Are you doing your own marketing or are the OTA's doing it for you?

This was a question we heard asked at a seminar in the World Travel Market, and it seemed to cause a lot of Hotel Manager bottoms to shuffle in their seats.

On reflection however it is a valid question. In the past the Hotel/Accommodation sector by its very nature is more of a 'person to person', 'touchy-feely' type of business. Arguably it never had the cut thrust of an Engineering/Manufacturing or Retail business, most of which would not exist without some form of Sales and Marketing.

Into this gap stepped the OTA's (Online Travel Agents) who have done an excellent job of providing hotels with a marketing service. They started with most of their effort in the Online Marketing area (which was clever as this is where most hotel guests are now going to book a hotel online). but we now see them expanding into more traditional marketing areas (Have you seen the TV ads recently?).

Hotels seem to take a different view on this. Some are happy to pay the OTA commissions to get their rooms sold, and some cannot imagine how they would find the resources to do their own marketing. We would estimate however that the majority are somewhere in the middle; ie They would probably have a go at doing their own marketing, but dont exactly know how to go about it.

However we in AccuBook are starting to see some strong signs that this is starting to change. Hotels are beginning to look more closely at what they need to do to get their name out there. We see more and more hotels investing in Google Adwords, TripAdvisor Business Listings and FaceBook Marketing as well as promoting their website within their hotel more strongly.

The obvious question is does it pay, or is it simply better to let the OTA's do the marketing and pass on the costs in the form of commissions? In yet another rough and ready AccuBook study we looked at our top 10 customers in January (by revenue) and estimated the cost to sell a room online. We added in any advertising costs (Adwords, TripAdvisor, TripConnect, FaceBook), the cost of any staff who are managing these campaigns, and of course the cost of the commission for direct bookings. Here is what we found;

Property A 5.1%
Property B 7.3%
Property C 4.8%
Property D 8.1%
Property E 6.2%
Property F 7.9%
Property G 4.9%
Property H 6.3%
Porperty I 6.7%
Property J 7.9%

By our calculation that makes an average of 6.5%

Undoubtedly this is not a completely accurate study, for example we know that the advertising costs of properties who are better rated on TripAdvisor are lower. But we would argue that the difference in cost between doing your own marketing and letting OTA's do it (ie Assuming an average OTA commission cost of 17%) makes it worthwhile for hotels to take a good hard look at what marketing they are or can do themselves.

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