great way to build base and protect a hotel’s retail rate, while sharing the discount with an airline partner.   Building that base is key as it can help the property achieve a higher ADR and avoid fire sale prices to move rooms last minute.  Expedia recently conducted a study in some sample markets, including Manhattan, Vegas, Orlando and Miami, and  found that hotels that have higher than average participation in packages also have a higher gross ADR during all booking window periods than those that do not participate much in the package path.

“At the end of the day, you should be making the most of your OTA relationship to help earn the lion’s share of converted business,” Saunders added.  “From the hotel to the OTA, it’s in everyone’s best interest to see both rate and occupancy increases.  A tandem approach to achieving that goal is no more than a phone call away to your market manager.”

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