Learn what to look for in an OTA, and see our recommendations of OTAs sorted by property type–B&B, hostel, & more.
Learn what to look for in an OTA, and see our recommendations of OTAs sorted by property type–B&B, hostel, & more.
Brandon: Welcome ladies and gentlemen, to this webinar by the team here at Cloudbeds on how to choose the right online travel agency for your property. My name is Brandon Dennis. I’m the VP of Marketing here at Cloudbeds. And I’m joined by Alex Gaggioli, our Marketing Coordinator. He’s going to be a moderator on this show. And if you have any questions, feel free to use the little Q and A button which will either be at the top of your screen or the bottom of your screen, depending on how your zoom interface is laid out. Feel free to ask a question and Alex will field the question my way during the webinar and I’ll take a moment to answer it. Major thanks to Alex who did the research and built this set. And major thanks to Rich Sanderson, our designer, who put in the images and made it look all pretty.
All right. This is going to be a fun one. It may be a little shorter than our past webinars. But we’ve created an eBook to accompany it, which we will email to you shortly. It should be in your inbox after this webinar. But let’s dive into the data. All right. So let’s introduce online travel agencies. I don’t want to linger on this too long because we all know what an online travel agency is and we all understand the importance of listing our inventory on it. But I do want to briefly touch on the numbers just so that we have a grounding, a foundation point for our decision making.
So the numbers are pretty impressive. The latest data shows that gross bookings were $19 billion on online travel agencies last year. Now originally, OTAs were designed to sell excess inventory for your hotel. Your hotel had a number of other marketing channels from paper advertisements to online advertisements, radio advertisements, and the walk-in customers. And OTAs were just in using the global distribution system, and OTAs were just a way to sell excess inventory. However, that’s all changed. Now online travel agencies are the number one place where travel is booked. People tend to go to online travel agencies first than to individual hotel websites or even to Google when in the process of doing their initial research for their trip. Which makes an online travel agency an incredible and important place to list your inventory if you want to get the exposure that you need.
That said, it can be a fairly complicated endeavor because every single online travel agency is different. They exist for different target markets. They’ve got different features. They have different commission structures. So that’s the purpose of this webinar is to kind of divide through all of the different options available to you to give you the information you need to choose the ones that are most appropriate for your property. So let’s take a look at some of the reasons why hoteliers use online travel agencies. OTAs such as Expedia and Priceline have evolved into sophisticated marketing channels for hoteliers of all sizes. Now guests can compare all of the different hotels in the area where they want to stay and take a look at different amenities and the different prices. And it’s really easy for them to make an informed decision.
The nice thing about using an OTA, the nice thing about leveraging an OTA, is that online travel agencies have huge marketing budgets that hotels simply don’t have. Hoteliers, and I think we have a slide coming up on this so I’ll save it for later, but they can offer reach far beyond the scope of small and independent properties. They have deeper pockets, deeper marketing budgets. And they can promote hotels in your area and even your hotel to a wider audience than you can. They also give you access to new markets. So not only can you tap into a huge user base of people who are there to do one thing, book travel, but you can use online travel agencies to find marketplaces for very niche communities, very specific things. Whether it’s backpacking or adventure goers or people who are interested in specific lifestyle around hobbies, for example. These are great ways to inject your property with very specific clientele.
Consumers also really trust brands. They may not know about your property. They may not know your hotel brand. But you know who they do know? They probably know Expedia and they know the brand of Expedia. They know that Expedia’s got a low price guarantee. They probably know Lonely Planet. They understand the brand of Lonely Planet. They understand that Lonely Planet creates a lot of thought leadership, that there are thriving communities on Lonely Planet. And they may trust the links to booking platforms that they see on Lonely Planet more than they would on other places. So guests and consumers are going to online travel agencies because they’ve established brands for themselves. They have a deeper marketing budget. And that is where we need to go to grab guests. They also go to online travel agencies because certain online travel agencies produce culturally appropriate experiences. Here are two examples. This is Ctrip which is the largest travel agency in China. It caters to a very explicitly Chinese audience. And then here’s Despegar and Decolar, both owned by the same companies. And they’re a Latin American online travel agency, the largest online travel agency in Latin America. These are very culturally specific online travel agencies. And if you were to list inventory with them, you would have expectations for reaching to a very specific marketplace, which makes it great if you really wanted to move into this marketplace. You can target these online travel agencies to inject your property with new guests from those marketplaces. Online travel agencies can provide a lot of language support that you might not be able to provide. They can provide deals and tailored experiences that you might not be able to provide. And so this is another great reason to leverage some of these niche marketplaces.
