009 | OTAs – The Basics, Tools and Strategies with Expedia’s Adam Anderson

Adam Anderson is the Managing Director of Industry Relations at Expedia, Inc. – one of the largest online travel companies in the world – owners of the consumer brands Expedia.com, Hotels.com, Hotwire.com, Travelocity.com, Trivago.com and several other international travel sites.

LL09-Adam_AndersonAdam heads up Expedia’s B2B marketing and communications practice focused on hotel industry partners including more than 435,000 hotels in Expedia’s inventory, with special strategic focus on North America, Europe, Latin America, and Oceania. His responsibilities include strategic engagement with hotel owners, ownership groups, and management companies, as well as market research, communications, speaking engagements and industry public relations.

Resources & Links

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Background:

Adam’s career in marketing and PR is largely in “tech” companies which set him up for success with Expedia. Beginning with Dolby Laboratories, Adam was PR Manager for more than 5 years before moving on to Microsoft where he continued as PR Manager and ultimately Senior Product Manager for Windows. In 2009, Adam transitioned to Expedia as Director of Public Relations, then Director of Global Communications, and he’s lead Expedia’s Industry Relations for the last several years.

It seems that these days, the primary way we (consumers) arrange our travel plans is through Online Travel Agencies (OTA’s). For the hoteliers, this world is quite overwhelming. In this episode, we’re going to address and debunk the myths, misinformation, and misconceptions out there about OTA’s and provide Hoteliers with the information they need so that they may maximize the opportunities these outlets potentially provide.

[spp-tweet ““OTA’s are a marketing channel for exposure and awareness about what you are offering” ~Adam Anderson”]

So, what are OTA’s?

OTA’s are global travel sites designed to drive massive amounts of traffic and conversions for hotel registrations, car rentals, flights, etc. In exchange for this service, these distribution channels get a commission for the fees consumers pay. For the hotelier, relationships with OTA’s increases the number of prospects that can see their listing.

OTA’s are a marketing channel for exposure and awareness regarding a hotel’s offering. It is very widespread and can be viewed all over the world reaching people who would not otherwise see your hotel. There’s also benefit for the consumer (guest) in terms of the rating aspect that comes into play on OTA websites. OTA sites enable people to leave verified reviews and ratings. This benefits the customer and hotelier respectively by preventing fraud and protecting integrity. And let’s not forget about how including several high quality photos for your property’s listing also reflects integrity.

[spp-tweet ““There’s a lot of benefit in participating with OTA’s” ~Adam Anderson”]

What’s the process for Hoteliers in becoming affiliated with an OTA?

The hotel creates an account with the OTA, signs a contract, adds a description of their property, upload several photos, defines their pricing and commits inventory. This can be done manually, or with tools and technologies that integrate with the hotel’s reservation system that keep your information accurate and in real time. There are also tools for competition on rates and tools to helps with promotion.

[spp-tweet ““An OTA is a tool in a toolbox – there is an opportunity” ~Adam Anderson”]

Myths around OTA’s

“Hotels should reduce their reliance on hotel bookings. Hoteliers are afraid of the high commissions OTA’s charge.”

An OTA is a tool in a toolbox – meaning, OTA’s provide an opportunity … it is up to the Hotelier to determine if using an OTA makes sense. OTA’s provide a means and an expertise to attract customers from all over the world. There’s also significant data to support the notion that many people shopping for hotels find the property on an OTA first, then choose to book directly (AKA the “Billboard Effect”). This brings in demand to OTA’s creating competitive rates for the customer.

“People argue that Expedia is getting more expensive”

Adam challenges this myth. Expedia’s compensation rates have actually been decreasing which is making them more and more affordable.

[spp-tweet ““There’s data to support the notion that many people find hotels on an OTA, then book direct.” ~Adam Anderson”]

“The GDS (Global Distribution System) is an overly expensive channel and only beneficial to the big chains or regional hotel groups.”

The idea that the GDS is only interesting to certain channels is questionable. Again, this is up to the hotelier to determine where they want to make their inventory available and understand the profile of the type of travellers that are coming in that way. They should question whether there is benefit to having this exposure. It’s all about considering a holistic strategy.

What is the Average commission (or range)?

This is hard to say. Rates are different for different shoppers out there. If you are part of a brand, you will usually work out a lower compensation rate than if you are an independent. It’s not a “one size fits all” formula. Adam’s advice: have a conversation with your marketing advisor and explore the different options.

