Top 5 Tips

17 June 2014


Frank Reeves, founder and CEO of Avvio, has the following tips when reviewing your OTA contracts: 

1. Evaluate the full range of the OTA’s KPI's and assess whether that OTA delivers customers that match your needs, target market and brand. As far as possible OTAs should be used to get business – by volume or segment – that you would not have otherwise attracted through other (more cost effective) channels. They might be blocking higher-value channels from booking your best inventory, for example. Or, you might be getting return direct business from customers who originally found you through an OTA. You do not have to work with every OTA, so consider dropping those who do not deliver what you need.

2. Agree commission levels that are relative to production: only commit to lower commission levels until that OTA produces consistently. Similarly, avoid entering any ‘Preferred’ partnership schemes – typically involving higher commission overrides – unless the OTA can prove their own value in regular sales along with the incremental value of those partnerships. Also bear in mind that the case for ‘Preferred’ status diminishes further away from crowded hotel markets.

3. Be very careful about how much allocation you agree – the less the better – and release periods. Be aware that OTAs may free-sell your inventory before invoking their allocation, rather than using their allocation up first.

4. Have a rate strategy in mind that favours your own brand website. Parity will be maintained by OTAs on rate, but not on room type (which you can close on the OTAs but keep open on your brand website), nor on conditions. So, you can have your advanced purchase rate available for shorter lead times (i.e., longer overall) on your own website. You should also take advantage of your brand’s 'closed group’ customers: opted in clients such as newsletter subscribers who can receive parity-busting rates to book directly with you.

5. Take advantage of any information you receive as to how much commission your direct competitor hotels are paying the OTAs. Bear in mind that these days the OTA salesperson may need your hotel as much, or more, than you need that OTA – particularly if your ADR is high – so any information that promotes compromise on commission levels is useful.

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