Today's Revenue Management thought:-
The true cost of acquisition…..
The cost of acquisition for hotels using Global Distribution Systems (GDS) and Online Travel Agencies (OTA) is a crucial factor that affects a hotel's overall profitability and revenue management.
Cost of Acquisition through OTAs (Online Travel Agencies):
Commissions: Similar to GDS, hotels usually pay commissions to OTAs for bookings made through these platforms. Commissions can vary, but they generally range from 15% to 30% or more. Some OTAs may charge higher commissions for better visibility or preferential listing.
Advertising and Promotions: To enhance their visibility on OTAs, hotels may need to invest in advertising, featured listings, or promotions. These additional expenses can contribute to the overall cost of acquisition.
Bundled Services: Some OTAs offer additional services like payment processing, market insights, and analytics, which may come at an extra cost.
Rate Parity Requirements: OTAs often require hotels to maintain rate parity across all distribution channels, meaning that the hotel's rates on their website, GDS, and other OTAs must match. This can limit a hotel's flexibility in offering lower rates on their website without violating rate parity agreements.
Have a profitable week !
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