[spp-tweet ““The quantity of reviews matters!” ~Adam Anderson”]

Examining commissions- is there an issue when booking arrangements change?

According to Adam, (generally speaking) cancellation and bookings are honored by the OTA’s. Again, have a conversation with your marketing advisor to fully understand the policies for your specific agreement.

[spp-tweet ““Encourage your guests to write reviews” ~Adam Anderson  “]

Strategy: Selecting the right OTA mix. Recommendations?

According to Adam, Expedia serves as an umbrella to many other channels. They can sign up with Expedia, which gives them distribution on many channels. Think of it as a megaphone. Ask yourself what kinds of travellers to you want to attract. The reason for this is because different channels appeal to certain types of people. Understand the exposure and different brands when you sign up with an OTA. See the opportunity in the broad reach it will get you and the tools you will have available to you to target your customers.

How can Hoteliers improve their positioning with OTA’s?

You want to be the highest on search results. Expedia’s algorithm works in a way where they reward those hotels with the best rates and availability because customers are there to find the right hotel at the right price. Expedia recognizes that and boosts them (this has nothing to do with raising or lowering compensation). Increasing your comments score is very important. The quantity of reviews matters a lot! Customers rely on it and hotels definitely convert less when there are lower volumes of reviews. So, encourage your guests to write reviews. Again, having great quality photos is also helpful to build trust. Additionally, in times of low occupancy, Hoteliers may consider removing restrictions to make their property look more attractive.  True, this may result in more cancellations, but it may also increase occupancy.

[spp-tweet ““Photos are about trust” ~Adam Anderson”]

Opaque Listings: Are they good or bad?

Again, a tool in a toolbox.  Due to the nature of opaque listings, cancellation rates are low.  There is also an increased transparency which makes it easier for shoppers to compare and contrast their options. Further, opaque allows hotels to maintain rate consistency by not openly advertising lower rates.

Comments Contest

In an effort to promote listener engagement, I have added a comments area to the podcast section so listeners can share openly about each episode, make suggestions, and even post questions.  Each of my guests will be encouraged to review and respond.

To get the ball rolling, I’m giving away one $25 Starbucks gift card for the best comment (and correct answer). Why a Starbucks gift card? Well, besides the fact that I’ve consumed more than my share of Starbucks coffee over the years, Adam is based in the Seattle area … home of Starbucks Coffee.  (I know, the synergy is uncanny).

To be considered for the Comments Contest, simply post a comment below before the deadline and include BOTH of the following:

  1. Your BIGGEST takeaway from this interview with Adam Anderson
  2. The correct title and source of the short audio soundbite I included immediately after I announced the episode number … hint “number 9”

* The winner of the contest will be announced when Episode 10 is released on Wednesday, June 10, 2015, so any comments received after 12:00 PM Eastern Time on Monday, June 8, 2015, will not be considered.

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Thanks for Listening!

Thanks so much for joining us again this week. If you have some feedback you’d like to share, leave a note in the comment section below!

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Until the next …

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  • Great interview Adam.

    Question about your review app, which I like the sounds of. Do you promote the reviewer to post to all social review sites, or just inside Expedia and their web assets? Or do you encourage the reviewers to post reviews outside of Expedia on TripAdvisor and Google (for example)?

    Does Expedia frown upon hoteliers trying to extract emails from the clients that the OTA’s bring in?

  • ASeverson

    Hi Geordie, Expedia reviews are verified meaning a guest has to book on an Expedia branded website and have stayed at the hotel to be invited to write a review. Once a review has been written, it is only view-able across the Expedia branded sites. This of coarse doesn’t stop a guest from writing a more public review on sites such as Trip Advisor, but Expedia isn’t feeding this content. I hope this answers your question!

    And no Expedia doesn’t frown on a hotel who asks a guest for their email at check-in. Our goal is to bring new guests to hotels and it’s the hotels job to convert them to loyal customers.

  • Thanks – Yes, that explains Expedia’s position perfectly. I’m glad to hear that Expedia even recommends that it is the hotel’s responsibility to capitalize on the customers that it sends to the hotel. Do you have some recommendations on how to efficiently capture walk in traffic, or OTA traffic at the front desk, or elsewhere throughout the hotel?