Hoteliers are often frustrated by the significant fees charged for bookings via OTAs. The trend among many hotels is to do whatever it takes to encourage more direct bookings that circumvent the OTA system – RoomKey being one of the most recent well-organized examples.
Other than pull inventory or redouble inbound marketing efforts,Â what can hoteliers do to push back against the OTAs?
One hospitality industry veteran has taken to the Web to publicly gripe about the OTAÂ situation on French travel industry website Hospitality-On.
In a series of articles, Georges Panayotis wrote about the “tense partnership” between hotels and OTAs, and received such a supportive response from hoteliers that he decided to create an online petition for hoteliers to express their frustration with the current model.
The petition urges theÂ EuropeanÂ government to intervene to create a fully balanced system that also considers the hotels’ interests, and has already been signed by over 4,000 hotels and hotel groups.
This effort follows on from the French government’s involvement last year in a suit against “unfair business practices” against Expedia and TripAdvisor.
Tnooz reached out to Mr. Panayotis regarding his pursuit of equitableÂ partnershipsÂ for hoteliers. The conversation centers primarily on commission rates, but also points to an underlying dissatisfaction with the relationships OTAs forge with hotels.
He first pointed to the complaints laid out in the petition:
- I, the hotelier, denounce the harshness of commercial relationships that are established with online hotel reservations agencies.
- I, the hotelier, denounce the lack of dialogue to engage in a genuine business partnership on a balanced basis.
- I, the hotelier, denounce the steady rise without previous discussion of the commission rates on hotel bookings via the OTA channel.
- I, the hotelier, denounce the system of determining commission on a All Taxes Included basis, requiring to pay fees even on public taxes.
- I, the hotelier, denounce online agenciesâ€™ will to take clients who come to my establishment for their own profit.
- I, the hotelier, denounce the seizure made on the name of my business for search engines by purchasing private adwords.
- I, the hotelier, denounce the creation of a dominant position for any single online supplier in a tourist destination.
- I, the hotelier, denounce the capture of internet users who freely search the internet by the massive purchase of domain names and generic adwords.
- I, the hotelier, denounce the practice of posted comments on my property under the guise of anonymity.
- I, the hotelier, recognize that I am primarily responsible for greeting clients in my establishment and the quality of service provided should be paid with a fair price.
- I, the hotelier, recognize that I am primarily responsible for any incident that may occur during a stay and therefore a direct link should be maintain with the client.
- I, the hotelier, recognize that I am primarily responsible for the economic balance of my business by keeping control of fixing my rates.
- I, the hotelier, recognize that I am the manager of my inventory and I maintain the freedom to distribute contracts among different marketing channels.
- I, the hotelier, demand a transparent and balanced contract in a spirit of partnership that justifies the added value of each signatory.
- I, the hotelier, demand the fixing of fair remuneration for marketing services of online travel agencies.
- I, the hotelier, demand a real effort and joint promotion of my business on the web without confiscation of my identity.
Why are you leading this charge against the OTAs?
I am not leading a charge on personal grounds but I consider myself as a voice to express the feeling of the industry after many discussions, with representatives of hotel brands and with independent hoteliers. They feel that the balance of relations between OTAs and the industry is no longer right.
Something should be done to point out the failures of the system that was once more in favor of the hoteliers. One drop too much made the cup overflow: When Booking announced they will no longer send information on the client together with the booking and that they will keep the credit card information for themselves.
What is the biggest problem with the current distribution model?
The biggest problem is twofold: first too many hoteliers have decided to rely heavily on OTAs to sell their property, thinking they might no longer need any commercial strategy and staff as the bookings came directly into their PMS. Because of the concentration among OTAs, they can increase their commission on every sale to a very high level (up to 25% and more) putting in danger the economic balance of the property.
Second, as a result of that overwhelming position of OTAs in the distribution of the hotel, the clients no longer are part of the goodwill of the hotel. They â€śbelongâ€ť to the OTA which can displace them just by a click of the mouse. Therefore the value of the business is decreasing enormously. Hoteliers do not realize this situation before trying to sell their property.
Â Is this problem unique to France or can it be applied worldwide?
The situation is more or less the same within Europe, where the major OTAs (namely Booking, Expedia, Lastminute) have a stronger position than in the USA. The concentration is stronger on the European market. In some cities in France, such as Paris, 30 to 40% of all hotels reservations are made throughÂ Booking.comÂ alone.
What solutions do you see to the current situation with OTAs? Is it eliminating them? Increasing more direct bookings? A completely different alternative?
I am not, the industry is not fighting against the OTAs. We all recognize that they have a useful role to play as an innovative distribution channel. Their technology is good, their advertising is wide…The industry wants to re-adjust the powers in balance. Hoteliers, and mostly independent hoteliers, should considered more as partners rather than prey to feed on.
Hoteliers must be in control of the distribution and have the right to manage the different channels of distribution. OTAs are one type of channel. It was the mistake of many hoteliers to rely solely on OTAs, an easy way to fill rooms but without thinking of the consequences.
What can OTAs do to repair their relationship with hoteliers in Europe?
To review their commission policy. To invest in promoting the destination. To stop buying the name of domains and the private names of hotels on the search engines. To play fair.
NB:Â Euro commission image via Shutterstock