An incentive for an incentive: convincing consumers to skip OTAs

Throughout the past few years, the ever-evolving relationship between hotels and online travel agents (OTAs) has been the subject of much scrutiny. While studies have alleged that OTAs are instrumental in building a hotel’s reputation, and that OTAs have even encouraged an overall increase in quality service efforts within the hospitality industry, it is difficult to ignore the reality that OTAs have firmly wrested control of distribution channels away from hotels. Offering their own forms of extended loyalty programs, these often technologically superior services have left seemingly few avenues through which hotels can distinguish themselves as distribution engines.

In an attempt to analyze the remaining strategies available to hotels to convince guests to overlook OTAs and book direct, hotel management analyst Taylor Short of Software Advice created a poll to find out what – if anything – it would take to encourage consumers to forego OTA discounts. Right off the bat, Short acknowledges that boosting direct bookings is a multifaceted process: “One challenge is getting users to your hotel’s website in the first place, but once there, convincing them to book directly instead of using a discount OTA is a separate challenge altogether.”

Focusing specifically on the second step in that process, Short polled over 2,500 consumers to gauge their interest in general incentive categories (e.g. “room upgrades,” “room service,” “gift cards,” etc.), and in explicit perks within these categories. Perhaps unsurprisingly, 48% of survey participants chose a room upgrade as their preferred stimulus, with free room service coming in as a distance runner-up, receiving 23% of the vote. Investigating further, Short found that responses for specific types of room upgrades were much more evenly matched, leading him to conclude that simple room upgrades (e.g. offering a balcony, or even just a better view) are nearly as desirable as more grandiose alternatives.

When it came to amenity incentives – which received only 14% of overall consumer interest – complementary food and drink garnered 55% of the vote, demolishing alternatives like spa, fitness, and sports packages. Here, Short quotes eMax Hotel Internet Marketing CEO R. Terry Mueller's assertion that “a kids-eat-free offer is something people really seek out, and free breakfast, which is relatively cheap for hotels, works really well.”

Based on his findings, Short concludes that hotels should consider publicizing room upgrade opportunities on their websites and through social media channels. A single incentive option may not be enough, however, as Short's often evenly split findings reveal that the general consumer consciousness is anything but decided on which upgrade it prefers. Instead, consumers appear to desire most the ability to select their own incentive from a variety of offerings. As always, visibility remains a central issue: hotels must first draw attention to their promotional offers if they hope to engage consumers effectively.

While it remains to be seen the extent to which hotels can reassert themselves in the battle for bookings, Short's findings do appear to demonstrate a palpable link between "booking" and "incentives." It appears that it is this relationship that hotels must exploit if they hope to draw consumer attention away from the already beneficent offerings of OTAs, thereby effectively beating these services at their own game.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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