Mr. Suggs

Reservations / Online Pricing / Booking Engines

Online Travel Agencies and Suppliers: the Seemingly Eternal Battle

By Blake Suggs, Account Director & Integration Specialist, Range Online Media

No one would dispute that OTA’s and Hotel Suppliers are irrevocably tied together, but over the years the love-hate relationship has gone through several evolutions, each of which has borne out a valuable lesson. Obviously the ultimate goal for a supplier would be to have every booking come through its .com. This hasn’t happened, and it most likely won’t ever happen. The primary reason? Today’s travel buyers like to shop and see what’s out there. With the economy as it is, more than ever, the ones that are making travel plans are taking every step necessary to shop for a rate that will allow them to stretch their dollar as far as they can. When there are fewer travelers, which is happening now, the tension escalates even more because the Online Travel Agency and the Hotel Supplier are fighting even harder for that dollar. Which goes along with the next point, travel is a large investment, and large investments necessitate research. According to YPartnerships, in 2000, 35 percent of travelers were already using the Internet for research, while today 66 percent do.

If you asked an OTA about what they do, they would tell you they’re an online travel company that addresses customers’ needs in every area of the buying cycle. They typically take ownership for setting the pace for Internet bookings, rich inventory content and innovative online services for travelers.

If you asked a supplier what an OTA is to them, their reply would probably be something very simple like, “They’re a distribution partner that provides another channel for selling our rooms.” It’s a story of competing views, which are starting to merge … slowly but surely.

To understand the phases of the relationship between the Online Travel Agency and the Supplier, you have to understand the history. Yes these phases are generalized, but bear with me.

2001-2002: OTAs – who are these guys? The meteoric rise of the OTA was a surprise to most people, or at least to those who didn’t work for one of them. They filled an immediate need by centralizing the entire travel buying experience. While working hard to become the travel agents of the future, they were also slowly killing off traditional travel agencies.

2003-2004: OTAs are awesome! Inventory providers – airlines, hotels etc – hit a bit of a stride with the OTAs during this time. They were growing their overall bottom line through distribution, but almost immediately the market became very crowded. The limited opportunities for distribution partners to control their own destiny through strategies like premium placement and off-site linking weighed heavily in the shift to the next phase.

2005-2007: I want it all through my .com! Suppliers began to make conscious efforts to drive more business through their brand sites. They expanded loyalty programs, reworked distribution agreements and generally tried to force more revenue through their direct channels. And it worked, at least in the short-term. Supplier sites saw gains against OTA SOV during this period, and it looked like a permanent shift was inevitable.

2008-2009: We have to work together. The shift to Hotel Suppliers was short-lived, and Online Travel Agencies began innovating on a large scale in mid-2007. OTAs began to gain back the share they had lost in 2006 and 2007, and one thing became ultimately clear: OTAs were here to stay. However, the temporary shift towards Supplier did have one lasting effect, Online Travel Agencies came to the realization that they had to improve their working relationship with their partners – they had to make their businesses more advertiser-friendly. Looking at this over the span of nine years, its obvious OTAs are in a completely different place than where they were in 2001. In the process of aggregating millions of transactions every day, they've grown into multinational corporations that take in billions of dollars in revenue each year. They are seeking out advertisers on a large scale in order to maximize not only revenue but also good will.

So where do we stand today? The bottom line is that OTAs and Hotel Suppliers are going to have to work together on more than just distribution if online travel is to get to the next level. When I say that, I’m not talking about overcoming the current economic slump’s effects on online travel. Rather, I’m speaking to the service, products and sophistication with which these two parties go to market.

The good news is that we’re starting to see this cooperation grow from both sides. I was just recently invited to a meeting hosted by one of my clients that included all agencies and OTA partners. The OTAs actually came in and presented to both the Hotel Suppliers and agencies in an effort to grow cooperation between all parties. What a breath of fresh air!

Here are the five things that must be priorities moving forward to ensure maximum value for both Supplier and OTA:

1) Transparency – both sides must be more transparent across the board. Whether it be pricing strategies or inventory availability and management, cooperation on every front will result in the maximum number of rooms sold.

2) Traffic – it’s no longer okay for OTAs to limit off-site traffic. Now is the time to open it up and allow the consumer to book on the Supplier’s website. In my honest opinion, it should even go beyond allowing this through advertising. As long as the OTAs are off-setting the lost bounty by more advertising dollars spent, then we have an equitable situation.

3) Rates – both sides need to cease trying to out-do the other on price. While it’s true that most agreements say otherwise, there are still numerous instances of one party trying to “out promote” the other, and that just won’t do. Not only does it sour the relationship, but it also creates confusion for the shopper.

4) Reach Out – OTAs simply need to do a better job of reaching out to Suppliers, as well as their agencies with opportunities. Up until recently – and they have been doing a better job as of late – this simply wasn’t a priority for OTAs. Agencies would call and get zero answers, while suppliers would inquire and get misguided answers based on which product was being pushed rather than which product was the best fit. This ties into transparency as well. It’s essential that Hotel Suppliers spend a lot of time physically meeting with at OTA heads, account managers, and hotel representatives in different markets to allay concerns and begin holding everyone in different parts of the business to the same performance standards.

5) Overall Experience - Both Online Travel Agencies and Hotel Suppliers need to continually be taking a look at how their customer experience compares to the other. It will help identify what factors drive purchase preference, determine whether loyalty exists when travel sites reach price equality, and as an end result it will keep both parties striving for a better customer experience, giving the travel industry a better reputation as a whole.

There’s no question that progress has been made, and that the overall relationship is headed in the right direction. In the end both sides are dependent on the success of online travel as a whole and a cooperative effort to better accommodate the consumer is what will inevitably result in growth.

After a career in retail management Blake Suggs joined Range Online Media. He quickly began offering his hands-on expertise and strategic insight to clients in the travel, retail and energy sectors. An expert in cross-tactic strategy, he ensures successful integration of multiple campaign channels, including paid search, SEO, feeds, media and conversion optimization techniques. Mr. Suggs' current clients include Wyndham, Charming Shoppes, Reliant Energy, Wingate by Wyndham, Sears Service Live, Hawthorn Suites and Handango. Mr. Suggs can be contacted at 817-509-0348 or blake@rangeonlinemedia.com Extended Bio...

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