Additionally, we can take a look at the lifestyle of certain guests who are using niche marketplaces. You’ve got guests who are not brand loyal, right? They’re not going to a Hilton just because it’s a Hilton. They’re not going to stay at the Motel 6 just because they love staying at the Motel 6. They want a new experience. They want to discover a new property. And they do that by doing the research, right? They tend to be younger travelers. They tend to be more Internet savvy. They tend to be price conscious but also experience conscious. Less about brand loyalty and more about creating a new experience and discovering something new. And these guys are going to be going onto online travel agencies to do a lot of their research. They’re going to be interested in finding niche travel agencies or niche online marketplaces and directories that may be unconventional like, say, Hostel World or Lonely Planet or Bed and Breakfast or something that is very untraditional. You’re going to find a lot of people who are interested in those niche online marketplaces.
And you’re going to find people who really want to do it in a package. These tend to be family travelers or business travelers who want to get everything they need for their journey with one transaction. So instead of going to the hotel and then going to the airline and then going to the car rental place to make all of the different purchases, they’ll go to one place, an online travel agency, to do that all in one spot and to make one transaction and get everything. So you’ve got this variety of needs that guests have. They have all of these different things that they have to do, whether they’re wanting to get a package or they’re wanting to find a unique property or they’re trying to get a culturally relevant experience that individual hotels have a really hard time fulfilling just simply because they have limited marketing reach, they have limited marketing budgets. And they really need to be focused on one thing: providing an amazing guest experience, producing amazing content on their website to entice guests to book, to create an amazing web presence. That’s what an individual hotelier needs to work on. And an online travel agency can strengthen their time and their resources creating these culturally relevant experiences and packages and making the booking experience really compelling for a wide variety of different personalities and people.
So then. Now you understand why online travel agencies are not the enemy. They’re an important part of the travel booking players. And let’s take a look at the big players here and understand exactly what the landscape looks like. So obviously the big players are the big four. We’ve got Expedia, Priceline, Travelocity, and Orbitz. Now, Expedia has already purchased Travelocity and they’ve talked about acquiring Orbitz. Priceline owns Booking.com which is by far the largest player in the OTA space. We’ll take a look at the numbers later, but it’s huge in Europe. So really we’re talking about Expedia and Priceline as the parent companies that own a lot of these larger online travel agencies. But these four brands right here that you see before you control about 95% of the market in the United States and that’s the number according to Forbes. Now when you talk about the international market, the numbers are looking a little bit different. But 95% of the United States’ travel market is pretty big. And if you ever turn on the TV and you’ve seen commercials, these are the four commercials you see from these four companies.
Expedia also owns Hotels.com which has 16 million monthly viewers and Priceline itself enjoys 14 million monthly viewers. So these are the big players. They have huge budgets and they get millions upon millions of visitors. So if we’re talking about just finding the greatest canvases on which to paint your hotel, these are going to be the big ones because they’re the largest. And because of that, you can take advantage of what’s called the billboard effect. I won’t linger on this one for too long because I think it’s something that we’re familiar with. But for those who are not, the billboard effect is a phrase used to describe the phenomenon by which you actually increase your hotel’s direct conversions by listing inventory on an online travel agency. And this is how it works. So this is based on research done by Cornell. And what they found is that if a hotelier takes their vacant inventory and lists it on an online travel agency, like Expedia for example, they found that the hotel’s website actually increased direct bookings by between 2% and 24%. I forgot the exact numbers, but it was 7.5% to 26% are the exact numbers.
