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Driving higher commissions, the simple solution to online hotel marketing

February 10, 2012 | Hotel Marketing

"Buying rank" is driving an increasing commission war between hotels that solely benefits the OTAs. Take the booking.com example. Although its published commission rate is 15%, hotels are providing commission overrides of close to 30% to be on the first page. But is it the intelligent solution?

Independent hotels are paranoid about visibility. The hospitality industry is extremely competitive: as within any market with oversupply, capturing market share means someone else is losing market share. Hence, most hotel managers spend an inordinate amount of time thinking about ways to make their hotels more visible than their competitors. And increasingly so they are thinking about ways to do it online through digital marketing strategies.

A friend quoted to me that in one of the big OTAs, the #1 spot of the search results gets 36% of the reservations, and results on page one get a whopping 90% of all bookings.
It sounds a bit extreme, but this single fact is the reason why in certain markets, though booking.com’s published commission rate is 15%, hotels are providing commission overrides of close to 30% to be on the first page. Because hotel visibility is key in a crowded market. And driving higher commission is a “simple” solution for many of these hotel managers. But is it the intelligent solution?

“Buying rank” is driving an increasing commission war between hotels that solely benefits the OTAs. Typically hotels only notice this at the end of the month, when they pay tens and hundreds of thousands of dollars to the OTAs. Using that budget for better digital marketing would be an alternative. This is why the big chains have recently launched RoomKey. We are also seeing an increasing number of independent hotels thinking of Online Travel Optimization, not just hotel SEO.

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