On line travel agents - a UK perspective

 NO DEFENCE FOR THE OTA’S, INNFINITE’’S TAKE

Whether you love or hate TA’s, this is really worth a read –

http://hotelmarketing.com/index.php/content/article/why_ota_customers_are_not_your_customers

A number of points we would like to highlight, amongst the many we could make:-

If the OTA's customer is not your customer, then hoteliers, Trip Advisor reviews by these customers are not allowed. Hooray!! .................But clearly the header is a misnomer, as a hotelier you should ensure an OTA customer MUST BECOME YOUR CUSTOMER IN FUTURE i.e. book directly with the hotel. This is an easy sell to the customer, but it must be backed up with superb customer service, especially pre-arrival.(where OTS service is often weak)

These monoliths (OTA's)are all about reservations, and almost zero about service - no wonder there are a huge number of varying types of complaint about on line service. OTA's are a numbers game that's it. See http://hotelmarketing.com/index.php/content/article/why_is_online_customer_service_so_bad

That said, as Riad (a contributor/commenter) has pointed out, their reviews of your hotel are at least from stayers, unlike Trip Advisor

The point about the hotel being in control of its margins is invalid as soon as it enters the OTA arena as - remember rate parity? Worse still, you lose control of your profile really, as most OTA profiles are worse than useless and also don’t allow you to properly differentiate yourself from your competition.

Rate parity, or wholesale price fixing, as it really should be known, is an absurd concept. Furthermore, to the best of my knowledge, it only exists in travel. And worse still, total lack of retail price fixing risks not only prejudicing the hotel’s rate integrity, but can produce prices that are downright nonsense, I’ll never forget a recent example of a hotel, whose rate during the Edinburgh festival (when, right we know that rooms are scarce) was published by Hotels.com at 25% above rack, this is malpractice and profiteering at its very worst, and represented a return to Hotels.com which would make every Groupon addict’s eyes water!

Here’s another interesting point – when Groupon and Expedia ‘got into bed’ with Groupon Getaways, this was a way whereby OTA giant Expedia could get access to and use/exploit Groupon’s vast armoury of data. Have you as a hotelier a corresponding right to ask OTA’s like Expedia for data (including email addresses) of all those OTA customer guests who have stayed at your hotel, for ongoing marketing use? Try it. And if not, why not?

Many commentators, like Max Starkov in particular continually present the argument about the direct on line channel. However laudable that is, we are in a seriously imperfect market when in fact for most travel shoppers the massive majority of the supply is in the hands of a few huge TPI's, with the added protection of rate parity. It is just not good enough to say that 'the power of their marketing programs can outgun even the largest hotel chain' - IHG proved that with Expedia/Hotels.com many years ago. Choice Hotels did something similar, American Airlines told GDS where to go. The problem is that the supply side is not well enough organised and managed to really take the fight to the OTA's. What's to stop Marriott, IHG, Choice, Hilton and Accor getting together as a collective and saying to the OTA's - 10% commission's your lot, or we pull out. Mr Starkov is right, there are billions of pounds being 'lost' to these OTA's every year, to an obscenely large wholesale market which delivers no value added, and owns nothing, not even a hotel!

They will of course say that their value is in their scale and the ability to allow you, the travel shopper,  a fantastic destination hotel search facility. They will also tell hoteliers the billboard effect will get you direct bookings you would not get otherwise, what they don’t tell you is that there would be no need for the billboard effect if they (OTA’s) didn’t exist.

No other market like travel seems to have so many 'consultants' and 'know alls' yet is in such a pitiful state on the supply side, especially hotels. I have to say good luck to the OTA's, the supply side only gets what it deserves. Despite billions of articles and hot air on this subject, this situation doesn’t look likely to change anytime soon.

Just remember - - - -
1          these intermediaries take no inventory risk, you take it all
2          they have commoditised the unit of sale, mind you even worse still so have the voucher companies, and where's the rate parity there?
3          any claim to customer service is masquerading, they only care about numbers and reservations
4          you the supplier have to listen to the moaning customer (who apparently may not be yours), 
many of the OTA's are now competing with the voucher sites/flash selling sites - all this is great for the intermediary marketplace, potentially fatal for the hotel
5          in all this you have to
invest in your product
meet the rising costs of energy, complying with regulations
face, and withstand the most critical audience i know for any product or service, real or fictitional
6          OTA’s intentionally close out your public website from  public access on their sites to prevent ;potential customers from booking direct with you. Fortunately there are enough savvy customers out there who will do the proper travel shop and Google your property so they can get your public profile, not someone else’s version of you.

There is another interesting point here about rate parity and rate integrity. I recently bought an IPad from the Apple Store. I also shopped on line and saw that different vendors were selling the same iPad at less than the Apple Store. Why did i buy from the Apple Store? Because i valued the trust and integrity of the Apple Store, and its knowledge of the product I was buying. Conventional wisdom in hotels says your rate on your own website should never be higher than the best rate publicly available. Apparantly the Apple Store doesn’t agree wit this philosophy. I wonder ewhy?

I remember many years ago, our Prince Charles here in the UK said that the primary producer should always get the lions share of the profit from the product. This was in the context of agriculture. The NFU (National Farmers Union) in the UK fights tooth and nail with the supermarkets and hypermarkets, and gets govt subsidies and support, to try to maintain its prices and therefore profit margins. The sort of licence the OTA has with your rooms and product is the same as the supermarkets colouring the farmer's well produced beef on the shelves to supposedly make it more attractive to buy. Where is the equivalent of the NFU in the hotel industry. Until/unless there is one, I'm afraid hoteliers we're all in the lap of the gods, and it’s our own fault. 

These are as much discussion points as hard and fast views. Your comments?