And the reason for this is people use online travel agencies for research and inspiration but not just online travel agencies. What they tend to do is visit a wide variety of other websites when they’re in their research and inspiration phase. So the way it’ll play out is a guest will go to Expedia and take a look at the different hotels in the area that he or she is trying to visit. They see your hotel listed, but they want to know more. So they open up a new browser tab in Google Chrome or whatever the browser they’re using and they Google the name of your property. Your website pops up in the first page of Google results. They hit your website and they see your photos, your packages, your promotions. They find your address and your phone number. They call you to learn a little bit more. And while they’re on your website, you have the opportunity to turn that visitor into a direct conversion, into a direct booking. And that’s called the billboard effect.
This is an interesting phenomenon whereby even if your strategy is not to get more bookings from online travel agencies because you don’t want to pay the commissions, you can still list some of your vacant inventory on an online travel agency and be secure on the fact that you’re going to increase your direct conversions which will cost you no commissions due to the billboard effect. So this is just one more reason why using an online travel agency, leveraging the power of all of these niche marketplaces can actually benefit your direct conversions as well.
All right. So let’s take a look at marketing spend. This is the slide I was referring to previously when we’re talking about how deep the pockets are in terms of marketing budget. When it comes to marketing, hotels spend on average, according to Focus, between 6% to 9% of their revenue goes back into marketing. Online travel agencies, on the other hand, spend between 35% to 40% of their revenue. And this is why the commission makes sense because if you were spending between 35% to 40% of your revenue on marketing, you would be getting a lot more direct traffic, you would be getting a lot more direct bookings, and you wouldn’t be paying a commission on those. But instead, you’re paying between 6% to 9%, which means that you can leverage the marketplace value of an online travel agency which is spending significantly more money than individual hoteliers are and then pay for that with the commission that you generate for the OTA. So this saves you money on marketing. You don’t have to spend a lot on marketing because the online travel agency is already spending that on marketing your property for you.
Okay. So we’ve covered a lot in this first introduction to online travel agencies. So now we need to get to the data. We need to talk about specific online travel agencies and which ones are correct for your property. So we broke this own into five different variables that you need to consider. One, the target market. Are you trying to get mainly Chinese-language speakers? Well then you should probably list your inventory on Ctrip, right? If you’re trying to target backpackers and hostel goers, then you might want to use Hostel World or something like that. So take a look at your target market. What kind of guests are you trying to get into your property? Take a look at the size of that marketplace. Are you really focused on the small niche marketplace? Then you might want to choose like a shared stay like AirBNB or FlipKey or something like that. Are you looking to get your property seen by the largest group possible? Then that’s when we target the Expedias and the Pricelines.
Parity rate rules. Are you really concerned about parity restrictions? Then you may not want to list your inventory with some of the larger OTAs. If you’re not concerned with rate parity, then you can do so. Commission fee structure. We’re going to take a look at which online travel agencies have the highest commission fees because if you can and if you want to and if this is the way you want to go about it, you could choose the online travel agencies that have the lowest commission fees and then find the ones that have the lowest commission fees that have the highest viewer count and then maximize your potential without spending quite as much money. And then the property type. Not all online travel agencies are going to be good for every single property type. So we break down the different property types from hostels to B and Bs to hotels to groups. And we take a look at which online travel agencies are going to be appropriate for what property types.
So this is a slide directly from our infographic which you can find at cloudbeds.com, where we’ve got a list of some of the major players here broken down by commission, scale and parity restriction. And it’s got all of the data here in one nice graph. So we have it listed in order from subscribed. So at the very top we’ve got Booking.com. This is international data. This isn’t just United States data. But at the very top we’ve got 40 million monthly active users on Booking.com, owned by Priceline. So Booking.com takes the number one slot. Priceline takes the number three slot. Combined, they’re quite dominant when it comes to the number of people who are on their platforms. But then if you take a look at the pie chart to the right, you’re going to see the commission fees. Booking.com, the commission fee could be anywhere between 15% to 49%. So yeah, they’ve got a lot of people but you’re paying for that in commissions. Expedia’s at 10% plus, so it’s a little bit lower. Priceline, as you well know, is on a sliding scale so it’s hard to represent that on a pie chart.
