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What are OTAs and how are they threatening local businesses?

This week I learnt about OTAs. Otherwise known as Online Travel Agents they’re having a massive impact on the Hospitality Sector. 

You’ve probably used one yourself. They’re the online giants such as Booking.com and Expedia. What you might not be aware of is the impact they’re having on local businesses. So let me fill you in… 

Hospitality is an area I’ve been keen to understand better. It feels like a great match for We Are Acuity’s local marketing proposition, but I was keen to know if I was right. 

On Tuesday, I was invited to the independent Hotel Show at Olympia by my good friend Robert Holland. I jumped at the chance, to 1. Learn more, 2. Visit a real live trade show with real people. Something I’ve missed over the last year or so. 

We all know life’s been extremely difficult over the last 18 months for travel and hospitality, but here the room was full of energy and enthusiasm. What I soon realised was that OTAs, and Booking.com was a major topic of conversation for the day. 

In a sector where margins are already tight, it seems there are huge tensions between these real hardworking local businesses and the giant online intermediaries. 
 
For example, did you know that that Booking.com and Expedia alone are now worth more than the top global hotel groups IHG, Accor, Marriott and Hilton combined! 

The OTAs own no accommodation, employ no staff, don’t have to look after guests or take on the risks of unsold rooms, yet they charge up to 30% of the overall booking. 

When OTAs first came online in around 1996, they were seen as the friend of the hospitality industry. They helped hotels manage over capacity, drove traffic to the hotel’s website and in return the hotels offered the OTAs a discount. Both parties benefitted.  

But as millennials became the target customer group, the balance of power changed and the OTAs were left holding all the cards. They had effectively driven a wedge between the hotels and their customers, focusing attention on prices and reducing their margins significantly. 

So how do hotels fight back? Well after watching several fascinating talks at the show, the answer is actually like that in many other sectors including local retail. 

It’s to remember that people prefer to buy from people, so build on those relationships with the customer. Showcase your expertise. Create the ‘special’. Highlight the local and unique. Be as relevant as possible. And of course, let people know! So let’s get going and save local business! 

 
If you are in the hospitality sector, what do you think of the current situation? Do you agree with our thinking? We’d love to hear more about your challenges. 

 

#savelocalbusiness #localmarketing #localism

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