It is a great time to be hotelier, as the hotel industry has been experiencing very positive growth in RevPAR. While I am thrilled about this growth, we still have to take a step back and focus on the cost the industry is paying for this growth. Recently I read an article titled “What Expedia and Priceline Growth Means to an Independent Hotel” on Skift that resonated with me, and I feel it’s something to be discussed. The article gives insight on online travel agencies (OTAs) and the cost for independent hotels to play ball with them. This begs the question, if a good percentage of your business comes from the OTAs such as Expedia and Priceline, your RevPAR is growing but are your profits growing at the same pace or at all?
With the growth of the OTA market, and with Expedia seeking to acquire Orbitz, the OTAs will have even more clout with their commission structure. Many of us try to encourage direct bookings, and we as an industry need to continue to get the consumer to book directly if we want to capture the increased revenues as profits. Independents have to focus even more on the direct bookings as they don’t have the buying power to negotiate lower commissions with the OTAs as noted in the article We need to use all the tools at our disposal. This could be done by using our own websites and personalized emails to past guests to generate more direct bookings, or we will just be generating more profits for the OTAs rather than our hotel owners. If we don’t focus on this now when RevPAR is growing, imagine the challenge we will have during the next downturn.