But AirBNB is going to be one of the best ones if you’re looking for a large audience with a small commission fee. They only charge 10% on commission fees, but they have just as many subscribers as Priceline does. Now, of course, Priceline has the benefit of Booking’s. That’s 60% if you combine Booking and Priceline. But AirBNB is going to be a good place to start.
So we created this little flowchart which you should be able to spend some time looking at and it should be kind of fun. And what we’re going to do is we’re going to include this in the eBook companion piece to this webinar and we’re going to send it to you via email. We’re going to send you a link via email so that you can download this for further study. But what this does is we tried to break down into four different property types and then show you which online travel agencies we felt were going to be the most appropriate. So let’s define some of these just so that we’re all on the same page. Bed and breakfasts are going to be small lodging establishments that offer unique quirky experiences, whether your guest is wanting a romantic getaway, maybe it’s an adventure traveler or somebody just looking for a little bit of a unique experience. Wealthier guests tend to stay at B and Bs. So you can expect to charge a little bit of a premium on that unique experience instead of having just a box motel, for example. But because a B and B’s profits are not quite as large as, say, a larger independent hotel, you’re going to have less of a marketing budget. So choosing an OTA with a low commission is going to be important. You’re also going to want to choose OTAs that provide unique experiences.
So you can see in this chart that we suggest three different online travel agencies or online directories to list your inventory if you’re a B and B. Bedandbreakfast.com, of course, obviously. And then you can also list your inventory on AirBNB, which has a huge audience but low commission fees. And at FlipKey, which also has low commission fees. All right, let’s talk a little bit about hostels. This is perfect for backpackers, adventure travelers, budget travelers. If you’re going on a trip that has multiple different locations, so you’re going to be switching properties fairly often, then you’re going to be really interested in staying at a hostel. So transient guests are going into hostels. But again, we’ve got another situation where commission fees need to be really low because profit is going to be really low for hostels because one of the things about staying at a hostel is you stay at a hostel because it tends to have a lower price tag.
There are of course the luxury hostels. We had an entire blog post on that, thanks to Alex who did the wonderful research on that. So if you’re interested in learning more about luxury hostels, well, you have that piece. But most people are going to hostels because they’re wanting a cheap, affordable place to stay that’s good and clean and nice. But because of that, you’re going to want lower commissions. So we suggested Hostel Bookers, Hostel World, and Gomeo. Now, Hostel Bookers and Hostel World, they’ve got fairly higher commission fees. But Gomeo is only at 10%, which is right in line with Travelocity and Expedia and Bedandbreakfast.com. Bedandbreakfast.com can be anywhere between 8% and…but it’s got a $25 monthly fee on top of it. So just depending on what you do, Gomeo is a great solution in my opinion.
All right, let’s talk a little bit about vacation rentals. Vacation rentals enjoy some of the lowest commission fees of all of the different OTAs on there. We defined vacation rental as it’s like a guesthouse. People are trying to rent an entire house for a period of time. It’s great for couples, honeymooners, families or large groups like reunions and stuff like that. So the price tags tend to be higher. If you’re renting the entire property, the price tag tends to be higher. However, vacation rentals have the problem of dead seasons because if they’ve only got one guesthouse, for example, then you’ve only got one piece of inventory. It’s not like you have other inventory that you can fill or charge for or put a lower price tag on to fill during the school season. So it’s kind of intermittent the profits that they have.
So we’re going to be looking at really low commission costs but very large audiences because the goal of making a profitable guesthouse is just they have that thing filled with people 365 days a year, if possible of course. So Wimdu and 9flats, they are targeted specifically for guesthouses and vacation rentals but they’ve got larger commission fees. AirBNB and FlipKey also for guesthouses and vacation rentals but really low commission fees. So I would list my inventory on AirBNB first because they’ve got over 20 million subscribers. Hit AirBNB and FlipKey, and then if you can, Wimdu and 9flats because those are going to be the best places to target the appropriate audience.
