What Role do OTAs Play in Optimizing Revenue Management for Hotels

A good Revenue Management strategy is crucial for the success of hotels and B&B’s. When Online Travel Agents entered the scene, OTA became a very important part of revenue management. In this blog we will explain what OTA is in hotel revenue management and how to use it correctly, to make sure you don’t miss out on revenue!

What is OTA in Revenue Management

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Let's start by defining two key terms. First of all, what is revenue management? The primary goal of hotel revenue management is to sell the right room to the right customer at the right price and at the right time, ultimately enhancing a hotel's revenu

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Second of all, what is OTA? OTA stands for "Online Travel Agency." OTAs are websites and platforms that allow users to book various travel-related services online. In the context of revenue management, OTA refers to the distribution of hotel rooms or other travel services through online platforms such as Expedia, Booking.com, Airbnb, and many others.

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The arrival of OTAs has completely changed the hospitality landscape. In recent years, bookings through OTAs have continued to rise. In 2022, a survey showed that about 70% of respondents would rather book through an OTA than directly through a hotel or B&B's website. This proves how important a good OTA-strategy is for your revenue management.

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Key Considerations For Managing OTA Correctly in Revenue Management

Channel Selection

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The very base of a good use of OTA in your hotel’s revenue management, starts with the right channel selection. It’s essential to use a mixture of channels. To decide which channels are relevant to your strategy, you need to consider a couple of factors:

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Think about your target audience. Different hospitality providers have different target markets, and similarly, OTAs also cater to different geographical locations or regions or to the mass audience as well. So as a hospitality provider, you should be smart enough to partner with an OTA that aligns with your target market. This way you will be able to get more out of the partnership.

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Every OTA has a unique commission model for booking a room through its website. Understanding how these commissions work and how each OTA expects to be paid is essential. Look for OTAs that charge low commission rates to improve your bottom line. Some may charge more but offer more benefits, such as free advertising, making the higher rate worth it.

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All OTAs are not suitable for all types of properties. Choosing the ideal OTA is based on the category of your property and the services that you provide, hence, the OTA which you are going to choose may vary too.

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Forecasting and Demand Management
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In the ever-evolving landscape of hotel revenue management, a crucial piece of the puzzle lies in forecasting and demand management. By diving into historical data and using demand forecasts, you can make well-informed decisions regarding pricing.

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The more factors you include in your forecasting, the more accurate and successful it will be. Thanks to the fast rise of technology there are a lot of possibilities to optimise these forecasts. That is why you should use a revenue management system that includes dynamic pricing. This way the most accurate calculations are made for you, to make sure you can always sell rooms at the best price.
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OTA Ranking Management
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Ranking management for OTAs is a critical component of revenue management because it directly impacts a hotel's visibility, reputation, and ultimately, its revenue potential.
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What is ranking management? It refers to the strategies to improve the position or ranking of hotels or B&B’s on OTAs. By not having a poor ranking on these OTAs, even the best accommodations can face lost revenue due to fewer bookings. After all, the golden rule is, "To be seen is to be booked." Fortunately, there are several actions you can take to improve your ranking and increase your chances of getting booked.

To really use the potential of OTAs to your advantage, you need in-depth knowledge of how these platforms work and how travellers behave on them. For example, you need to understand how OTA algorithms work, how search results are generated, and what factors really influence a traveller's decision to book your accommodation. Luckily Otamiser can help you with that! 
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Promotions and Packages

Leveraging OTAs for promotions and packages is a dynamic facet of revenue management that can make a substantial difference in your bottom line. It's not just about filling rooms; it's about crafting enticing offers that capture the attention of travellers and entice them to book with your hotel.

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During off-peak periods, such as weekdays or slow seasons, creative promotions can help keep your occupancy rate from plummeting. By offering value-added packages or discounts, you can entice guests to choose your property even when demand is low, ultimately boosting revenue during these otherwise challenging times.

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Incorporating promotions and packages into your OTA revenue management strategy allows to not only drive bookings but also enhance guest satisfaction.
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Key Takeaways

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Correctly managing OTA channels is an ongoing process that requires a combination of technology,a deep understanding of your property's unique characteristics and market dynamics. By doing so, you can maximize your revenue potential and reach a wider audience of travellers.
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Book a call with the experts of Otamiser to help you with implementing the best OTA-strategy!