Are OTA’s slowly becoming more powerful than hotel groups?

OTA vs Hotels GroupsThe controversy is definitely in the air of the global hotel industry. Traditionally the Big 5 (Marriot & Starwood, Hilton, IHG, Accor and Wydham) have been unrivaled by pure virtue of their size and brand reputation.

However are they becoming submissive to major OTA’s like Booking.com & Expedia as they become increasingly powerful in their own right? Many hoteliers would turn up their noses at the idea however it would be naïve to not recognize the influence that these key players are earning themselves especially when considering Air BnB now having hotel listings also – It becomes a very real possibility that these companies are slowly forming their own hypercompetitive market similarly to our current large hotel groups in constant competition with one another.

The hotel industry has undoubtedly become fragmented and when looking at the global sales for 2016 of the below mentioned companies namely; Expedia Inc, The Priceline Group, AEGBT & BCD Travel it is clear to see where the controversy stems from.

Global sales of leading travel agencies for 2016

Are OTA’s slowly becoming more powerful than hotel groups?

With Revenue Management tools such as Rev+ through Expedia and RateIntelligence through Booking.com, OTA’s have made way to becoming “back-of-house tech providers” as well as the analytics they provide through their back-end.

It is important to remember that OTA’s are still nothing more than distributors and partners to the industry. Yes commission fees can be frustrating at times but they are a necessary evil in order to get a booking you otherwise wouldn’t have gotten – Thus it becomes important to align your rate strategy with the inevitable commission. E.g. putting your rate online at $125 dollars instead of $120 to break the shortfall of the commission.

(You’d be happy with $120 and the customer most likely doesn’t mind paying an extra $5)

In closing OTA’s should never be considered a threat to hotels group nor will hotels ever become submissive to their demands. It can certainly be said though that the better the relationship your hotel/group has with your OTA’s though, the better your business will do.

At the end of the day it’s co-existence that will benefit the industry as a whole far more than an ongoing battle between hotels and OTA’s when in this day and age both rely so heavily on each other’s business.

“You must spend money to make money.” – Plautus

Article by Michael Gimingham (Revenue & Distribution Analyst, TrevPAR World) – more about Michael Here