And then independent hotels are completely different. They’re going to be much more flexible. As you can see in this nice graphic, there are quite a variety of different options for independent hotels. So you’ve got between 10 and 100 rooms. They cater to all kind of traveler types: couples, families, solo travelers, business travelers. This is going to be for people who really want to go to a bigger city or they’re trying to find a nice place to stay for a few days because they’re in town for business or they’re going to some sort of local attraction. This is your typical hospitality stay. And so for hotels, since you have the widest audience, you can cater to the widest variety of travelers, you’re going to want to put yourself before the most eyes possible. So all of the major online travel agencies is where you’re going to want to list your inventory: Booking.com, Hotels.com, Priceline, Orbitz, Expedia. Gomeo is another good one because you can, as a hotelier, list your inventory on Gomeo. And then, of course, Travelocity.
So I think we’ve covered all of them in this. The hotel groups and large hotel chains are almost in the same bucket as independent hoteliers. So if you’ve got a motel like a roadside motel or if you’re part of a large hotel group or if you’re a large hotel chain, then you’re going to want to take some of the same strategies as a larger hotel and get all of the major players. So this is a breakdown of which online travel agencies are going to be good based on property and commission structure. Again, this is in the eBook that we’ll send out and also the free infographic that is on Cloudbeds.com. All right. That’s all of the content we had. It’s quite a quick run through. As I said, we have an accompanying eBook. It’s going to have all of this data much more rigidly and structured so that you can read through it and refer to it in the future. And now we can open it up to any questions that you might have. Alex, do we have anyone on the line who’s got a question that they’d like answered?
Alex: We do. What do you suggest for a long stay service apartment OTA?
Brandon: That’s going to be in the same realm as vacation rentals. Let’s go back to our little chart here. So if it’s going to be a long stay, I would suggest something with a really low commission rate. I’m thinking AirBNB is probably going to be a good choice. You’re going to have a lot of flexibility there. You can make your arrangements directly with the guests and AirBNB is only going to take 3% off of each stay. So Wimdu, 9flats, FlipKey, AirBNB, those are going to be my choices for something like that. Do you have any other questions on the line?
Alex: Yes. How many OTAs should a typical property list on?
Brandon: Great question. It’s going to be dependent upon your marketing budget and your strategy. So one of the interesting things about that question is that the answer is that the more marketplaces you list your inventory, the more bookings you’re going to get. And the reason for that is because there are different communities that tend to hang out at different online travel agencies and online marketplaces. The Hostelbooker community is going to be different than the Priceline community, right? And so you’re going to get your property listed before a whole lot of different eyes. So I would use a tour manager like our own Myallocator or whichever one you choose to choose as many as you’d like. Now that said, practically…Alex, you might want to mute your microphone for just a moment. That said, practically we may not have the infinitely deep pockets to list our inventory on as many online travel agencies as possible. So what I would do is I would focus on community first. I would take a look on the kinds of people who are on the online travel agencies and the kinds of people that you would want to get on your property and focus my attention on those.
So if I’m a hostel, I’m going to list my property on all of the major hostel ones. If I’m a vacation rental, I’m going to list my property on all of the major guesthouse and vacation rentals. If I’m a B and B, I’m going to find as many B and B directories and marketplaces as I possibly can. Then if I want to expand beyond that, I’m going to take a look at some of the other major players that have a lot of monthly subscribers and then I might take a look at some of the niche online marketplaces and see if there’s a way that I can position my property in such a way in terms of value proposition to appeal to that community. A good example of this is the bud and breakfast community. Now, budandbreakfast.com is for marijuana smokers who are looking for a legal and safe place to smoke marijuana. Now, of course, this is a very niche marketplace. This is not going to be suitable for every property type. But if I own a bed and breakfast and I’ve already got my bed and breakfast listed on all of the bed and breakfast marketplaces and I really wanted to kind of flex my marketing strategy and try something new, I’d maybe consider whether or not I want to list my inventory on Bud and Breakfast.
