Why List On Expedia and Booking.com?

The title of this blog is a question: Why list on Expedia and Booking.com? The short answer is, because that’s where the people are.

Assuming you’re in the vacation rental business, your reaction might be, “Yeah, but those are hotel OTAs. I’m not a hotel.”

Fair enough, but think about the economies of scale here. Booking.com alone gets around 400 million visitors per month. Say 10 percent of that audience that doesn’t necessarily want a hotel room. What they really want is a nice place to stay — the best and most convenient one they can afford. That’s still 40 million people.

Isn’t that precisely what you have to offer?

More and more, people don’t go shopping for just vacations or a place to crash. They’re looking for experiences. We certainly don’t have to tell you that the VR experience is almost always superior to the hotel experience. If you could put your offering right in front of them next to a room at the Doubletree for the same price, don’t you think they’d choose you at least as often as not?
​
That’s the opportunity these types of OTAs provide. Maybe there’s a stronger hotel presence, but is that a reason not to be there? Like they say about the lottery, you can’t win if you don’t play.

Aren’t OTAs Mainly For Hotels?

In a word, yes. Hotels have long driven the ubiquity and reach of OTAs, particularly these two. They still do. But that doesn’t mean your vacation rental shouldn’t be there.

The winds have shifted quite a bit toward VR in recent years. Google’s own lodging platform added alternative accommodations just this March. Booking.com’s alternative accommodations saw a 21% bump Y/Y as of last November. There’s been a fundamental shift in consumer preferences and the OTAs are paying attention. In point of fact, a Booking.com vice president said the company’s making a concerted effort to “further educate consumers about Booking.com's variety of listings.”

Read between the lines. A company with immense reach and market power intends to basically go to bat for VR and comparable offerings, possibly at the expense of hotels. Yes, please!

Any business has two basic options for getting in front of customers. Either you come to them or they come to you. This has been the push/pull of marketing since the dawn of commerce.

OTAs do both. It’s an online marketplace for people who need a place to stay, but it’s also an opportunity for vendors to show their wares. Amazon is as happy to sell a thousand $1 items as it is to sell one $1,000 item. There’s really no incremental cost to them, which may be why it’s the world’s largest online marketplace.

OTAs are in the hospitality business. There’s no good reason for them to exclude VR, which is why most of them accept VR listings now. So you have a choice: Try and pull in an audience ($$), go to where your audience already is ($$), or do both with OTAs, which only charge you when someone books.

Hotel-oriented OTAs offer another subtle, but important advantage: branding. VR-oriented OTAs often don’t let you put your brand out in front and may even be opaque when it comes to passing information along about your browsers and buyers. Make no mistake: The “billboard effect” is alive and well. Many customers will find a place on the OTAs then book directly, in which case your ROI is effectively 100%.

It should be a no-brainer, but it isn’t. Even so, it seems OTA commissions are the marketing spend VR loves to hate. But should you reject the promise of new business just because it seems expensive?

What’s My ROI, Really?

An acquisition rate of 5:1 — 20% — is pretty standard for ad spend in the vacation-rental industry. Put another way, for every $1 you spend on acquiring a guest, you should make $5 back in revenue.

As it happens, this is roughly what OTAs charge in commissions. But there’s a key difference: You only pay an OTA when somebody books. How many other channels work that way? 

Imagine a sales rep for a magazine with 400+ million visitors a month came to you and said, “I’ll let you have a page in our magazine for free. If someone books through your ad, you pay an 18% commission.” Sure, it’s a really thick magazine and you won’t convert much, but you bear almost zero risk. As long as your rates make sense, you literally can’t lose money. Would you not jump at that opportunity?

OTAs Are Search Engines

It’s been said that Amazon isn’t an online store — it’s a search engine for products. If that logic makes sense, then maybe you’ll also believe that OTAs are search engines for room nights.

So what?

Well, unless you have a deep understanding of SEO (search engine optimization), then you probably have no idea how an algorithm-driven platform like Amazon or Expedia determines the order of search results or which listings become “featured” or “hot.”

The precise inner workings of search engines are as closely guarded as the formula for Coke, but there are enough proven SEO techniques to know that there are ways to boost your visibility. Listings with a high content quality score, for example.

Anyone can play the OTA game, but not everyone can win. Assuming your goal is to drive as many quality bookings as possible, then consider working with a channel manager who understands what you need out of the OTA relationship and how to maximize the value they offer in return.

The More Channels You Use, The More Flexible You (and Your Owners) Must Become

Channel mix is a strategic decision. You can’t be everywhere at once. But you also can’t content yourself with the status quo even if your traditional mix is still producing results. Like investing, you need to hedge your bets. That means testing unfamiliar waters.

Owners aren’t always along for the ride, which is why there’s some education to do. You need to understand enough about the available channels to explain the pros and cons to owners, who can and should have some say in the matter. If they regard Booking.com as just a way to cut into your margins without getting any value back, then you have some persuading to do. But do it you must.

The same goes for revenue management and dynamic pricing strategies, two areas in which Lexicon has particular expertise. Strategic pulls on the rate lever are one way to maximize revenue for both of you, but to sell the idea to many owners, you need to confer two things: A core understanding of these strategies and the flexibility to put them into effect.

Before you diversify your channel mix, be ready to explain the how and why to your owners. Then they’re less likely to be caught off-guard when you’re ready to shift gears.​

Summary

Look, we get it. It’s only natural to want to play ball with the kids in your own neighborhood. If your strategy to this point has favored VR-specific OTAs, we’re not saying you need to change. If it’s working for you, great. Keep with it and do your best to optimize. In the end, we’re a fan of whatever works.

If, however, your occupancy is lower than you’d like and it feels like the train is about to leave the station, then hotel-oriented OTAs like Booking.com and Expedia might be just the ticket. 

As with any OTA, your listings need to be tight, accurate, great-looking, and on-brand. But if you’re been paying attention to our blog, then you’ve probably whipped your listings into shape. It’s not that much more work to have a presence in spaces that have traditionally favored hotels.

Of course, there’s a big difference between simply having a presence in a marketplace and making the most of it. A great listing is only part of the equation. The other is to manage those listings in concert with a comprehensive revenue strategy. That’s what we do. Let us show you how and you’ll be playing with the big boys in no time.