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How Much Does A Typical Hotel Pay for OTA Bookings?
In this article, we will explore...
How Much Does A Typical Hotel Pay for OTA Bookings?
There has been much debate about the dominance of OTA’s in the industry and also many hotel chains are now pushing back aggressively against the OTA’s. However does this mean the end of the OTA’s ….NO!!!
The fact is that many hotels do a poor job of selling their rooms online and hence, the OTA’s are actually helping hotels achieve desirable occupancies, although be it at a higher cost. They provide exposure on the global stage for the hotel which otherwise would not be possible for smaller hotel groups and independents. However in this process, many hotel managers have resigned to the fact that they will depend on OTA’s to sell their rooms! By doing so, many do not realize that they have just given their customer away to the OTA’s and hence, have lost the ability to reach the customer directly. During the Covid pandemic this became very apparent when hotels which were totally dependent on OTA’s had difficulty sustaining as they had not taken the trouble to build direct relationships with their guests!
The fact of the matter is that we need the OTA’s to help us expose our hotels to the greater market out there but that does not mean that we give up all our customers to them! Hotels need to start building a relationship with their customers and this all starts from the simple process of the first contact, e.g. the booking! A typical 100 room hotel today which has about 65% occupancy and 50% OTA customers with an average rate of $100, will be paying at least $200k in commissions. Imagine what can be done with the additional income if the hotels could divert some of the traffic to their direct website!
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