Alex: Great. Paul asks, “What OTA do you suggest for an African safari tent hotel type product?”
Brandon: Oh, wow. This is exciting. So I actually recently worked with a safari company and I had so much fun working on their website. Now you got me reminiscing. But I worked on this big African safari website with hundreds of properties all over Africa and India and it was a lot of fun. Anyway, what I would do for an African tent type safari is you’re going to need a good SEO strategy to make a property like that work because the kind of people who are going on tent hotel type safaris, they do use online travel agencies, but they also tend to leverage Google really heavily when doing their research. I think you’re going to find that fewer people are going to go to Expedia and type in “I want to go on a tented safari.” They’ll go to Google and type in “Can I do some research on some of the tented safari companies that are out there?” So you’re going to need a good AdWord strategy, paid Google advertisements. You’re going to need a good organic SEO strategy.
So aside from those strategies, if we’re just talking about online travel agencies and want to leverage online travel agencies, I would hit the big guys because I don’t really know of any niche online travel agencies that are just for African safaris. Maybe I’m demonstrating my ignorance on this. Maybe there are some out there that I just don’t know about. If there are, please inform me. I’d love to know about them. But you know how you have an entire community of OTAs for hostels and an entire online directory for bed and breakfasts? I don’t know of a whole lot that are designed explicitly for African safaris. So my strategy, if I were trying to leverage online travel agencies for a safari business, is I would take a look at all the big guys, Expedia, Booking, Priceline, Hotels.com, Orbitz, Travelocity, and take a look if they allow tents and if they allow safaris. And if they do I would list my inventory there. So just get before as many eyes as possible because they’ve got the largest subscriptions and subscriber base.
Alex: And then Paul also asks, “What are the top OTAs in Africa?”
Brandon: That’s a really good question.
Alex: I just Googled it and I found a company called Geziko.com. They look pretty large in Africa, but I do not know off the top of my head. I had to Google that one.
Brandon: Yeah. That’s a good question. We’re going to do a little bit of research after this to figure that out. I do know that there are very powerful regional OTAs like Despegar and Decolar in Latin America and Ctrip in China. I wasn’t familiar with an African-specific OTA. So we’ll take a look at that and see if we can figure anything out for you.
Alex: Great. Considering the billboard effect, would I consider a higher price on some channels knowing viewers might come to your own website thinking the price might be lower?
Brandon: That’s an interesting strategy and it’s a legitimate one. I would certainly experiment with it. The nice thing about this is that there’s no exact science and so there’s no perfect answer for every property. So what I would do if I was trying to leverage an OTA is I would start with…now you do have to keep in mind parity restrictions because some parity restrictions state that you can’t actually market your inventory for cheaper on your website than you do on an online travel agency. However, parity restrictions are going out of style and I know that many online travel agencies are removing them, making it that you don’t have to worry about it. So let’s assume that you’re working with an online travel agency that doesn’t have any parity restrictions. What I would is I would start with listing my inventory a little low so that I can start to build up a reputation on that online travel agency, get reviews, get some likes, start to rank organically within the list on that online travel agency. Then when I’ve established a great presence on the OTA, then I would experiment with putting my price tag higher on the OTA and then lower on my website to try and get more direct conversions, to see if I can leverage the billboard effect.
But I would make sure that I’m taking track of all of the data. I would make sure that I’ve got some sort of tracking mechanism, whether or not I’m using my PMS to track that, whether I’m doing AB experiments in Google Analytics or something like that to make sure that the lower price that I’m charging for my direct reservations isn’t undercompensating for the lack of commission fee, right? So yes, I may be paying a higher commission fee to get that booking from an OTA. But if I’m losing that money anyway because I’m having to undercut the prices on my website so much, then it may just not be worth it. So there’s a lot of math involved, a lot of experimentation. But if you have the time and the resources to do that, I would definitely do some AB testing to see what works for you.
Alex: Great. In all OTAs, should I use the same information for prices, strategy, etc.?
