The relationship between luxury hotels and online travel agencies (OTAs) is now highly unbalanced, with hotel owners losing valuable revenue streams as a result. This is driven by OTA dominance in traffic, enabled by under-performing hotel websites, which fail to attract and convert visitors.
Hotel owners have failed to resolve this with the templated website solutions provided by booking engines. However, by building more effective digital solutions, they can regain direct bookings, and drive an increase in direct revenue.
The issue with OTAs
In the travel industry, OTAs have transformed from an auxiliary channel for incremental revenue to a dominant source of bookings and traffic. As a result, hotels are now losing revenue in OTA commissions at far higher rates.
OTAs now account for 65% of hotel room bookings in the United Kingdom, and with commission rates ranging from 15-25%, this equates to roughly 13% of revenue going to these agencies. In an ideal scenario, OTAs would serve a useful service in marketing rooms and services which could not otherwise be sold, but they are currently acting as monopolistic controllers of traffic, holding disproportionate amounts of leverage over hotel owners.
The value of direct website traffic
When a hotel receives a booking on their own website, they can enjoy its full value without paying any commission. This makes each direct website booking more valuable than the same room sold via an OTA. In addition, a direct booking allows hotels to collect first-party data via their website, and ensures that the guest experiences a branded and thoughtful impression of the hotel when booking.
However, increasing the share of direct bookings is easier said than done. Many hotels rely on templated website solutions provided by their booking engine partner. Whilst these may seem to provide a cost-efficient solution, they fail to increase traffic, convert users, or offer properly branded visitor experiences.
Our research at Kooba found that 64% of independent luxury hotels in Ireland relied on these booking engine website templates. Not only did these websites perform poorly, but they were often identical from one hotel to another, reducing the ability of luxury hotels to distinguish themselves within a competitive market.
How an effective website can make a difference
Rather than relying on booking engine partners to provide low-quality website templates, luxury hotels can instead invest in their own, custom-made websites. These sites can provide a seamless experience for visitors, perfectly representing the brand and quality of the hotel itself. On a technical level, they can improve organic and paid traffic, and can rank higher on both conventional and AI search queries.
This results in a digital solution that delivers more traffic, more bookings, a better user experience, and a reduced reliance on OTAs. For luxury hotel owners, this means more revenue, better guest data, and an improved visitor experience. At Kooba, we’ve already delivered these outcomes. See our award-nominated work with The Killarney Park as an example.
How you can regain direct revenue
Improving your hotel’s digital performance begins with a clear understanding of your existing website solution and your wider strategic goals.
To discuss this further, and learn more about your hotel website’s potential, reach out to our team for a free consultation. We’d love to hear from you!
