Broken down, how OTAs are eating hotel business


Fact – online travel agents are taking everyone’s lunch, apparently charging pretty high commissions and have become pretty good at the whole hotel distribution game.

No discussion about OTAs and hotel distribution would be complete without at least one mention of (yes, we know there is debate about whether it’s strictly speaking an OTA).

The point is, how and why, has it (and others) become so successful?

Step forward Jenny Taaffe of iZest who recently gave a fascinating analysis of some of the tools and messages an intermediary such as Booking might employ to convert the customer. It’s not rocket science but it makes for a pretty interesting read.

Speaking at Enter 2014 in Dublin last month, Taaffe reminded the audience that customers go to OTAs to simplify things and get access to choice. She then launched into a breakdown of the home page.

  • Nice clear ratings – stars, text and numbers – customer can’t go wrong surely!
  • Discount messages
  • Thumbs up symbols – providing the customer who is not sure which way to turn with reassurance

hotel distribution

What else?:

  • Latest booking 20 mins ago
  • There are 32 people looking at this property

It’s interesting to note that when you click on the property, the number of people looking goes up and the time since the latest booking comes down. What this does is validate to the customer that he or she is looking at a good option and begins to create a sense of urgency – better book that hotel before someone else does!

Taaffe describes it as ‘sub-conscious positive reinforcements’.

Best price guarantees and ‘savings’ messages are also dotted throughout.

hotel distribution2

And, that’s not all. There are further carefully worded phrases and tools to help the consumer dive for his or her credit card. Free booking and free cancellation are some you often see, again providing the consumer with peace of mind that they can change their mind.

The reality is that the cancellation policy tends to be no different than if the consumer had gone to the hotel direct and you don’t tend to pay a booking free when you phone a hotel or book on its brand website.

Anyway, then the same messages are repeated again such as the number of people looking at ‘this hotel’ and the ‘last booking made’ while ‘book now, it only takes 2 mins’ button is added and then, a ‘confirmation is immediate’ message. Taaffe says:

“They (the OTAs) are doing everything they can to keep customers on their sites. It’s all very reassuring, like a pat on the back.”

hotel distribution3

And, when the customer chooses that room, he or she receives a ‘best price – you just got it message’ as well as various other ‘look how clever you are’ type affirmations.

The point of all this, as Taaffe says, is that when you compare the experience with the average hotel website, there is little of the same reassurance, the explanations of terms and conditions and often no reviews and ratings.

So, what can hotels do?

They often bemoan the power of the OTAs and how they need to fight, to claw their business back, so here’s a few of Taaffe’s tips:

  • Tell them why to book on your home page.
  • Keep pricing simple, less text/jargon, think about creating three simple options with names with ‘single short innovative lines’.
  • Tell them what you won’t charge them.
  • Show and link to relevant reviews.
  • Reassure, reassure, reassure – that’s what the OTAs are really excellent at.

And, she points to research from Cornell University revealing that consumers are also going to hotel websites as part of the purchase cycle so something is going wrong.

NB: Cat image via Shutterstock.

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