The Hidden Costs of OTA Commissions for Boutique Hotels

Introduction: Online Travel Agencies (OTAs) are a popular way for boutique hotels to get bookings, but the high commissions they charge can significantly eat into your profits. Understanding these hidden costs is crucial for small and medium-sized independent hotels looking to maximize their revenue.

A necessary evil: While OTAs offer visibility, they charge commissions that can be as high as 20%+ per booking, they're cumbersome to manage, they don't share guest contact information with you etc. all translating to lower profits and less time to spend doing more productive things. That said, the big players control a lot of the global travel demand and it (usually) doesn't make sense to avoid getting that exposure.

The Billboard effect is real: The billboard effect is the theory that OTAs serve a lead-generation platform (i.e. a billboard) that gets lots of eyeballs, that encourages the prospective guest to do more research. As the average traveler has over 12 touchpoints before making a booking, this concept has been widely accepted throughout the industry. As such, what matters is conversion - that is, converting those guests who discovered you on an OTA and have now landed on your website. Studies show that this billboard effect equates to 30-50% of the web traffic an independent hotel website gets. The challenge is that you need to give them a reason to book on your direct website versus the OTA website.

‍The Solution - Optimize your OTA listings and have a great website & booking experience

• Optimized OTA listings: The OTAs are in many like search engines, where you need to optimize your listing with the right content (pictures, text, prices, inventory, reviews, guest response rates etc.) to make sure you're visible. This is complicated and the big players have the resources to hire people to do this.

• Beautiful website & booking engine: While beauty is in the eye of the beholder, it really serves as a proxy for traveler trust. At the end of the day they're buying expensive goods online and want to trust they're going to get what they think they're paying for. This includes the entire check-out flow from your Google Business profile to your website to the booking engine and check-out experience.

Of course, this is only the tip of the iceberg when it comes to using OTAs to your advantage. At Autumn we do all this and much more to drive more bookings, much more direct bookings, and a fraction of what it would cost to hire people.

Contact us to learn more!