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“The Winner’s Exchange” – A Proven Way To Lower OTA Fees

IMEG - The Trusted Agency for the Tourism & Hospitality Industry / blog / “The Winner’s Exchange” – A Proven Way To Lower OTA Fees
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“The Winner’s Exchange” – A Proven Way To Lower OTA Fees

As we know, guests want to book with the company who provides them with the best deals and best experience. Hotels want guests to book direct to save them the hindering of 15% - 25% they are paying OTAs. What if there is a way to give each side what they value and also build relationships that produce a winner's exchange? OTAs have the leverage with their deep pockets that allow them to market at a scale that 99% of independent hotels can not.

Don’t get discouraged yet, there is always a balance to something so one sided. Cornell University School of Hotel Administration performed a study called “The Billboard Effect: Online Travel Agent Impact on Non-OTA Reservation Volume.” The study showed that, on average, 53% of all bookings from OTAs first go to the OTA then travel to the hotel’s website, review more about the brand and what it offers - amenities, pictures, story, location, etc., then go back to the OTA to book because they see more value on the OTA. How can a hotel convert some of the 53% of people that end up on their own site to increase direct bookings? That is a great question! The simple version is - add remarkable value that is greater than the OTA. On average, hotels can convert 35% of the 53% “Billboard Effect” traffic in direct bookings, and we have seen this lower OTA fees by up to 9%.

Examples of Revenue Increase

Example 1:

  • A company’s gross revenue is $2,000,000.  
  • 20% of their revenue is from OTAs. $400,000 is being brought in from OTAs.
  • We know 53% of that $400,000 is coming to your brand's website before going back the OTA to book their stay.
  • On average, we are able to retain 35% of that 52% - growing your profitability by $70,000.

Example 2:

  • A company’s gross revenue is $5,000,000.
  • 15% of their revenue is from OTAs. $750,000 is being brought in from OTAs.
  • We know 53% of that $750,000 is coming to your brand’s website before going back to the OTA to book their stay.
  • On average we are able to retain 35% of that 52% - growing your profitability by $131,250.

How much profit can be gained from OTAs for your hotel?

Hotels OTA Revenue divided by 53% = X, then 35% of that revenue number = the amount you can gain back using the correct message at the right time paired with technology.

How can you do this and stay within the boundaries of your legal agreements with OTAs?

1. Use technology to show specific content and value propositions showing the guest the right content at the right time when they come from the OTA site to your site.

2. Stack value you can add that an OTA can't compete with

3. Have a rewards program to offer lower rates when booking direct while also giving rewards for future stays. This seems to be key to not breaching your OTA agreement, but it varies by hotel and OTA.

4. Engage with your guests pre and post checkout using targeted, value-added messages and communication.

How can I learn more about this?

This process is proven and working for hotels already. At first, this process and concept may seem complex, but it becomes clearer during implementation. It's a beautiful method when a hotel is able to optimize their revenue in such a way that brings value to their brand and guest experience. We would love the opportunity to show you how our suite of products, called OTA Hero, can increase your direct bookings and ultimately increase your overall revenue and profitability. A consultation is free and takes less than 30 minutes to show you how we can help you grow your revenue and profitability with direct bookings.

Watch the video below for more information, and to schedule a quick demo with us, click here.

I wake up each day in search of people who want to achieve goals larger than their dreams. I believe goals should be set just out of our reach so we spend a lifetime working with the end in mind, keeping our appetite for success steady and fierce.

My goal at IMEG is to deliver the most innovative, problem-solving tools that generate revenue for people who are seeking to grow their business. I am driven by 2 things - growth & more growth. I value the relationship that is developed with someone during the process of helping them grow their business. Here at IMEG, we find problems in businesses and use technology to develop a solution. These technologies have been proven to allow businesses more scalability and time to focus in other needed areas.

A man named Napoleon Hill once said, “whatever the mind can conceive, and believe, the mind can achieve.” Our mental mindset plays a large part in whether we take action or sit on the sidelines and say things like “I could have” or “I wish I would have.” I challenge you today to ask yourself what you want to achieve, then start taking action mentally to move toward that goal. If your goal is to grow your business, I am here to help make that happen!

Let’s Grow,

Daniel Evans
IMEG - Internet Market Expert Group