Cost
Generally direct bookings are considered to be most economic. But the transaction costs are only part of the total cost involved into generating a booking.
If you account for the costs to create and maintain your web site(s), the time and means spent on search engine optimization, advertising, newsletter marketing … the actual cost of direct bookings could be higher than the cost of bookings from OTAs.
Reach
OTAs give you access to segments which would be hard to reach directly. One example are foreign markets. OTAs translate your listing into multiple languages thus opening markets which would be expensive to address directly.
Due to their marketing expertise they quickly adapt to changes in consumer behaviour and new technologies.
Billboard Effect
Consumers like to search on OTAs. A large number of prospective guests will go to the hotels web site to compare prices. If the hotels web site is appealing, has competitive prices and an easy to use booking engine many of these guests will book directly.
Pay per Performance
You only pay when you actually have a guest. Empty beds also mean no commission for the OTA so it is in their best interest to sell your rooms.
Reactivity
OTAs offer hotels various ways to quickly react to changes in demand. You can drive additional business through payments for positioning i.e higher commissions on periods when business is slow, featured promotions or promotional rates.
These options come at a cost. But in the end they come cheaper than leaving rooms empty.
Market Information
The market intelligence provided by OTAs can help dive your overall strategy and pricing.
Many OTAs offer self-service options which allow you to compare your performance with competitors. Market managers usually have a deep understanding of their local markets and are happy to share their insights.
Unplugged Collection is the Front Desk Management System (PMS) and Reservation engine of choice for independent hotels, Villas and boutique chains. Read more information here: www.unpluggedcollection.com/index2 or contact us.
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