Are OTAs like Priceline suitable channel partners for independent hotels?

Online travel agents (OTAs) dominate the travel booking landscape. According to travel-management company TravelPerk, OTAs are the top online resource for travelers in 2023, used by 80% before making any purchase.

This surpasses search engines (61%), social media (58%), airline websites (54%) and meta-travel websites (51%).

Such stats – and there are many more like them – demonstrate the age-old adage that it’s not whether you do something, it’s how you do it.

The ‘something’ in question is working with OTAs or, more specifically, which OTAs you should focus your energies on fostering the strongest partnerships with.

Of course, OTAs take a cut of each sale, but the theory is that they more than compensate for this by increased reach. So, which OTAs can put that theory into practice by helping you drive bookings and improve your bottom line?

Let's examine three of the biggest players in the OTA market to help you make informed decisions about your distribution strategy.

Priceline

Dealing in air travel and hotels, Priceline has been around since the late ’90s. Owned by Booking Holdings Inc., its URL – Priceline.com – was the original name of that parent company, which, rather confusingly, also owns Booking.com (see below), its arguably more prominent sister company. Together, they make up two of the Big Six brands united under the Booking Holdings umbrella, with Kayak and Agoda being others.

So what distinguishes Priceline.com from other OTAs?

Well, the basic way it operates is pretty standard: guests search for a room, pay the same price they would have had they booked on your site (a.k.a. Brand.com), and you as the hotelier pay a cut to them as the online travel agency. But it’s well-known for features like ‘Name Your Own Price’ and ‘Priceline Express Deals’, which facilitate discounted rates (see below).

It also has an enormous customer base, and reach is of course one of the biggest selling points of OTAs for hoteliers.

Is this combination of a big reach and a focus on discounted rates a good thing for hoteliers? 

This is a judgment call. It’s legitimate and while you may not always want to attract the most ‘budget-conscious’ guests it will be a great source of bookings and revenue. 

Priceline’s revenue figures offer a strong indicator of its rude health, but what of the Priceline review? A quick read of what its customers say about the service on Tripadvisor suggests that its users have mixed feelings.

Is Priceline a good OTA partner for your independent hotel?

Priceline is a legitimate and reputable OTA that can drive business to your property.The question is whether the type of business it offers fits in with your strategy, and this should determine your level of involvement with the site.

Much of it hinges on the site’s focus on price, as illustrated by the features we mention above (and the name of the site itself). Priceline appeals to a broad spectrum of users, yet it is particularly favored by more budget conscious travelers and those seeking last-minute bargains.

With ‘Priceline Express Deals’, pre-negotiated rates aren’t revealed to the guest until the hotel booking is complete, but these guests know that those rates will usually be lower than standard prices, so such deals should drive up occupancy because they deliver the best prices.

Similarly, the ‘Name Your Own Price’ tool allows guests to bid on hotel rooms that might otherwise be left unsold. Again, though, you need to ask yourself whether this is a game you want to play. 

If your aim is to target this demographic and your revenue management strategy places stock in last-minute deals, then this online travel agency is definitely for you.

Alternatively, if your hotel is a luxury property and prizes early reservations, it may be prudent to explore other platforms that better serve these customer profiles. 

As a hotelier, the easy-to-navigate platform offers you a good degree of flexibility in how you list and price your hotel rooms, and whether you promote all or just some of them.

The route through to registering properties isn’t quite as obvious with Priceline as it is Expedia or Booking.com (see below), but to get started on the path, visit their partner solutions page. Fees do vary, so enter your negotiations with an open mind.

Expedia

With so much business flowing through so many channels, it’s fair to say that the OTA space is very crowded. It would therefore be an exaggeration to speak of duopolies in this space. But insofar as there is one, Expedia forms one side of it, with Booking.com (see below) being the other.

Founded by Microsoft in the late 1990s, a year or so before Priceline, Expedia is now part of the publicly trading Expedia Group, a company that takes its name from ‘exploration’ and ‘speed’, and which owns other big names such as Hotels.com.

It’s set apart by its dominance. If you search “hotels in [city name]”, Expedia will almost certainly be among the first one or two results for both sponsored and organic listings. Users are very likely to click on these links for hassle-free hotel reservations.

Expedia Groups employs around 17,000 staff at the last count and brings in an annual revenue of nearly $13 billion, much of which is from Expedia itself.

It’s clearly a big player and customer reviews indicate good levels of trust and reliability. It also offers those customers members’ prices and members-only promotions.

