The Role of OTAs in Revenue Management: The Only Constant is Change

By Christian Koestler President & CEO, Lixto, Inc. | October 16, 2011

The practice and profession of revenue management in the hotel industry is a relatively new phenomenon. While the first hotels probably began catering to the pleasure traveler during the Roman Empire – and records show the first inn in the United States opened the year Jamestown was founded – it was not until the 1980s that hotels, hotel schools and academic institutions started to seriously examine and quantify the field of yield and revenue management.

Not until even more recently have hotels begun to implement formal revenue management policies, programs and systems. Fueled by technology, the field is now a true science. Increasingly powerful computer systems can handle many tasks essential for revenue management. The growth and proliferation of the Internet has changed core communications for travelers and hotels alike.

Amid these developments, the online travel agency (OTA) has arisen, changing the rules of revenue management – and the professionals who practice it – on an almost-continuous basis.

Leveling the Playing Field

OTAs have, at their base, added another layer of complexity into the mix of sales channels in the hotel industry. In a positive sense, hotels of all sizes can leverage OTAs to increase and enhance marketing efforts and sales revenues. For hotels without a strong brand presence and technology tools, OTAs – even with their sometimes-onerous commission structure – can level the playing field, and often make the difference between success and failure, surviving and thriving.

At the same time, OTAs constitute only one distribution channel. Hotels realize that they cannot depend solely, or even primarily, on OTAs. They need to find ways to be their own primary booking channels. Today, in the United States, about 45 percent of booking revenues derive from hotels’ own websites. As advanced price intelligence systems help hotels assure their own rate parity strategy, the trend – and that percent – will continue to edge upward.

Coming up in March 2018...

Human Resources: Value Creation

Businesses must evolve to stay competitive and this is also true of employment positions within those organizations. In the hotel industry, for example, the role that HR professionals perform continues to broaden and expand. Today, they are generally responsible for five key areas - government compliance; payroll and benefits; employee acquisition and retention; training and development; and organizational structure and culture. In this enlarged capacity, HR professionals are no longer seen as part of an administrative cost center, but rather as a member of the leadership team that creates strategic value within their organization. HR professionals help to define company policies and plans; enact and enforce systems of accountability; and utilize definable metrics to measure and justify outcomes. Of course, there are always new issues for HR professionals to address. Though seemingly safe for the moment, will the Affordable Care Act ultimately be repealed and replaced and, if so, what will the ramifications be? There are issues pertaining to Millennials in the workforce and women in leadership roles, as well as determining the appropriate use of social media within the organization. There are new onboarding processes and e-learning training platforms to evaluate, in addition to keeping abreast of political issues like the minimum wage hike movement, or the re-evaluation of overtime rules. Finally, there are genuine immigration and deportation issues that affect HR professionals, especially if they are located in Dreamer Cities, or employ a workforce that could be adversely impacted by federal government policies. The March Hotel Business Review will take a look at some of the issues, strategies and techniques that HR professionals are employing to create and sustain value in their organization.