Vacation Rentals Can Lessons from the OTA Wars

Family in Patio

Is there any end in sight to the booking battle between hotels and OTAs? Can we at least expect a change in terminology so that the situation shifts from a war to a treaty, even if the two don’t always see eye to eye? The short answer is not likely. Although many major hotel brands have launched pricey and fairly effective direct booking campaigns, OTAs gained about a percentage point while hotels lost about a percentage point of bookings in the past year (Skift). The difference is negligible, but this is the point: chipping away at the power of OTAs is a formidable task. Even major hotel chains struggle to negotiate better commission deals (see Hyatt and Expedia this summer).

If we assume vacation rentals can learn something from the direct-booking wars, and we do assume this, then we can also assume that many hotels could have done things differently. So where did hotels go wrong?

When hotels initially began using OTAs, they did so as a way to put heads in beds, selling leftover inventory at lower margins. Perhaps this was before the industry acknowledged that filling a room with cheap business isn’t a sustainable strategy. And what did OTAs do? They built technology. They paid attention to how to use the internet, and they invested in understanding how travelers wanted to engage with them. They made this their business, and hotels focused on staffing the front desk and being hospitable. OTAs made the user experience better. First takeaway:

#1 Let your technology work for you. As much as possible, invest in technology that will not only capture guests but also serve them while they are staying on site. This is more challenging for vacation rental companies because they’re generally smaller than the average hotel brand. That’s why we advocate not just for individual VR companies but also for the entire industry to harness resources toward this effort.

Because OTAs invested in the guest experience and spent money on branding and marketing, they naturally wanted to own the guests. This is where hotels began to concede. Some of the problems were related to technology, and some were simply issues of training. Had front-desk agents been able to properly gather details from guests upon check-in, this situation may have looked different in the long run. Second takeaway:

#2 Own the guest data. Just because guests stay at your property doesn’t mean they are “your” customers. Not anymore. Third-party listing sites have a stake in making sure that the traveler is their customer and in the last several months have made their strongest push ever to make sure it stays this way. What you can do is ensure that you capture as much guest data as possible at every single touch point. For instance, NAVIS has technology that can track guests’ pathways and capture their data— despite the fact that third-party sites are making it more difficult for owners to connect those dots by withholding owner details from prospective guests until much later in the booking process.

Above all, what OTAs have done well is branding. They went all-in, and it has worked. Third takeaway:

#3 Go all-in. Grab the branding torch and run with it. If you rely on third parties to keep your vacation rental in the spotlight, when the fervor over rentals starts to die down, you will end up in the same battle over your business. OTAs have invested in getting guests to choose them because they offer choices, provide guests with the ability to compare properties and thrive on reviews. Travelers have responded by choosing OTAs, and those customers won’t easily be persuaded to jump ship, at least not without the deep discounts that hotels are currently losing money on to get guests to join loyalty programs.

And OTA marketing continues to work even as hotels finally go all-in. See a trend? Late with technology, late to invest in marketing to compete, and late to develop competitive programs, many of which are coming at a significant cost to hotels. What if, instead of spending billions of dollars on advertising in an attempt to recover these guests, hotels had kept pace? Our final takeaway:

#4 Don’t wait. Keep pace! When third parties make a move, rally your industry or company or property to keep pace. It may take an industry-wide movement in some cases, but it is better to do it now while you still have your own guests instead of later when you’re trying to recover them.

Sure, you can try to make the case that hotels aren’t responsible for what has happened. Hotels sometimes feel like they’ve been beaten up by a bully, but this is how the market works. Vacation rentals have an opportunity to be innovative, keep pace, and stay on top of technology. If you take and maintain control, then you have a shot at a different, perhaps better, outcome.


Blog Source: VRM Intel | What Vacation Rentals Can Learn from the OTA Wars

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