According to a 2023 study by Expedia Group, on average, travelers view 141 pages of travel content in the 45 days leading up to booking a trip, with online travel agencies (OTAs) accounting for nearly half of these pages (67). In fact, 4 out of 5 travelers visit an OTA at some point in their ‘planning to purchase’ journey. What do these numbers mean for your PMS? First, online travel agencies in the hospitality industry are the top resource for travel planning, and second, you need to be where the action is.
This speaks to the importance of having a property across an optimal number of OTAs to increase visibility and ultimately, revenue. Tapping into various channels can help property owners attract a wider pool of audience, in turn maximizing occupancy rates.
How does unlimited OTA model work wonders here? What are the unlimited OTA benefits? Let’s find out.
Unlimited OTA Business Model Benefits
Demystifying the self-fulfilling prophecy
Hotels keep a lower number of channels because they believe that 70 to 80% of the business comes from the top 3 channels. But what about the remaining 20-30%?
Limiting the channel count to only have top OTAs in the mix, to bring in the big bucks, is a self fulfilling prophecy. If you do not offer a model that encourages properties to connect to an optimal number of OTAs, then the properties will be aligned to the top performers by default.
An OTA may have a bigger market capitalization, but should you allocate your entire inventory to them? Restricting the number of channels can limit your reach and miss out on potential business.
Plus, relying on a handful of OTAs or the top OTAs is shortsighted and can increase your dependency on a single distribution channel. Therefore, diversifying your channel portfolio is essential to increase visibility, take advantage of the billboard effect, and get closer to an acceptable number of channels for success. An unlimited OTA model for your PMS can help you do that.
Selecting the right and optimal OTA channel mix
Working with the top OTAs is a key ingredient for success in the hospitality industry. But it’s important to diversify partnerships beyond just top OTAs.
While one must include a few global OTAs in the channel mix, there needs to be consideration of many other factors such as the target audience that the OTA caters to, the demographic reach of the OTA, the commission model, suitability of that OTA for your property type, etc. Therefore, having the right channel mix is important. On average, hotels should have at least 6-8 channels that mix top OTAs, regional channels and even niche channels.
For instance, if a property caters to the requirements of those having pets, connecting with a niche OTA like PetsPyjamas, meant for travelers having pets, may be a good choice.
Overcoming per channel model constraints
Many All-in-One/Channel manager providers have a per channel model where they charge per transaction, including set up fee per channel. This traditional landscape is not profitable for property owners who need to be present across multiple mediums. This is where an unlimited OTA model comes into the picture. It is based on a flat fee per room, in line with the PMS pricing model, regardless of the number of channels in the mix and number of transactions involved, making it a very convenient and cost efficient option.
Let’s understand this with an example: A 50-room hotel
While it may seem like property owners have more autonomy and potential economy for a lower number of channels, which is detrimental to the performance of the property, setting up in this case is a lengthy process. On the flip side, with an unlimited model, there is access to OTA mapping for hotels to choose from the list, in turn opening the doors to testing OTAs that offer lower commission rates, regional visibility, or address niche markets.
Connecting with several channels through a per channel model can be heavier on the pocket than connecting with one unlimited OTA platform.
Increased business potential
The OTA market is speculated to reach $911.45 million by 2031; unlimited OTA model opens the doorway to that growth potential. It empowers the property owners to diversify their channel portfolio, cutting down their reliance on a single distribution channel. It makes the revenue stream more resilient to market fluctuations.
Moreover, when a PMS platform allows a property to experiment to adapt to changing trends without incurring any overheads, it increases stickiness with the PMS.
Reduced administrative burden
Managing different channels is not an easy task. Each has its own structural difference. If a property is operating on a per channel model basis, they have to do the heavy lifting of assimilating themselves to that structure. This intense workout can be avoided with an unlimited OTA model. It reduces the administration burden for the property owners due to its centralized management and easy mapping screens pre-set to allow for mapping in minutes.
Conclusion
The global hospitality market projects a growth of a whopping $5816.66 billion by 2027, with travel expecting a steady annual growth rate of 4.42%. Basically, the stars are aligned for the hospitality and tourism industries, and by extension, PMS’ in the coming years.
There are very few unlimited channel models out there. To get a piece of that cake and enjoy mutual growth, it makes it crucial for a PMS to offer 1000+ channels of all kinds of distribution channels to property owners. An unlimited OTA model is the future of property distribution, especially when it comes at such a competitive cost.