Brandon: No. Yes and no. So when it comes to marketing content, I would definitely try to make a cohesive brand. So I would take professional photography, I would get a copywriter or somebody who writes copy really well to write wonderful room descriptions, wonderful property descriptions, and then I would use a lot of that same marketing content across all of the OTAs you’re using. The only difference would be if you’re trying to position your property a little bit different for a niche marketplace. For example, if you’re a regular independent hotel, but you want to make it sound like you’re really good for adventures, then you might want to tweak the marketing copy a little bit if you’re listing your inventory on, say, Lonely Planet or a hostel place or something like that.
That said, when it comes to prices, I would definitely change the pricing based on commission structure. So if there’s a sliding scale, I would keep that into consideration. If there’s a really high percentage, then I may make my rooms a little bit more expensive. It just depends on the rate parity restrictions that are involved with that online travel agency, the amount of traffic you can actually get to your website because of the billboard effect. Notice that if you’re going to an online marketplace that just gets very few monthly visitors, you’re going to benefit from the billboard effect less, right? But if you’re going to the big guys that get 20, 30 to 40 million viewers, then you’re going to benefit from the billboard effect a lot, right? So it may pay to put more inventory on those and to charge a little bit higher price if you’re trying to convince them to flip on over to see if they can get a better deal at your property.
Alex: Okay. As I get more OTA and rental ratio raise, should I get rid of the biggest commission fees or raise my price?
Brandon: Yeah. This really has to do about filled inventory. If you filled all of your inventory and you feel like you’re spending way too much on commission fees, then that’s exactly what I would do. I would either turn off some of my rooms. So I would use my channel manager to reduce the size of my pool of available inventory because if I’m already at full capacity, I really don’t need to leverage the OTA as much as I already am. Or I would simply increase the prices on my OTAs hoping that that would convert into more direct traffic, that I would be able to get more higher value direct traffic. Yeah, that’s an excellent strategy.
Alex: Great. What OTAs do you suggest for a small hotel in Central America wanting to target the U.S. market?
Brandon: Small hotel in Central America but you’re wanting to target the U.S. market. Well, I think your best bet for finding the widest audience is going to be the big players, the Priceline, Expedia, Orbitz and Hotels.com and Travelocity. Those are going to be ones to find the best players. But I guess I don’t know your profit margin. If you don’t have a large profit margin, then I’d probably try the AirBNBs of the world. That’s going to give you the lowest commission fee and you’re still going to reach a lot of people. But if you’ve got a little bit of a marketing budget that you can dip into, especially if you’re mainly considering creating an online reputation for your property in North America, then I would definitely hit the big players. It’s a bit of an investment working with these online travel agencies because when you first start out, you’re a completely new company. You’re a blank slate. You’ve got no reviews. You’ve got no reputation. And one of the benefits of getting your property listed on as many online travel agencies as possible is it really helps with your property’s brand. And this is something that Google, for example, pays attention to, which can, in a sidelined kind of way, help your organic ranking and your organic listings.
So one of the things that I would recommend is I would list my inventory on as many that I can afford that I feel would be a good solution for my property as early as possible so that I can start building a reputation, building positive reviews, getting wonderful photos and room descriptions up on there, starting to build a reputation on that portal so that I can rank higher and higher. That’s one of the major things that I would do. So if you can afford it, the big players.
Alex: Great. This is more of a comment rather than a question. It says, “Generally, OTAs for African safari are host sellers such as African travel resources. Just wanted to put that out there.”
Brandon: That’s a great note. I do recall we worked with a lot of just traditional travel agencies and tour guides who gave the African safari that I worked with a year or so ago a lot of their business. So they didn’t rely upon some of the new channels. They relied on some very traditional channels.
Alex: Great. “On most OTAs and in my region, some hotels do not show tax and fee. I actually give my price tax and fee included. Should I change that to stay competitive?”
