PRICELINE SPEND $3.5 BILLION ON PPC...
Hoteliers will tell you that dealing with online travel agencies (OTAs) is a necessary cost of doing business. Yet, in recent years, they have been much more than that for hotels, in fact, for some hotels, OTAs were an essential marketing channel for staying alive. Partnering with an online travel agent is necessary in order to appeal to a broad range of travelers from many locations around the world. An OTA has the power to outspend just about any independent supplier, making it difficult to compete with their expansive marketing strategies. Instead of trying to compete with OTAs, we recommend partnership, and yes, this partnership comes with a price, but let’s talk about what you need to know about what it costs to work with an OTA.
In 2016, Priceline Group spent $3.5 billion on PPC, making it very obvious why travel companies find it hard to compete with OTAs marketing strategies. The Priceline Group, covering the Booking.com, Priceline, Kayak, Agoda, Rentalcars and Opentable brands, increased its outlay on performance advertising by 27% between 2015 and 2016. With an overall brand advertising increase from $274 million to $296 million in just one year. Expedia spent $4.3 billion in advertising in 2016 - up by almost $1 billion on the previous 12 months.
Customers today go to OTAs to simplify things and get easy access to a wide range of services and options. Have a look at the Booking.com home page and you will see a fantastic example of the following; clear ratings, discount messages, thumbs up symbols providing customers easy direction to the best products, latest booking information, and showing how many people are looking at the same property as you, all of which encourage customers to stay on the website and book with them!
In 2013, travel sales generated from OTAs accounted for 45% of the European market, of which 76% were generated by Expedia and Priceline. Priceline controls 62% of the European market and Expedia accounts for 70% of the US market. There is limited comparison to the market exposure a large OTA can offer a hotel or vacation rental and especially unbranded properties, which otherwise have very limited exposure. Allowing for global market exposure and with marketing budgets of substantially bigger scales than those provided by hotel chains or independents; OTAs have more power than ever to invest in marketing campaigns and thus reach a wider audience. In one study, hotel website bookings increased anywhere from 8 to 26 percent due to the “billboard effect” of hotels simply being listed on a popular OTA website.
Like traditional travel agents, OTAs have become increasingly popular among consumers, making them an undeniable presence in the hospitality industry. OTA websites and phone apps are user-friendly; information is available in multiple languages and customers can learn about activities and attractions to visit in the city they are searching. As a result, these sites may help bring in new guests, who may not have known about or considered certain hotels before. OTAs can also provide an easy, convenient way for hotels to earn more bookings during a slow season, because they offer a one-stop shop that includes flight and car rental packages. They can provide those value-added perks to move rooms that might otherwise stay empty.
In today’s day and age, it is especially important with the Millennial market, which responds well to high-quality video and images. Expedia works with destination-marketing organizations to create original materials and to help brands stand out; its video showcasing Bermuda’s activities, for example, is designed to shift the perception that the island’s attractions are geared to an older crowd. Travel planning can be described as a long process and consumers love to dip into various websites as they move on to their final purchase. The OTAs job is to make that easier!
Partnering with OTAs has limitless opportunities for those in the hospitality industry. The positives certainly outweigh each other and ultimately money is being spent by the OTAs on new guest acquisition which is the best return on investment for partners. Most consumers research, plan and book your property on these channels, which they wouldn’t otherwise book on your personal website. Being connected is not only the best investment to increase bookings and revenue, but to tap into an entirely new market of consumers, becoming part of a fast moving industry that is supported entirely by technology.
Lexicon Travel Technologies powers the leading distribution platform for independent hotels, vacation rental properties, timeshares and resort property managers. Our customized solution packages feature comprehensive rate and promotion syndication, a full content management system, and a team of dedicated account managers with deep expertise in online travel distribution. Trust us to connect you and let the OTAs do what they do best! Let’s build success together!
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