Maximizing the Billboard Effect on OTAs
By Jennifer Nagy President, JLNPR Inc. | September 29, 2013
A very common complaint among hoteliers and revenue managers is the high commission rates charged by the OTAs. Many hoteliers feel that they are being ripped off and that the OTAs are "stealing" their business. I'm here today to tell you that, while their commission rates can be high, having your property listed on the top OTAs is actually one of the best things that hoteliers can do for their business and revenues.
Here's Why… The Billboard Effect
According to a 2009 report done by Cornell University's Center for Hospitality Research, the billboard effect is "a boost in reservations through the hotel's own distribution channels (including its website), due to the hotel's being listed on the OTA website." While it is a term that is bandied about by many hospitality marketers, I believe that the value of the billboard effect is often underestimated.
The truth is that the exposure that is created by being listed on OTAs can have a HUGE impact on the number of bookings generated through a property's non-OTA sales channels. In the same study, Cornell Professor Chris Anderson found that a hotel's direct bookings increased from 7.5 to 26% when listed on Expedia, perfectly illustrating the impact that the billboard effect has on a property's direct bookings.
Today, many customers use OTAs as a search engine to find out what properties are available in a destination, the average prices, etc. and then continue their research on a property's own website. Independent properties will never have the marketing dollars necessary to secure the same level of visibility to potential customers that flagged properties do, so it is especially important that they use the most effective marketing tools available. The top OTAs spend millions of dollars on advertising every singe month and through that advertising, they are increasing your property's visibility to potential guests. And the best part – you don't have to pay for all of this free marketing until you generate a booking from the OTAs – even though you may be getting many more direct bookings because the OTA listing. Sounds like a win/win situation for everyone.
So now that you're rushing to call your OTA market manager to get your property listed, let's look at some tips on how to maximize the billboard effect on OTAs in order to generate as many direct bookings as possible.