How to increase hotel revenue by avoiding OTA channel risks. After reading this

Cooperation is necessary, but how to avoid the risks of cooperation with OTAs, avoid the erosion of interests to the greatest extent, and use distribution channels to increase profits is a topic worth thinking about for hotel managers.

The author of this article is Zu Changsheng, a special commentator at Global Travel News

Since the merger of the three major OTA distribution giants, Ctrip, Elong and Qunar, it has brought an unprecedented sense of oppression to the hotel industry. , whether a dominant player will create a monopoly in the distribution market, further squeezing hotel profit margins, has become the focus of the hotel industry. There is no doubt that a dominant player in the distribution channel will inevitably further reduce the hotel's say in the cooperation between the two parties, which will subsequently affect its negotiating power. In response to this current situation, how hotels should respond has become a question that managers must think about. Through the investigation and analysis of some domestic hotels, the author has made some analysis and thinking on the common problems and solutions in the current cooperation between hotels and OTAs, for readers’ reference!

First of all, let us explain the main problems that hotels face when cooperating with OTAs. First, the multiple agency models launched by OTAs in pursuit of high profits have led to the destruction of the hotel channel price system and the phenomenon of "price inversion". On the surface, hotels have the pricing power of their products, but in actual terms, part of the pricing power has been transferred to the hands of OTAs. This gives customers an intuitive feeling of disordered pricing, contradictory pricing, and even chaos. For example: the channel price system of a hotel's standard double room is as follows: the standard price (BAR1) is 368 yuan/room day, the guaranteed price (BAR2) is 358 yuan/room day, and the prepaid price (BAR3) is 348 yuan/room day. However, due to the separate functions of OTA's cash payment department and prepayment department, the profit rules are not unified, and the selling price displayed in the channel is completely different. BAR1 has a cash rebate of 59 yuan/room day, which has become 309 yuan/room day; BAR3 has been asked by OTA to provide a base price, and the hotel has lost its pricing power, and the OTA has independently priced it at 337 yuan/room day, and BAR2 has a cashback of 41 yuan. / room day, becomes 317 yuan / room day; plus the BAR3 sold by an agent unknown to the hotel is 318 yuan / room day, showing a situation where BAR2 and BAR3 are higher than BAR1, and BAR2 is lower than BAR3. As a result, the hotel price system was destroyed and price inversion occurred, and hotels lost their real pricing power.