As COVID-19 roiled the globe, hoteliers, like 9/11 and the Global Recession before it, found online travel agencies (OTAs) throwing them a lifeline. Through extensive TV and online advertising, booking engines pull in heaps of business, but at typically high commission costs that eat into profit margins.
According to HotStats data, rooms cost of sales, a metric that measures commissions and reservations expenses and fees, year-to-date 2021 were down 37% to $2.08 on a per-available-room basis compared to the same period a year prior. In Europe, it was a similar trend, with rooms costs of sales at €1.31 year-to-date 2021, a 62.6% decrease over the same period in 2020.
The data show a slightly higher dependency on OTAs and other middle men straight after the pandemic’s outset and lesser reliance the farther removed.
The use of OTAs can be a Faustian bargain for hotels. That’s especially the case now, when total revenue and profit are well off from pre-pandemic levels. As business slowly wakens from hibernation, how should hoteliers address OTAs? According to some, it’s time to beat them at their own game.
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