Alternative Accommodation | Driving Growth


The relationship between OTAs and hotels

In April 2018 Colliers International produced a research paper as part of the Arabian Travel Market Series. The paper, Alternative Accommodation - Driving Growth for Destinations or Disruption, has detailed and insightful analysis of how Online Travel Agents (OTAs) and hotels are interacting, and how this symbiotic relationship might continue to grow.

As summarised by Filippo Sona, Director - Head of Hotels, Middle East and North Africa for Colliers, the paper “highlights the current status of the industry, importance of meeting the changing consumer needs, emergence of online travel agencies, their relationship with hotels and the continuous shift in balance of power with the entry of new players and the improvement of online travel technology.

“The research takes us back before the emergence of online travel agencies when bookings were made directly through hotels , travel agents or wholesalers and discusses the impact of OTAs on the industry.” 

Some of the key points from the report are:

  • Hotels need to pay significant commission to OTAs, which will affect their margins.
  • The commission varies between different OTAs and different hotels. It typically ranges between 15 to 30 percent.
  • Hotels have low spending power for marketing and advertising compared to OTAs.
  • Hotels typically spend 5 to 7 percent, while OTAs spent 40 to 50 percent of their revenue on marketing.
  • The essence of rate parity is to have the same rate for the same product on all distribution channels.
  • However, rate undercutting has created issues between hotels and OTAs, as well as reduced consumer confidence.
  • Airbnb has 4.2 million listings.
  • Airbnb plans to bring hotels to its network of apartments and home rentals.
  • Airbnb charges commission of 3 to 5 percent (Compared to 15 to 30 percent for OTAs).
  • Google plans to expand and simplify their travel research platform.
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