Brandon: That’s interesting. I don’t know if I would change that, but I would certainly let the guest know. So for example, if they’re on an online travel agency and they’ve got a lower number than when they get to your website and they don’t know that you’re roping in taxes and fees and that the online travel agency isn’t, then they may be confused and they may think, “Well, I can get it cheaper on the OTA, so I might as well get it on the OTA.” So if you do rope in taxes and fees into one listed price, then I would explicitly say put an asterisk by it and then write below it, say, “This price includes all taxes and fees.”
However from a marketing perspective, I think it’s always best just to show the lowest price. So that may be a business decision that you need to do. Just always show the lowest price possible and then when they get to the checkout screen, go, “Oh yeah, by the way, these are the taxes. These are the fees.” It might not be the way you want to go about it, so just do what you feel is right for your property. But it may also help with conversions if you just show the lowest price possible on your website.
Alex: Great. One more question. “What do you think about social media in applying offers there for properties?”
Brandon: I think using social media is a great solution for packages and properties. And I’ll have Alex comment on this, too, because he’s our social media guru. But one of the great things about using your direct channel is you can establish an email database, you can establish social media followers, and those are all part of your subscribers. And if you’re marketing directly to them, then you can sometimes get around rate parity restrictions because the rate parity restrictions usually apply to public offers, not to people who are in your directly targeted marketing campaigns. So you can sometimes offer a great discount or a great deal to people on social media or on email that you might not be able to offer on your website if you’re dealing with an OTA that’s using rate parity restrictions.
Alex: Great. Yeah. And I’ll also add there that social media is a great place to offer as a research tool for potential guests as well instead of just as a place to push offers and push your latest deals because a lot of people will use it as a research process. Whether or not they find you via social media, a lot of people will go and check what your Facebook and Twitter and Instagram are up to in their decision process. So definitely utilizing that is a marketing channel. You’ll see great benefit in that.
Brandon: That’s true. And a lot of people will use Instagram and Pinterest to get inspired for travel. They’ll go there to find travel photos, to research places where they want to go to. And if you can establish a powerful presence on those image sharing platforms, it’s a great way to get people inspired to stay at your property.
Alex: Totally. All right. We just plowed through all those questions. Does anyone have anything else to add before…?
Brandon: Great questions, everybody. I’m really enjoying the activity going on here. We’ll hold out for a minute or two more. And if there are no more questions, then we’ll go ahead and end the webinar. But we plowed through a lot of data. I’m not expecting anyone to be taking notes, so don’t worry. We’ve got you covered. We’re going to be sending you an eBook that has all of this data in it so that you can refer to it later.
Alex: We have one more question. “I use Expedia and have rate parity restrictions but on my website you can have cheaper weekly price. Is that okay?”
Brandon: Is he asking if that’s okay?
Brandon: I don’t know. I haven’t read the terms for the Expedia rate parity restrictions. So every single OTA is going to have completely different terms. Are you going to get caught? I don’t know. Is that a risk you want to take? I don’t know. So what I would do is I would take a look at the contract that you signed with Expedia to see exactly what their restrictions are because I don’t know them off the top of my head. Every OTA is going to be a little bit different. I think you’re probably going to be okay. I don’t think it’s going to be the end of the world. They may not even catch you. But if you want everything to be above board, I would just reread the terms of that contract.
Alex: Great. Last call for questions, anybody? Okay.
Brandon: All right. Well, ladies and gentlemen, this has been a whole lot of fun. Thanks for all of your wonderful questions and thank you so much for coming to this webinar. I hope it was really useful. We try to do two webinars a month here at Cloudbeds and we send out invitations regularly to your email. So stay tuned for our next webinar. Also, we’ve got quite a history of webinars and eBooks built up on the site so far. So if you want to check out some of our past topics, go to Cloudbeds.com, go over to the content section, and check out the other webinars we’ve done. You can watch all of our old webinars listed there on the website. You can download all of our old eBooks which all have wonderful information, so you should find that really interesting. Subscribe to the blog for future blog content. Alex does an amazing job doing his research and his writing, and he’s got a lot of wonderful pieces there for you as well. So thank you, everybody, for attending this webinar and stay tuned for future content from the Cloudbeds team. You guys have a fantastic Thursday, everybody.
Alex: Thank you. Have a great day.