by Ken Vincent, Featured Contributor
I have known quite a few of both groups, and I have to say that sometimes the rabbits are the brighter.
Why? Well, I’ve never known a rabbit that didn’t have a back door escape route to his burrow. However, again the hotel executives have dug themselves into a hole with no back door in dealing with OTAs.
There was a time when hotels and travel agents were on the same side. Travel agents packaged hotels (or sold packages created by wholesale tour operators), sometimes several hotels, along with air travel and sold the packages to the public. Hotels paid the TA a 10% commission Pretty straight forward. It was a two party deal with hotels+ travel agents, both selling to customers.
However, some hotel executive (s) agreed to give one or more OTAs higher commission rates, then to remain competitive, other hotel brands joined in. Now with OTAs becoming highly profitable many others emerged. Then to put the icing on the cake they started demanding “best rate” clauses.
So, now we have a situation where there is a three sided issue: Hotels vs. OTAs vs. customers. Everything else being pretty much equal, potential guests will certainly consider the best rate as desirable which favors the OTA. Many hotels have experienced a multiple edged sword from this. They have lost control of their ADR, a large part of their rooms inventory, and they are taking in less net room revenue.
We now have the worst possible situation. How do the hotel brands back away from these deals, or make them more balanced? Are there any hotel executives, with any brand, that will take that first step and dig an escape route out of the hole they’re in? What will that escape route look like?