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Comparison Sites: The Pros and Cons for Hoteliers

The continual increase in the popularity of price comparison websites (e.g. booking.com, Expedia, Trivago), naturally causes debate over the pros and cons of partnering with these sites for the individual hoteliers that use them (or for those that are considering using them). We take a look at the advantages and disadvantages of using an online travel agent (OTA) to list your property and advertise its rooms, rates, reviews and facilities.

Advantages

Cost

Using comparison websites can be a fairly low-cost way to advertise your property online and may help reduce the spend of your overall online marketing budget, as these sites invest in their own marketing initiatives using your property.

Comparison site partnerships could also reduce your website costs, as OTA’s commonly provide a positive experience for customers through good website design and functionality. This isn’t to say that you can lack initiative when it comes to your site, as this is the hub of your brand image and value – but being listed on an OTA site that has excellent user experience (UX) can no-doubt lead to new and more business.

Visibility

Listing your business on an online travel site will largely increase its visibility. Use of an OTA allows your business to reach beyond those ‘in the know’. As mentioned above, OTA’s have large marketing budgets that they will spend to increase the amount of qualified traffic reaching the website to search for relevant hotels (including yours). This includes running print, TV and online ads that are high volume, high competition and also – high cost. This is particularly beneficial for smaller brands, as they will be put in front of a huge new market without the cost of running expensive national campaigns.

These sites are popular with customers who like to compare accommodation costs and the services offered by individual providers, and so not only are you reaching a wider market, but you are also able to stand out based on your USPs and what you have to offer in contrast to similar businesses.

For example, although it may be popular for consumers to use OTA’s to search by price or star rating, the filter structures on these sites are becoming more and more sophisticated (including interactive location maps), giving huge range of options for customers to filter by can give you the best chance of standing out against your competitors:

Feedback and Reviews

Reviews are integral to the success of hotels, with TripAdvisor and other OTAs often go-to research hubs for consumers looking to book their next getaway. Just look at these statistics from TripAdvisor:

  • 96% consider reviews important when researching a hotel
  • 79% will read between 6 and 12 reviews before making a purchase decision
  • 70% of users look at up to 20 reviews, and more than 16% between 21 and 30 reviews before booking
  • 88% of travellers filter out hotels with an average star rating below three
  • 85% agree that a thoughtful response to a review will improve their impression of the hotel.

Listing your business on an OTA enables the chance to receive even more customer reviews. Using these sites to gain feedback is also a great way to take on board what your customer is saying, helping you to improve your services and maintain the elements that are praised.

Disadvantages:

Commission Charges

The commission charges that OTA’s implement may cause reduced profit margins for your business. As OTA’s charge commission on every sale, it can range between 10 to 20% of the gross cost. It’s important to take this into consideration before listing your business on an OTA, to ensure that the benefits will outweigh the charges and that new customers will convert to more profitable, direct visitors in future. These commission charges can also be a bone of contention for hoteliers over the use of OTA’s as ‘sort by price’ is often the most used sorting function on comparison websites – forcing aggressive pricing between comparable destinations.

Restrictive T’s and C’s

There may be terms and conditions, such as guest cancellation and automatic room reselling policies that form part of the OTA’s agreement. Take a look around different OTA’s to see which sites rules and restrictions you can and cannot adhere to. The best price guarantees offered by these sites also restrict the offers that you can carry out directly, as often the comparison site will appear more attractive.

Systematic Issues

Integrating systems to manage room availability may also prove to be a barrier when joining an OTA. You must be able to ensure that your own website, front desk and telephone sales work seamlessly with the comparison site to avoid double-bookings and restricted availability. Managing these issues can be complex and time consuming, so you must be committed to the use of the site and implement a strategy to avoid risk and loss of revenue.

Own Booking Facility

Using an OTA does not mean that you should restrict direct sales, and so your website should still include a booking function. Comparison sites aren’t for everyone and some consumers may find booking directly more reliable.

Brand Knowledge

An OTA will list the facilities and offers your business provides, along with a great deal, but they don’t really allow the visitor to get to know the real story behind your brand. You will still need to implement a multi-channel marketing strategy to ensure that existing and potential customers are still being targeted with your unique messaging.

Lack of Control

When appearing on an OTA website, hotels often have to relinquish some control over their brand image. Although having increased visibility through the OTA’s more aggressive marketing strategy can be an advantage, you are also left at the mercy of how they choose to market the properties they list.

 

There are many distinct advantages and disadvantages to listing your property with an OTA, and so it is important to analyse the needs of your business and understand how it will work in unison with a comparison site before taking the jump.

 

An investigation was carried out by Cornell University, researching the ‘Billboard Effect’ to discover whether direct sales were increased as a result of being listed on an OTA. The findings revealed that being on Expedia increased bookings between 7.5 and 26 percent.

 

Understandably, the use of these sites is more beneficial for a small independent business. Recognise that it will make a great profile for your business and increase visibility but do not rely solely on the site to deliver.

 

We partner with many hospitality organisations and would love to help make things easier for you when considering listing with an online travel site. If you’d like to find out more, please contact us on 01642 525100 or email enquiries@agnortheast.com

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