Is Expedia a good OTA partner for your independent hotel?

For those reasons – reach and reputation – you’d have to have quite niche strategic reasons not to work with Expedia.

So what does a partnership with the company look like?

The company invites hoteliers to “join its thriving ecosystem”, laying out its offering on this partnership page.

What cut you’ll pay Expedia for each booking is heavily influenced by the size of your hotel. There’s always room for negotiation, depending on how much business you can show that you’ll make for them, but, as a rule of thumb, big brands can expect to be asked for between 10 and 15%, whereas smaller hotels are looking at 15 to 30%.

With an interface that hoteliers find easy to use, Expedia is a safe bet.

How much emphasis you place on this online travel agency at the expense of others: that’s the question. When starting out or looking to expand quickly, the company represents a safe pair of hands.

Booking.com

Launched in the Netherlands at around the same time as Expedia, Booking.com is, as we discuss in our section on Priceline, a subsidiary of Booking Holdings. You can therefore expect some overlap in the ways in which the two companies operate.

Booking.com is marginally more ‘generalist’, one could argue, and boasts one of the most downloaded apps in the world – although transactions are still as popular on desktop as they are with any other online travel agency.

The company has faced criticism from regulators over the years – being headquartered in Europe might be a factor – but has fought its corner and maintained a largely good reputation with its many millions of customers if reviews and sales are anything to go by.

If you’re attracted to Expedia’s benefits or reach, volume, reputation and ubiquity, you’ll be similarly wooed by Booking.com.

Is Booking.com a good OTA partner for your hotel?

Booking.com is well set-up for partnering and provides good customer support and perks for hoteliers.

Simply visit its partner hub, register your property and join the company’s partner community, where hoteliers can discuss their experiences and share tips with each other. Once set up, managing your property on Booking.com’s platform is straightforward.

What you actually pay for your commission is a matter of private negotiation (though broadly aligned with Expedia), but the company provides public guidance on its commissions and how payments are collected.

Listing rooms on multiple channels is the best strategy for your hotel

While it’s smart to consider the differences between the OTAs listed above, you ultimately need to use a selection of OTAs to maximize bookings and revenue, while at the same time prioritizing direct bookings on your own website to avoid the high commission fees that come with OTAs. 

In all but exceptional circumstances, the trick is to calibrate and adjust your booking sites, not to go it alone. 

The bigger the OTA and the more diverse its offering it is, the more likely it is that you’ll gather business from travelers initially looking into flight bookings before handing over their credit card details to you via one of these channels.

After all, if they secure a good airfare on an international flight, the card holder might be emboldened to stay on the site for a travel booking that saves money on accommodation.

Working with OTAs takes skill and practice, but when the relationship is finely tuned and tailored such that OTAs don’t become your only channel, the cost of these relationships in the form of the fees can be compensated for by a significant increase in bookings.

Familiarize yourself with the intricacies of these relationships, such as those relating to rate parity, cancellations, tax and negotiation strategy, and always keep an eye on OTA-related data – something that a rate-shopper can also help you with.

It's clear that OTAs are indispensable tools for boosting booking volumes. However, it's crucial to prioritize direct bookings via your own website whenever possible. Ultimately, this should take precedence.

Direct bookings not only provide you with more control but also allow you to foster stronger relationships with your guests and, most importantly, increase your profitability.

By sidestepping the commission fees, which can range from 15-30% per booking, charged by OTAs, direct bookings can substantially bolster your bottom line.

Manage bookings across OTA sites with automated channel management

There are numerous tools to help the modern hotelier excel in their job. When it comes to understanding  and getting the most value from your OTAs and other distribution channels a Channel Manager  is an essential piece of software.

A channel manager keeps track of your room listings, tracks your reservations from one central location and updates your property’s availability across all platforms for you as bookings are confirmed.

Lighthouse Channel Managers offers AI-powered channel management that transforms pricing and distribution for independent hotels. 

Channel Manager works in conjunction with Pricing Manager to automatically send dynamic rate recommendations to your connected distribution channels 365 days a year. It also makes suggestions for automation based on real-time market demand, competitor pricing and your current occupancy rates.

Lighthouse Channel Manager helps you:

• Optimize distribution across your channels with AI-driven dynamic room pricing

• Maximize visibility and revenue by connecting to 200+ channels

• Save time: Automate pricing, promotions, and syncing of availability

• Avoid overbooking your rooms with real-time updates

• Get more commission-free bookings directly through your website

Request a live demo of Lighthouse Channel manager today.